West. Im emily chang. Were going to be covering all today from how ebay has gone from auction house to e commerce juggernaut. Were going to be talking about ebay now, their sameday delivery service. Amazon may have drones. They may be working on drones but ebay may bring you something in an hour. People think ebay is one thing. It is something very different. I dont think people understand how very different this business is. It is very cold and i forgot my gloves. Im getting some gloves delivered to us. It is a really fun place, quite frankly. I feel like im back at the malls of teenagers. They have got the guitar shop here. I admit, i dont play the guitar like cory johnson. They have the place where you originally do your shopping which is created to touch off some of the technology that ebay has. You can use Something Like apal, your phone or paypal, your phone or tablet. Well look at how ebay helped transform itself and get ready for the future. Well have much more on ebay business throughout the day. First i want to tell you how much the company has grown over the last decade. Heres a look. Ebay, the Global Commerce and Payment Company with 31,000 employees in 33 countries around the world, driving three different businesses. There is the online marketplace where 124 million active users buy, sell or bid on more than 500 million items. In the u. S. Alone, a flat screen tv gets sold every six minutes. Mens sunglasses, a pair every 18 seconds and globally every minute, 362 pieces of clothing, shoes or accessories are sold just on mobile devices. Then there is paypal. Where people spent or receive money 729 million time last quarter. More than the populations of the u. S. , south america and australia combined. You can paye pay in 26 different currencies on paypal ranging from the turkish lira to the japanese yen. Bringing Technology Like touch screen walls and mobile payments to 500 of the worlds biggest retailers and brands like levi, atel and sony. For more on ebays booming business, im joined now by the man who is responsible for turning ebay into a global e commerce program. John donaho is the president and c. E. O. Of ebay. Under his leadership, their revenue has has gown to over 15 billion today. Congratulations on that. This is a pretty busy time of year for you. It sure is. Happy to host you here at our innovation center. Talk about thanksgiving. How did it go at ebay . It is a very strong week. It has never been a better time to be a consumer. Technology is changing how consumers are able to shop. For instance it is no longer just around black friday. We call it the cyber5. It started on thanksgiving day. People could start shopping sitting on their couch getting ready to eat turkey, shopping on their smart phone or on their tablet or laptop. We saw companywide between ebay, paypal, a 90 increase in mobile commerce volume. Im pretty happy because i got 50 of my shopping done. Are you done . Im not quite done but im getting there. Going into this holiday period you guys were a little nervous. You said you had a lot of angst. How do you feel now . Do you feel a bit more optimistic . Were cautiously optimistic. I cant comment on anything during the quarter but at that time we didnt have a federal budget. We had a government shutdown. I think as things are come into the fourth quarter, our hope is that consumers see there is great deals out there, great opportunities to get great gifts for their lovered ones and were trying make that as easy as possible for consumers. So it was the Biggest Online shopping day every on monday. Shopping up 20 or so. But growth is still slowing down. That is the reality. One of your big strategys is connecting online and offline. Lets talk a little bit about connective glass. This is something cool you have tested in new york. Now youre doing it in san francisco. How is that going . We used to think in terms of either youre shopping digitally or shopping in a store. What mobile technology is nabling is that line to blur so you can have a seamless experience in has technology involved with it but you have a choice how you actually receive the item. On kate spade saturday in new york, store fronts has a touch screen so as people walked by they could shop and have it delivered to them with ebay now. We extended that into the mall here in the bay area where we have these gigantic touch screen where is consumers walking by can engage in a large touch screen experience and see what they want and have it delivered to them or here is a great example. Sony has a store in the mall and has a touch screen at another place in the mall. A consumer can be shopping for it or can decide if they want to go to the shore and pick it up and bite or have it delivered to them at home. How fast do you plan to scale this . We approach innovation. What we are good at is consumer innovation. Delivering new experiences. Just as with ebay now, the ability to buy something on ebay from a number of different retailers and have it delivered to you in the moment just like you bought some gloves today. They are coming because you wanted them within an hour. You wanted them today. We started that in one city and rolled it out to three, then five and well go to 25 next year. Things like touch screen, touch glass windows, well slowly roll it out as we get the Consumer Experience right. What about the perception problem . A lot of people still think ebay is auction. Youre much more than that. Thats what they still think. The proof is in the pudding. 