The short answer
eBay's 1998 public offering was a financing milestone in a business that already connected buyers and sellers. Understanding the episode requires separating Pierre Omidyar's founding work, Meg Whitman's executive role, the goods traded by users and the fees earned by the company. The contemporary records also show the operating work and risks behind the expansion.
Chronology
A timeline of the turning points
AuctionWeb begins
Pierre Omidyar launched the service as a sole proprietorship, before Whitman's involvement.
California incorporation
The contemporary annual report dates incorporation to May 1996; Delaware reincorporation followed in April 1998.
The eBay name
AuctionWeb became eBay as the company developed its brand and technical service.
Whitman becomes CEO
The original annual report and company timeline date her executive arrival to February; board service began in March.
Public trading begins
eBay's shares began trading on Nasdaq under EBAY, changing financing and reporting obligations rather than creating the marketplace.
First public-company earnings release
eBay reported third-quarter results, IPO net proceeds and spending on marketing, equipment and customer support.
A marketplace existed before the new CEO
Pierre Omidyar launched AuctionWeb in September 1995. The service brought people together to list goods, place bids and arrange transactions. Incorporation in California followed in May 1996; the company reincorporated in Delaware in April 1998. These legal milestones were distinct from launching the website and from the later public offering. AuctionWeb adopted the eBay name in September 1997.
Whitman arrived as president and CEO in February 1998, according to the contemporary annual report and eBay's company timeline. Her executive role complemented Omidyar's position as founder and chairman. The business already had a technical service and a community of users; professional management had to organize expansion around them. The IPO was therefore not the moment when Whitman founded eBay, nor the beginning of all its commercial activity.
The company sold access, not the listed inventory
The economic distinction was important. Sellers supplied the items and buyers bid for them; eBay earned fees for providing the service. Its 1998 annual report described listing charges and additional success fees when auctions concluded. The company did not take possession of the listed goods or the buyer's payment during that transaction. Buyers and sellers arranged payment and shipment between themselves.
This was different from purchasing stock for a warehouse and reselling it. Avoiding inventory ownership reduced one category of commercial exposure, but did not remove the costs of running a marketplace. A useful service still needed functioning technology, customer support and enough participants to make listings worthwhile. A high value of goods traded could therefore coexist with much smaller company revenue: most of the purchase price belonged to the seller, not eBay.
The IPO financed an organization, not one individual
eBay shares began trading on Nasdaq on 24 September 1998. In its October earnings release, the company reported approximately $66 million in net proceeds to eBay from the offering. That was financing for the enterprise, separate from its revenue from operating the marketplace. Becoming public also brought reporting obligations, exposing the business model and results to more formal scrutiny.
Whitman supplied executive leadership, but the annual report identifies a wider management group. Gary Bengier handled finance and operations, Michael Wilson oversaw product development and site operations, and Jeff Skoll worked in strategic planning. Users supplied the goods and trading activity on which the company depended. Recognizing these different contributions explains more than assigning every subsequent result to a CEO or assuming that access to capital alone guaranteed successful expansion.
Operating capacity had to grow with activity
The first public-company earnings release described spending on equipment, customer-support personnel and product development. It also explained higher marketing costs and the company's relationship with AOL. Some national advertising expenses had been deferred during the IPO's quiet period, showing that the offering affected the timing of business activity as well as the balance sheet.
The January 1999 release reviewing the fourth quarter reported further costs for customer support, new site equipment, Internet connectivity and processing sellers' fee payments. Additional personnel and public-company expenses also mattered. These records show a practical management challenge: attracting more listings was useful only if the service could handle the resulting work. Whitman's earlier consumer-business experience entered a company where marketing, engineering and support had to develop together, not where growth was simply a publicity achievement.
Trust could not be reduced to a feedback score
Because strangers dealt with one another, confidence in the marketplace was an operating issue. Feedback let users report experiences, but reputation information did not make every transaction safe. The annual report reviewing 1998 discussed disputes, fraud, unlawful goods and intellectual-property complaints, as well as uncertainty about an online intermediary's responsibilities. Avoiding possession of goods did not make these problems disappear.
In its January 1999 results announcement, management said it had taken steps to improve trust and safety during the fourth quarter. That was the company's account of its work, not proof that the risks had been eliminated. Expansion increased the importance of handling complaints and reviewing problematic activity. For users, a growing audience was valuable only alongside a reasonable prospect of receiving goods, payment and help when a transaction failed.
What the contemporary numbers do and do not show
eBay reported third-quarter 1998 net revenue of $12.9 million alongside $195 million in merchandise sales and more than 1.2 million registered users at quarter-end. These measures describe different things: the company's income from its services, the value of goods traded and accounts registered on the platform. Registered accounts were not necessarily active purchasers, and merchandise sales were not eBay's own retail turnover.
For the full year, the company subsequently reported $47.4 million in net revenue. These results document rapid expansion around the IPO, while the same contemporary releases warned of competition and difficulties managing growth. They do not establish that the offering caused every increase, that Whitman alone produced the results or that historical growth would continue. The episode concerns building and financing a marketplace institution, not a formula for future investment returns.
Biography context
Explore United States through connected lives
Connected biographies
The executive in context
1956–present
Meg Whitman
Business executive and former diplomatMeg Whitman is an American executive who led eBay from 1998 to 2008, later headed HP and Hewlett Packard Enterprise, and served as United States ambassador to Kenya.Read biographyQuick answers
Common questions
- Did Whitman found eBay when it went public?
- No. Omidyar launched AuctionWeb in 1995. Whitman became president and CEO in 1998, before the September IPO. Founding, executive appointment, incorporation and public trading were separate events.
- When did eBay incorporate and begin public trading?
- Its contemporary annual report dates California incorporation to May 1996 and Delaware reincorporation to April 1998. Shares began trading on Nasdaq on 24 September 1998.
- Why are merchandise sales different from eBay revenue?
- The merchandise figure measured the value of goods traded by users. eBay principally earned seller fees for the marketplace service rather than collecting the entire purchase price as its own retail revenue.
- Did having no inventory make the business risk-free?
- No. Site reliability, support costs, competition, fraud, unlawful listings and user confidence still affected the company. Its contemporary disclosures acknowledged those operating risks and warned against assuming that past growth would continue.
Primary and institutional sources
How this history was checked
The account uses eBay's contemporary annual report and earnings releases alongside its corporate chronology and an institutional career profile. Financial measures are attributed to company reports and kept distinct from stock-market performance. This article was reviewed on 21 October 2026.
- eBay Inc.; document copy hosted by AnnualReportsForm 10-K for the year ended 31 December 1998
- eBay Inc.Our History
- eBay Investor RelationsFrequently Asked Questions: founding and public trading
- eBay Inc.Third Quarter 1998 Financial Results, 27 October 1998
- eBay Inc.Fourth Quarter and 1998 Year End Financial Results, 26 January 1999
- Harvard Business School AlumniMeg's World, 1 December 2003