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Give and Shake: It's not just Omidyar's Web sites that are groundbreaking. With outside-the-box ideas like investing in for-profit ventures—not to mention the staggering amount of money it's dealing with—his Omidyar Network is challenging conventional ideas about philanthropy. This is the site of the organziation's base in Redwood City.

The Eight Million Dollar Man

Can eBay founder Pierre Omidyar save the world—or at least start a second online revolution—with his new Web site?

By Najeeb Hasan

IT CAN BE difficult to find out what a man worth $8 billion is up to.

Pierre Omidyar, at last count, is worth $8 billion. And, indeed, he doesn't seem to want to talk to the press about what he's up to. Omidyar has said he plans to give away his entire fortune. The guy seems to be all about do-gooding in the most epic sense. And yet what he's doing with his new Web community may be even more revolutionary—what he's up to with omidyar.net could change the entire way we think about how someone can go about making the world a better place. As the founder of eBay, one of the Internet's biggest success stories and a cornerstone of Silicon Valley high tech, Omidyar's stature in the business world rivals that of Google founders Larry Page and Sergey Brin. You'd think everyone would want to know exactly what he's doing with his fortune—and why.

And yet, when one of the wealthiest men in the world provided a window into his philanthrophy and his philosophy with omidyar.net, virtually no major media outlets even mentioned it. If they had taken a look, they would have found a fascinating new breed of public forum that seems to build on some of the same principles of social contract that made eBay a multi-billion-dollar success—and just might revolutionize the American social net.

The Mystery Do-Gooder

According to a recent study by the Chronicle of Philanthropy, the 37-year-old Omidyar, along with his wife, Pam, is already near the top of the list of most generous American donors at almost $200 million, below Bill and Melinda Gates ($3.4 billion) but above Oprah ($50 million). His plan to give away his entire fortune over time will likely put him at the top of that list.

Toward that end, at the Secretary of State's office in Sacramento, there are four separate limited-liability corporations registered with the Omidyar name: Omidyar Network Services, Omidyar Network Commons, Omidyar Network and the Omidyar Network Funds. The LLCs mostly serve as checkbooks for Omidyar. But the biggest clues to Omidyar's plans are actually being provided by omidyar.net, a site that was initially created as an internal tool for Omidyar Network staffers and now operates as a network for members to discuss and debate social-justice issues—including Omidyar himself.

It's not that Omidyar is any more chatty about the Web site to the press. His staff also keep their lips sealed about the subject. Thomas Kriese, one of the administrators of the Web site, replied to an interview request via email: "Thanks for the offer of coffee, but I'd ask that you contact Michelle Goguen [Omidyar's public relations representative] regarding press about omidyar.net." Goguen subsequently revealed that neither she, nor any of Omidyar's staff, was interested in making any comments about the venture.

Nor did Omidyar associates such as Michael Mohr—a Los Gatos financial adviser who Omidyar reportedly met at a 1998 dinner at Jerry Yang's Los Altos home and who shortly thereafter registered the omidyar.net domain name with an Internet registry—return telephone calls. Even a call to the Skoll Foundation, the San Jose-based philanthropic venture of another eBay billionaire, Jeff Skoll, came up empty.

"You know, I'm not really up to speed on what Pierre is doing," Sally Osberg, the president and CEO of the Skoll Foundation, insisted.

However, an email from an Omidyar representative attempts to shed some light on this unexpected wall of silence from a man whose stated intent is to be one of the biggest charitable donors of all time, and offers a clue as to where the answers can be found:

"As I've mentioned, our preference is to collaborate out in the open with a broad community rather than participate in one-to-one interviews. There's a great Japanese adage I'm fond of: 'None of us is as smart as all of us.' It's a good summation of our approach ... including interacting with the media. You might even find that many of your questions have already been asked and answered somewhere else on the site. If so, the community will undoubtedly quickly point you to the answers. Because everything there is within the public domain, it's also, by default, on the record."

Opening Up Online

Omidyar.net is not directly related to Omidyar's charitible spending. But while he chooses mostly to remain mum with the media in traditional interview settings, he is radically transparent on his new Web site. Omidyar.net includes a page that links to a list of investments and contributions the Omidyars have made since 1999. The individual amounts of the contributions are not listed, but the totals, as well as the organizations and companies toward which the contributions are directed, are. In 2004, for example, the total Omidyar investments are listed as almost $61 million, while a note adds that the Omidyars "gifted" more than $173 million to 501(c)3 entities the same year.

Judging from the Web site, Omidyar's interests seem straight-forward: He doesn't want to create something new. His strategy is to invest in what's already there. The Omidyar Network doesn't accept unsolicited proposals or business plans; instead the network actively seeks out investments, which come by a wide-ranging variety of routes. Top-down, they are not.