70 to 80 of our items are fixed price. You see more and more people coming to ebay. The growth has been accelerating all year long. More and more consumers are coming to ebay. They are telling their friends. Perception takes time to change but we see consumers responding. What is the goal . To be amazon or Something Different than amazon . Well, were very different in that our focus is on nabling commerce. Are we to assume that anything we want should be available on ebay . Yes, anything you want. Including, were partnering with retailers all over the world. We dont compete with them. You can go on ebay today and get things from bail sellers in the United States or all over the world and retailers like best buy. On ebay, you can get good from all over the world. 20 to 25 of our transactions across the border. So anyone that sells on ebay can reach 130 Million Consumers all over the world. The same thing is true from outside. What about some of the other competitions . Facebook, pinterest referred a lot of traffic over the weekend to commerce. O you think of them as referrals . Technology is changing options that consumers have and how they can shop and their choices. So our focus is on commerce. What were good at is connecting a buyer and seller to do a successful transaction safely and reliably. That is our piece of the pie and a growing piece of the pie. We think there is plenty of opportunity for us to be very successful and others as well. All right. Well, were going to talk a little bit more about pames after this quick break. John don horks the c. E. O. From ebay. Well hear more from him in a moment. Ebay can already get you your packages in just one hour. Something amazon doesnt offer. Thats next right here on this special edition of bloomberg west. Welcome back to our bloomberg west special inside ebay. We are broadcasting live from ebays headquarters in san jose. Im emily chang. In the world of same day delivery, time is money and ebay has an advantage over its competition. They promise same day delivery in an hour. Something amazon and google dont offer. Were going to tag along with an ebay courier later in the show but first i want to bring back john donaho, the president and c. E. O. Im waiting for my gloves. The valet has been very polite. She called me welcoming me to service. She is on route. Can you give me any numbers . Were no publishing any numbers now. What we have done this year is in three cities, we partnered with retailers so that when you have a situation, you want those gloves and you dont want to wait until later this afternoon and pick them up in a store, you want them now. Go on ebay now and the courier will have them to you within an hour. Why not tell us more on actually how it is going. When i download ed the app, there were only a few reviews. Why not . Were building a new Consumer Experience. You have to get the experience right. The consumers that are using it like it a lot. Evidence that we think it is successful is we have expanded it from one market to three. Three to five. As we were talking during the break, we just bought a Company Called shuttle. It will help us expand to 25 cities across the u. S. Amazon made a lot of headlines a few days ago talking about delivery by drone. They are working on an octocopter. Were not focused on longterm fantasies. Were focused on things that will change the consumers experience today. Other companies are also experimenting with google. Google has a shopping service. Do you think they how do you have an edge on that . You know, what we have is 130 million active consumers that come to ebay intending to shop. We have paypal which makes payments easy and safe. So we start with an enormous advantage of an ecosystem and a willingness to partner with retailers. Not compete. There will be a lot of people trying a lot of different innovations. Our focus is on delivering a great experience the consumers here and in the rest of the world. Speaking of drones and moon shots. Do you think it is important to have a moon shot mentality to work on and be thinking about farreaching ideas . I think boldin ovation is important. The notion of making a store front window, i would call that a bold innovation. Getting a product to you within an hour, i would call it a bold innovation. By having those moon shots be really focused in our area of competence, they can grow to be important businesses. Paypal is now 42 of the revenue that you guys are bringing in . When does it become the majority . You can do the math. It is only a couple years out. Paypal can serve the entire commerce market. What paypal is doing is making payments safe and easy. We always said in our mind were the clear leader in online payments and now mobile payments. The reality is people like to shop. No one wants to really pay. To paypal is making it easy shop and making the payments a frictionless experience. You guys brought braintree. A pretty big acquisition. What is the strategy going to be for next year . Small tuckin acquisition or bigger the braintree acquisition is a bigger just like what we were talking about. You talk about buying and ordering a hoover. Youre shopping and not really aying. Well continue to grow in those. Were bringing the same principles to the offline world. Beacon, which is what we announced. Allows