There are certain moments that really matter when building a massive company, and one of those moments is when you discover you have more to lose than gain by taking a risk.
For Simon Rothman, the founder of eBay Motors, that lesson was learned from his journey leading eBay’s expansion from being a collectibles-only auction site to a platform for buying and selling cars.
“eBay in many ways had more to lose than gain by entering cars” says Rothman, who joined the company in 1999.
At the time, eBay was profitable and growing quickly as a collectibles marketplace and, in many ways, had more to lose than gain by entering the car market. Customers who were currently selling collectible toys weren’t looking to buy and sell cars.
But Rothman recognized the power of the platform they had built with eBay and saw an opportunity to nationalize the used car market.
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His strategy, called “Race to the Beige Honda Accord”, targeted rare classic car collectors, identified their greatest pain point and built a product that would solve it. “The more pain people have, the more they are going to overcome friction” he shares. “Once you have created a customer and solved a problem, then you have earned the right to make the product better and solve broader problems for broader people.”
As eBay Motors started to take off and the platform was serving broader and broader audiences, he also learned the power of marketplaces and network effects. “As most businesses get bigger they get weaker” he says. “The laws of physics for marketplaces are very different.” He calls marketplaces the perfect business model because as they grow bigger, they grow stronger and more powerful.