From the list of his partners on the Omidyar Network's Web site, it appears Omidyar has a special interest in groups working with open-source software as well as groups committed to making government more and more transparent. Also, an interest in groups working on micro-credit and micro-finance schemes can be gleaned through evaluating the Network's partnerships. The listed groups include SourceForge.net, Project Vote, the Center for Public Integrity, the Electronic Frontier Foundation and Grameen Foundation USA.

Last July, the Omidyar Network awarded $400,000 to the open-source software site SourceForge.net. A subsidiary of the VA Software Corp., SourceForge.net is one of the largest developers of open-source software, hosting thousands of software development projects across the world that embrace the open-source movement's goal of programming source code that can be modified by other programmers. The philosophy of open source is that by making software collaborative rather than competive, bugs will be found and fixed quicker and the all-around quality of the software will improve faster.

The award to SourceForge.net came on the heels of an eyebrow-raising announcement last month by Omidyar that the Omidyar Network would also invest in for-profit ventures. (The $400,000 was still a donation, rather than an investment, however, since Omidyar received no equity in SourceForge.net.)

"I don't see why we ought to make an artificial distinction that says for-profit is all about making money and only nonprofit is about helping people," he told Business Week in a rare interview. Tellingly, Omidyar was also reported as contributing $1 million in support of Proposition 71, California's stem cell measure. Meanwhile, in December the Omidyar Network awarded the Electronic Frontier Foundation a general-operations grant and announced a new partnership.

"They are dedicated to empowering innovations, so it's a very nice partnership," says Terri Forman, the director of development at EFF. "Their commitment is really manifest in their new Web site. Through the Web site, we can learn from comments others are making about us as well. It's sort of the ultimate transparency system. I think that people don't think that they have a place at the table and what Omidyar has done is make the table big enough."

What doesn't provide the ultimate transparency—and indeed has puzzled some observers—is Omidyar's decision to use LLCs rather than foundations for his philanthropy. Unlike foundations, LLCs don't have to file public reports with the state on their charitible activities, or give any specific amount to nonprofits every year.

This could be another move by Omidyar to break down that "artificial distinction" between business and nonprofit.

"It could be cheaper and more convenient to register as an LLC," says a spokesperson for the Washington D.C.-based Council on Foundations. "For tax return purposes, you can consolidate everything."


Building the Frontier: Documentation on the Web reveals that Omidyar has a particular interest in contributing to groups working with open-source software.

Slippery Definitions

How to define omidyar.net? It's a difficult task.

In some ways, it's difficult to distinguish the site from a run-of-the-mill web forum; though the participants of this forum (in February, omidyar.net boasted more than 5,000 members) seem to be of the sort who can write in complete sentences and whose conversations rarely devolve into the crass. Initially, many members believed it was created as a vehicle through which Omidyar could give away his money, but the Omidyar Network exists to accomplish much of that. This site exists as something beyond Omidyar's checking account.

Becoming a member is free and relatively painless. Once signed up, members are encouraged to join one or more of the hundreds of groups on omidyar.net, and take part in online conversations about the several hundred discussion topics within those groups.

The discussion topics are varied, though all are linked directly or indirectly to social justice. The concept of values is key to omidyar.net, which touts itself, ultimately, as an expression of values.

"While other foundations list their mission statements, grant procedures and organization charts, Omidyar simply expresses the values by which it expects to grow," writes Tom Munnecke, an omidyar.net member.

And what, exactly, are those values? The network defines at least four: the belief that every individual has the power to make a difference; the idea of allowing people to discover their own power to make a difference; the idea of building a network of participants; and the invitation to learn about one another.

Some members get heavily involved in the discussions, then distance themselves. "I used to be there all the time," says Ken Nakagama, once the network's top user and a Campbell resident, with a grin. "The issue is that it's addictive; I needed to be careful about how much time I was spending on it." Nakagama names networking, or meeting new people, as the most unexpected result of his time on the Web site.

Revolution, Point by Point

One of omidyar.net's most notable features is the way it builds on some of the concepts Omidyar used to great effect with eBay—namely, positive and negative feedback—to create a "point" system that shifts power around the site. Virtually everything on omidyar.net, most importantly the membership itself, is attached to a point value. Members can give or take away points from other members.

The idea is that the more points you have, the more trustworthy you are—and the more things you can do on the site. Things like starting a new group cost points; new members start with 10. As of the end of last year, Pam Omidyar had 403 points. The group Poverty in America had earned 2,631 points by the same day.

"The Web site is an exercise in what I call trust building," Munnecke tells Metro. He speaks from his office in San Diego and qualifies his remarks by saying he does not want to represent what the site is.

"What eBay did, they have 100 million people who somehow trust each other. Is there a way of taking that trust and replicating that in better-world activities?"