me when came in this morning and i went into the starbucks in our lobby. I walked in and i had my mobile phone in my pocket. I didnt pull it out. I dont carry a wallet anymore. When i got to the front of the line, the barrista had my name and picture and said john, would you like the usual . When i bought it, she pressed click and i got a text on my mobile. Well be talking with the president of paypal later in the show. Hat about china . Alibaba had a big day. How do you get in on action . We have a strong export business in china. We enable serls to reach consumers all over the world. This year well do 6 billion to 7 billion of volume of chinese serls selling around the world and using paypal to reach consumers all over the world. Were not currently competing in the domestic market and well continue to look at that. It is early days in china. Well look at that in the next many years. Sheryl sandberg wrote about you. You have been very vocal about how you and your wife who is a working career woman have balanced work and family. You done a lot to elevate women here at ebay. Any idea for working dads with how they can help women . I just think in my case, my marriage is a partnership. You can argue that actually my wife is my boss. Have worked hard to balance dual careers and raise a family. Ebay is competing and winning. If were going to be successful, we have to have the very best people. By definition, half the people in the world are women and we need to have the best women and men that can lead to the best diversification and execution. I think it is a matter of Good Business and it is also a matter of being in my case a good husband. That is good to hear for myself as a working mom. Thanks for having us here. Thank you. When Top Tech Companies try to attract new talent, free perks are often a way to persuade potential workers. The culture of ebay has some asking where is all the free stuff . First, Jon Erlichman has been checking this place out. Take a look. One of the interesting things youll find is an 11 by 11 wall of pez dispense ers. It played a bit of a role in the creation of the company. Me, im partial to the chewbacca ez dispensers. Attaboy chewy. Welcome back to a special edition of bloomberg west inside ebay. Im emily chang here at ebay headquarters. Guess what . We have good news. I heard. My gloves have arrived my fingers can now be warm. Thank you so much. Thank you so much for keeping me so well updated throughout the process. This is what i got arent they kind of cute . I like them. They are kind of cute. In an hour onset, that is pretty good. Thank you so much. Nice to meet you. Have a great day. Thank you. Im excited. Ebay and john donaho said they are exploring a lot of new areas and need a lot of people. We wanned to find out what kind of perks do they have here at ebay . Is that important . Here is a little more on that story. From the free gourmet meals at facebook, Silicon Valley is known for offering plenty of employee perks. Ebay takes a different approach. We have a variety of different perks but that is not how we ask people to join our company. Sure, there is a few gym but employees pay for on campus food, dry cleaning and massages. People come and they believe in our purpose. That purpose is to enable 00 billion worth of Global Commerce by 2015. They are adding to their army of Customer Support staff. Already more than 31,000 strong. 4 of hires come from the intern program. They may not care as much about the freebies. They care about impact. They care about the impact that the Company Makes on the world. And by recruiting from 300 schools globally, they get a few how the next generation views its brand. What do they often say . What kind of feedback do you get . What is interesting is that ebay has changed so much in the last few years. Not all the students realize that. Sometimes they think it is just an auction company. Ebay has hired 500 knew granddaughters this year around the world. He business is growing faster. New graduates this year. There is a little bit of insight in how it all work behind the scenes. Good to hear. Pay pals c. E. O. Will be coming up well be with him next. Welcome back. I am emily chang. We are coming to you from inside the ebay headquarters from san jose, california. This look like a shopping mall. But it is not a store at all. It is a fake storefront pulled by ebay to demonstrate the future of shopping. Is our technology playground. It gives us the opportunity to showcase what we have in the. Arket area that push ebaye trying to to brickandmortar retail. If you look at what we are able to do for online shoppers, none of that exists in the off line world. For paypal, that means replacing cash registers to customersow to make comfortable with swapping their wallets with their phones. They roll out hightech touchscreen walls like this one in separate cisco. We turned an average storefront into an interactive shop double store. You walk up and touch the grass glass. Then you pay on your mobile device. Papal paypal brought in revenue of 1. 6 billion. 