How eBay CEO John Donahoe Keeps Founders From Leaving After Acquisitions; “We need to create a culture where they can realize their visions”

How eBay CEO John Donahoe Keeps Founders From Leaving After Acquisitions

FREDERIC LARDINOIS

posted 2 hours ago

At TechCrunch Disrupt 2013 NY, eBay’s CEO John Donahoe talked to Bloomberg’s chief content editor Norm Pearlstine about how the company screens its acquisitions and how he keeps founders from leaving after the acquisition. Since becoming eBay’s CEO, Donahoe said, the company has made about 20 acquisitions. Currently, fifteen of the founders that joined eBay and PayPal after their companies were acquired are still at eBay and most of them are in executive positions. After the company acquired Zong in 2011, for example, Zong’s founder David Marcus became PayPal’s vice president for mobile. After essentially getting tested in that position, he became the President of PayPal last year. Similarly, when eBay acquired Hunch (also in 2011), its team of co-founders, including Chris Dixon, Tom Pinckney and Matt Gattis joined the company (with Dixon leaving after about a year). Today, this team is in charge of eBay’s homepage. Donahoe believes that in order to keep founders from leaving, eBay needs to give them the opportunity to grow inside the company. Because of this, he is also most interested in acquiring companies where the management team believes that they can execute their vision inside eBay. “We are always looking for companies that have a strong vision,” Donahoe said. “And then we allow them to innovate at a higher level.” The kind of founders he likes, he said, are “founders come to us and say we founded our company to do x and would like to take it to the next level.”

In his view, this strategy has been a key ingredient to eBay’s and PayPal’s success. Acquisitions, in his view, drive innovation inside a large company like eBay and bringing in founders as executives – and giving them monetary incentives to stay as well, of course – is a key part of this strategy. As for the details of these incentives, Donahoe noted that “most of the founders make money in the acquisition In some cases the acquisition price is tied to staying for a two-three year period. But yes – we provide incentives to stay. We provide good compensation, but at the end of the day, we need to create a culture where they can realize their visions.” He does, for example, regularly meet with founders to discuss the state of the company. These discussions have, for example, lead to the redesign of the eBay’s homepage. It’s that kind of impact, he believes, that keeps founders at eBay.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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