This is where the idea that Omidyar could transform the world of nonprofits begins to become clear. Munnecke likens the current nonprofit system to the vertically organized minicomputer industry, in which one company created the whole computer. He notes that the industry transitioned to the microcomputer industry, which was horizontally layered and included the participation of many companies.

"The current philanthropic model is 1.4 million stove pipes," he says. "It's very competitive, but not enough good management. What I see happening is the very same transition, from minis to micros, from the stove-pipe model to an infrastructure base. It allows people with a vision to do what they want without having to start foundations and without having to go through the whole fundraising process. What Pierre did with eBay, making it a self-organizing network with minimum oversight, I think he's trying to replicate with this. I think it's a spectacular idea; it's revolutionary. But I would guess that the current stove pipes are not comfortable with this. The auction houses—the last thing that they wanted to see was eBay."

Omidyar Speaks

Every member of the site seems to have a vision for what it could and should be, but what about Pierre Omidyar's vision for it?

Omidyar's representative made it clear he isn't interested in talking to the press any further. However, a rare interview he did previously with Esquire provides some insight. The interview took place online, on an omidyar.net discussion thread and, in the spirit of omidyar.net, all interested site members were permitted to chime in.

During the online discussion, Omidyar came across as an individual who carefully chooses his words. His writing style is clear; his sentences short and precise; his thinking logical and calculated. Very little of what he writes is superfluous. The Web site, he wrote, is about allowing people to discover "their own power to make good things happen." But his goal seems to be to not have a goal for omidyar.net. "Sometimes you can't really predict where you'll end up," wrote Omidyar, sounding a bit like an Eastern mystic. "The journey itself is the reward."

Omidyar readily admitted that his idealism stems from his experience at eBay. He says the fact that 100 million people can trade on eBay throughout the world, without the system breaking down because of malicious intent on anyone's part, is "experimental proof" that people are basically good.

"I think sometimes the difference between an 'idealist' and a 'realist' isn't as obvious as it might seem," he posited. "Maybe if everyone acted on their 'naïve' ideals, we would all discover how realistic they were."

An Omidyar representative told Metro that omidyar.net's model for social change is not based on eBay's values). But during the online discussion, Omidyar implied as much.

"If you think about eBay in the most generous terms, over 100 million people have learned they can trust a stranger," he wrote. "And I think some of them are taking that lesson offline, into the real world."

Who Wins? Who Loses?

Another one of Omidyar's signature values is his desire to connect social benefit and economic success. His donation to Source Forge and his announcement last spring to invest in for-profit ventures last year were no flukes. Again, eBay is used to justify his thinking. Business isn't inherently good, Omidyar believes. But it's not inherently bad either.

"I just think we need to work harder to find more business models that are inextricably linked to positive social impact," Omidyar wrote online. "As we move into a world where people are more connected to one another, in larger numbers, I think more of these models will present themselves."

But, while Omidyar was generous in crystallizing some of the principles behind omidyar.net and Omidyar Network, he did seem to dance around one question that, in some ways, brought forth what many consider to be the inherent ethical question about eBay—"Do you ever think of where your money comes from? Does your wealth represent about $1.50 taken from every person on earth, or have you created additional wealth in the world that makes your enormous chunk just your fair share?"

Omidyar answered the question—sort of.

"I do think that we're blessed by the fact that modern wealth can be created by nonexploitation," Omidyar wrote. "In the very old days, it seemed like when there was a successful business, there was necessarily a loser or someone who was taken advantage of. I think with all the new business models being created in the information age, more people are able to create successful businesses without exploiting people."

Is Omidyar in denial? A hopeless dreamer? Does he have an insidious agenda—perhaps using his money to influence agenda-setting organizations like the EFF and others that he funds?

Kamran Elahian is willing to vouch for Omidyar's character and intentions. Born in Iran, Elahian is now a successful Silicon Valley entrepreneur who has followed Omidyar's career for a long time.

"I've always admired Pierre," says Elahian, sitting in his elegant Redwood Shores office. "He's one of the most enlightened human beings on the planet. To me the power of eBay, the beauty of it, the big thing of it is that it became a global exchange. It overcame barriers and it overcame borders. It fulfilled the need, and if you allow needs to be fulfilled, you create good."

Elahian doesn't believe that Omidyar's success taints his efforts to transform how people think about social justice. He also hopes people understand how significant it is that Omidyar wants to give it all away.

"There's nothing wrong with earning a ton of money," says Elahian. "What you do with the money is questionable. If I have a billion dollars, and I make a donation of a million dollars, that didn't hurt me much. Giving really matters if it starts to put you in an uncomfortable position, whether you have no money in your pocket or whether you have a billion. If it's tough, then it's meaningful. And so, to Pierre, more power to him. I hope he makes more money."


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From the April 6-12, 2005 issue of Metro, Silicon Valley's Weekly Newspaper.

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