42 of ebays hall for the quarter. We take a small transaction fee. Mobile payment is a crowded field with startups like square. Million active0 customers that use the paypal wallet to shop area and that is a meaningful advantage. We have a relationship with that consumer that goes beyond the numbers. For a place to there is technically no shopping, it is pretty groovy here. Be the besty acquisition that ebay ever made. I want to head to cory johnson who is standing home with more. This paypal business is fascinating. Wasbuilding that we are in once mostly ebay. Paypal dominates now. Are paypalployees versus ebay. This is mainly the paypal campus and the other campus is the ebay marketplace. About 13,000 people work for ebay now. Wonder what is it that has changed . Any ebay acquired p powell it was losing money. A looked as much as competitive purpose. Ecommerce is growing. Over 90 more use paypal to buy things than last year. 91 more sales on thanksgiving. 99 more on black friday. That is incredible growth. Why is that happening now . People do not want to be waiting in stores. They prefer buying online and on mobile. Mobile is growing like crazy. Because growth is so great, can you tweet about the results . Or is it too big . We can see it. In europe, the economy was slowing down. We had to compensate. Generally the team really fights when those things happens to try to compensate for the macro. How do you compensate . Be more aggressive and getting more merchants and doing more promotions. When we have macro events, they try to compensate. It is hard to see anything at a macro level. What are you staying in terms of the economic environment in the u. S. . This quarter was slow to start, right . Look at the holiday shopping, it was pushed late. Other than that, i think things are looking better and better. You have done so many acquisitions and have launched many products as well. John donahoe was excitedly showing this beacon. How do you describe it . We want to change how people shop. People love shopping, but they hate paying. And it is not just because they are cheap . No. Everyone is like that. We want to remove that friction and make it completely invisible to pay. With beacon, we did that. You can go into a coffee shop like he did earlier today and then your phone vibrates. You can pay completely hands free. It can be a retail store or restaurants to enable that and have one of these systems. And i have big merchant partners, but how many pointof sale locations are you in . In the u. S. , we have over 100,000 locations. I do not want to make it specific you can. We have hundreds of thousands of locations. In australia, tens of thousands of locations. There are tons of restaurants where you can pay at the table. You do not have to wait for the waiter. Why should you pay online . The expense of the apple store where you talk to a salesman in the aisle and you make the purchase and leave. You looking at those type of innovations or are you there are ready . We are there are ready, but we have to scale those experiences. That is what 2014 will be about. To that point, i was talking to you today and one of the things i heard from a number of people is that there wasnt a great Consumer Awareness of these point of sales. Will there be a Marketing Campaign . When . This year and into 2014. You need to have enough of these expenses out there. 2013 has been the year where we have reinvented all of our existing products. Now we have a lot of new products and experiences that we need to push out there. 2014 will be the year where we will invest in. You have a Company Called braintree. What did they have that you couldnt build in time . We need payments os. Any disruptor or builder that wants to build something completely new that involves payments whether it is Companies Like uber or others, they need to be on top of paypal. Both braintree and paypal, 100 of the profits on uber goes to paypal. It has been slowing down measurably in the last quarter. It was 20 . Yes, we think we still have a lot of growth ahead. Mobile is growing fast. We will start seeing the benefits of all of our efforts. Not in 2014, but 2015 and 2016. We can accelerate revenue. Accelerate growth. You heard it right here. Amazon might be experimenting with delivery drones, but john donahoe says it is a fantasy. First, to Jon Erlichman. Ebay is all about enabling commerce around the world. We have onesies and a soccer ball. Ebay employees are encouraged to get a bit of physical activity. I think kobe Bryant Wouldve called glass. I think you get some pretty big props for that. This is a live edition of bloomberg west inside ebay in san jose. Broadway,uper bowl to users flocked to ebays stub hub to buy and sell tickets. One way stub hub is trying to make things better is by collecting and analyzing user data. Cory johnson explains. This ticket business was ripe for innovation. Ebay made an aggressive move by buying stub hub. The business has grown into something. Left self arely sport fans. To change howying tickets are sold. We are trying to change the whole fan experience. Innovation is used across the business. Stub hub takes 25 off ticket sales and the rest goes to the seller. Stub hub is after a lot more. Ebay paid 310 million for stub hub in 2007. The business has grown dramatically. Today, they are selling one ticket every second. Technology was the enabler. Businessas grown the with mobile ticketing and ways to buy a couple of seats and split the bill with a friend. Stub hub is a risk for ebay. Ebays margins have fallen to 69 since the stub of acquisition. Every incremental dollar stub hub profits compresses ebays margins. Be the key data may to improving. This is a new science. We are trying to understand