Source: http://nymag.com/daily/intelligencer/201...

Omidyar co-founded a start-up, Ink Development, but when he disagreed with his partners over its direction, he left to take a job with a company called General Magic, an Apple spinoff that was developing a rudimentary form of tablet computing. General Magic was a ’90s hotbed: It called its young employees “magicians” and had an inspirational rabbit that hopped freely around the office. But in Omidyar’s view, both his start-up (which eventually sold to Microsoft, making him a millionaire) and General Magic had a fatal flaw: Their systems were not built to take advantage of the web. “Basically the latest, coolest shiny toy at the time was the web, was interactivity,” Omidyar later recalled.

Originally, the domain eBay.com had nothing to do with auctions — it was a workshop where Omidyar would tinker. Its earliest incarnation hosted a web page about Ebola, inspired by the national scare that coincided with the movie Outbreak. (Later, eBay would offer a variety of origin stories for its odd name, none having to do with Ebola in the Bay Area.) In August 1995, as General Magic began to show signs of financial distress, Omidyar took advantage of the Labor Day weekend to program a simple auction service and posted a link to it on eBay.com. He soon recruited a company president, Skoll, whose first management decision was to remove the alarming Ebola content, over Omidyar’s objection that it was still drawing lots of traffic.

The online-auction idea wasn’t original — a founder of a preexisting site, OnSale, recalls talking to Omidyar about a job before he started his competitor — but eBay was unusually frictionless. The company never touched the inventory, and it left market regulation to buyers and sellers. Instead of policing cheats, Omidyar wrote a manifesto declaring “most people are honest” and set up a forum where users could assign each other positive and negative ratings. “It turned out to be this magic thing,” he later said. By 1997, eBay was hosting 200,000 monthly auctions; the next year, the company went public. “We literally went from Pierre having maybe a couple million, and me just scraping by, to us being billionaires,” Skoll told me.