When Leaders Serve: A Conversation with eBay CEO John Donahoe

eBay CEO John Donahoe (l) with a16z GP Peter Levine

Before a crowd of folks who know a fair bit about leadership, military veterans, eBay CEO John Donahoe and a16z General Partner Peter Levine discussed the type of leader Donahoe has become as he’s spearheaded a turnaround at eBay. The conversation also tackled Silicon Valley’s obsession with “hot,” and why, for Donahoe, not taking enough risk is a mistake.

Peter Levine: You describe your management style as “servant leadership.” Where does that come from?

John Donahoe: It started with Tom Tierney who was a mentor of mine. He was my boss at Bain & Company, and is on the board of eBay. He’s one of those leaders that care enough to always give constructive feedback.

To give you a sense of what Tom’s like, after the last eBay board meeting he calls me and asks, “How do you think it went?” And I go, “How do you think it went?.” And he says, “You know John, that conversation around X, Y, and Z. If what you were trying to get across is that you felt fairly emotional about the issue, you’d already decided what you wanted to do, and you didn’t want to hear anybody else’s opinion, you did a good job. If on the other hand, what you were trying to demonstrate is that you are seasoned and sophisticated CEO, that you are open-minded and wanted to hear other’s opinions, that you knew you could make a decision but you were actually engaging in an authentic discussion with them, eh, not so good.”

That’s something I’ve taken away, which is, I think a good leader cares enough to give his or her best people feedback. But Tom early on captured the phrase for me – servant leadership. And that’s how I’d describe my leadership: servant leadership. In most companies it’s a classic hierarchy, the person on top is the CEO, in the military it’s the general, whomever is in charge. That’s never really worked for me. I’ve always been trained with the inverted pyramid, where the customer is on top. They’re why we’re here. They are the people who give us a sense of purpose of why we’re here.

And inside our organization, the people I talk about on top of our org chart are the people who deal with customers every day ­– they’re our customer teammates, our sales team, and our support teams. And everybody inside the company exists to help them serve the customers better. And I’m at the bottom of that pyramid, and ultimately my job is to clear channels to serve our customers as well. It’s to serve. If you want to have the absolute most talented people working for you, they can’t feel like they are working for you.

The one other person that had more impact than he realizes is General Colin Powell, talking about followership. The focus is not about me, the leader, the focus is on how do I create followership. We’ve all had leaders we want to follow and usually that leader empowers us, has our back, and treats us better than they are.

PL: Is that philosophy something that you can go to a class and learn about? Or is it experiential? And are other leadership styles acceptable as well?

JD: I think each of us has to discover what our leadership style is. You can’t copy another person’s. If I think about the leaders I respect the most, they can have different styles, but what they all are, they are authentic in understanding who they are and who they want to lead. They are transparent and consistent about that. I think that’s the job of any leader. I wouldn’t try to copy someone else’s personality. I followed Meg Whitman, I had big shoes to fill. But I couldn’t be Meg Whitman. I had to be me. The leaders that create followership, if there’s one common quality it is that they are authentic. Having good values, and then being authentic and transparent.

PL: What has been the origin of your own mistakes?

JDonahoe: I’ve made a lot of mistakes. The truth is, my biggest mistakes have been not taking enough risk. It’s not been what I’ve done, it’s been what I’ve not done. There have been times where I haven’t moved fast enough or taken enough risk. When I was running the Marketplace before becoming CEO, I was scared of taking the risk of labeling what was going on. We had stopped innovating, we weren’t delivering good experiences for our customers, and we were taking them for granted. We were living a narrative that was no longer true.

It was only when it got so bad that I spoke up and spoke the truth and took on the risk. It was hard, it hurt, and everyone hated me. By the time I became CEO it became clear to me that I was going to be presiding over this ­– I’m going to catch a falling knife. I was named on a Wednesday. On Monday, we had a seller meeting in Washington, DC where we announced the biggest set of changes in eBay’s history, and I labeled it as a turnaround, a word that everyone hated. We stood up told the truth, it felt so good. And we finally labeled what everyone knew what was true. It felt good for 24 hours, and then all hell broke loose.

PL: What are the cultural and character ingredients about building a great and enduring business?

JD: The first thing is picking the right company. I was at Bain for 20 years. I loved it. And when Meg first called me to join eBay, it was the hottest company on earth at that stage. I said, Meg that’s not me. I’m not a Valley guy in that way. It doesn’t light my fire. There’s nothing wrong with it, it just doesn’t light my fire. And she said, “I want you to meet eBay’s founder, Pierre Omidyar.” I’ll never forget ­– it was a rainy day in November 2004 at this place where eBay was having a leadership meeting. I was curious. I had never met one of the most famous Internet entrepreneurs. I went in thinking I would meet somebody like Steve Jobs ­­– some larger-than-life personality, maybe a little and brash and arrogant. And I could not have been more surprised. Pierre is soft spoken, and one of the most humble, centered humans I’ve ever met. And I sit down and we’re talking and I say, “Pierre, how do you measure success for eBay?” And he didn’t say a thing about growth rate or revenue or stock price or reputation in the short term. He said, “John, what I care about is I want eBay to positively impact hundreds of millions of people’s lives all over the world and I want to do it over decades, I don’t just want it to be a flash-in-the-pan. If we have lasting impact and we’re going to help the world be a better place, we’ve got to last.” And I was like, you had me at ‘hello.’ I literally walked into that interview thinking I wasn’t going to leave Bain for eBay, and I walked out saying, “I want to follow this guy.”

PL: How should the rest of us think about picking the right company? Does “hot” matter?

JD: What I would suggest is, don’t listen to what everyone else says. Don’t join something because everyone else is. You need to ask yourself, can you personally relate to the purpose of the company that you’re joining? It’s interesting, because Silicon Valley has produced 98-percent of the greatest technology, innovation, startup companies, and entrepreneurs in the last 50 years. There’s no place that’s even close. But during that period of time – 50 years – Silicon Valley has produced five scale-enduring companies. And I’m defining scale as above $20 billion market cap, and I’m defining enduring as having been successful for a 20 year period or longer: HP, Intel, Apple, Oracle and Cisco. That’s it. Google’s not 20, eBay’s not 20, none of the Internet companies are. And the ethos around here is short-term, the hot. And you know when it stops being hot, I’m going to jump to the next one.

What it takes to commit to build a great, enduring company is a different mindset. What is true about Silicon Valley is that innovation is the lifeblood. Innovation drives competitive advantage, but what I think is not talked about is the timeless principles of management. To build a great enduring company you have to marry innovation with the timeless principles of management. How do you scale, how do you build a team, how you go global, how do you develop and retain people? A lot of what we’re trying to do at eBay is marry those timeless principles of management with the ability to innovate. The question is how do we try to do both? We’re right in the middle of that experiment.