it. Buyers are buying things already. Data. Understanding what they might be intending to do. Interesting stuff. It is just her medically changed the ticket business. Ticket resellers and scalpers. Thank you, cory. Ebays marketplace is still the core of the business. How are they keeping their Digital Business booming . That is next. The core of the business is still the ebay marketplace. How is ebay making it better . Jon erlichman is back with more in that. Youre right about that. The marketplace is half the revenue and two thirds of the operating income. I found myself curious. What is the guy that runs the marketplace buying this year . Game consoles. We are the worlds biggest store. I asked that because you are what doesdatadriven. The average shopper by . Are there any major businesses between the competitive layers out there . It is the Worlds Largest store. There are a half million items for sale. What we do see during the holidays as it becomes very deals driven and electronics and fashion oriented. Since thanksgiving we have seen a lot of electronics and fashion a lot of jewelry. There was a story this week about the amazon drone idea. Focused on longterm fantasies. Have you had any questions about what that is and what it means for ebay . We not focus on drones and robots. The convenience for consumers is critical and that is what we are about. We want to get things to people in a way they can trust quickly and efficiently. It is critical for the future of digital commerce. Our responses about now. Connecting people with local shopping markets. It is efficient. We will scale up to 25 markets next year. There is a lot of capacity in there. It does point out a big difference between us and some of the competitors. Is humanistic. We do not have a view that technology is going to replace people or retailers or merchants. It is going to transform retailers, but it will not replace them. You mentioned game consoles. Theres a story about some buyingwho thought he was an xbox one and it turned out to be a photo of an xbox one. How do you deal with that . We have to have retail standards. Able have confidence that what they buy on ebay is what they expect. When something goes wrong we have a guaranteed. They can call us up and get their money back. That has been really important a peering turn ebay from to peer marketplace to of retail experience. Thanks a lot. Emily, i will send it back to you. Thank you, john. Ebay is Just One Company thats trying to get packages to you faster. Ebay will bring you things under an hour if you live in certain markets. We will be back. I am in an ebay now car. This will deliver things within an hour. They will do this in 25 cities in 2014. If you excuse me, i have a pickup to make. Jon erlichman is looking very good in that ebay now mini cooper. To look at what goes into executing that in just one hour, john followed to valet drivers. Need something and needed now, if you live in the bay area or the big apple, james or megan could be answering your call. Order. St got an it looks like i am going to best buy. They are shopping valets for ebay now, ebays newest addition to the online marketplace. It is an experiment in instant delivery. Canomers in certain series buy onyx from certain retailers and they will be delivered in under an hour. Time, people can shop any anywhere on mobile phones. This is a logical extension. Ebay charges five dollars for the delivery service. For the Holiday Season they are waving the fee. That working professionals like the service. Half of our usages from 9 00 a. M. And 5 00 p. M. Google has its own express stop shopping service. Amazon is building more Distribution Centers closing to cities. Jeff bezos wants to deliver drones in just 30 minutes. Ebay is expanding its ebay now service to 25 cities next year. That we can love help them take advantage of their existing stores and meet consumers expectations. Jon erlichman their following an ebay now courier. I also got my gloves. Had i known you wanted gloves today i wouldve brought some. They are smart gloves, you can use your phone with them. They didnt come by drone. John donna hill says drones are a fantasy. There was a press release with some drones. I think ebay is clearly in a hurry. Acquisitionst the they are doing, they are doing something now through rapid hiring. They have bought 21 companies. The shuttle acquisition ties into that. You have to go out and tested. Everyone wants everything right now. You have to figure out how does going to all work and that takes a little bit of time. This is a delicate balance. They are doing a promotion that it is free over the holidays. I can tell you that after using it once, i will be using it again. You like to wait. The first time i walked in this building they were asking difficult questions about paypal. That business has grown by leaps and bounds. They said on our air that the growth would rick celery. Integrateden so well into their other businesses. Thank you all for joining us on this special edition of inside ebay. The following is a paid program. The following is a paid presentation. Imagine you can go from looking like this, too flawless. This, too glamorous. This, too fabulous in just one minute in just one easy step. Takes less than one minute and youre ready to go for the day. It gives you everything you need in one compact. It used to take me 20 minutes and now takes me one minute