Pierre Omidyar: from eBay to Philanthropy

By Shlomo Maital   

       Omidyar

Pierre Omidyar is well known as the pioneering founder of eBay.  That company, after it was acquired, made him immensely wealthy; by the time he was 30 he was a billionaire.  Today, he is 46,  and he is deploying fully $1 b. of his fortune for philanthropy.  But unlike Jeff Bezos, founder of Amazon, who spent $250 m. to buy the Washington Post,  Omidyar is spending $250 m. to revolutionize the media.

  According to the Economist (the Schumpeter column),  “… in 2004 Mr Omidyar replaced his foundation with a new organisation, Omidyar Network, which sees itself as an active investor, not a passive donor, and is free to put money equally into for-profit and non-profit ventures. Almost half of the 300 or so outfits it has backed aimed to make money—though Mr Omidyar has said that any profits will be recycled, with none going back to him.”  

   The Economist continues:   “With the non-profits it backs, ranging from Kiva, a microfinance website, to the Sunlight Foundation, which promotes open government, Omidyar Network practises “venture philanthropy”—developing a non-profit start-up in the same way as a new business venture, except for not expecting it to make money one day. Typically, foundations have given funds for a specific project rather than to build the capabilities of the charity itself, which makes it hard for the charity to hire and retain talented people. In contrast, the network not only provides money for its charities’ general budget, it has a human-resources department that helps them find good staff. This service seems to be universally appreciated by the charities Mr Omidyar backs, some of which say it is more valuable than the money they get. Although there are several other successful venture-philanthropy organisations, such as New Profit Inc (which helped develop the Teach for America charity), none comes close to the scale of Omidyar Network, which makes it the crucial test case for the idea.”

      Omidyar ‘invented’ on-line commerce. Now he seeks to reinvent philanthropy.   He seems to have put his finger on a key failing of many social enterprises – good management, proper staffing.  We wish him well.