EBAY -THE BEGINNING

SOLO
So my business career was on standby for the moment, Street Fashion was sold, DO was canceled, and at the same time, the relationship with my child’s mother had come to an end. To make the change perfect, I decided not to start any new business projects for the moment but rather take a timeout for some months so I could get my private things in order again. For some time already, I had wanted to work as an artist, so I decided to get rid of my 400sqmtrs office in central Vienna sinceI was pretty much the only one left there anyway -all activities related to DO had been canceled abruptly- and start to work at home. The only things left in the office were a couple of promotional products from barter deals with companies that had been advertising in Street Fashion Magazine. In the advertising business, it is pretty common to try to make barter deals with companies that don’t want to pay in cash. Among the products we had received were Leatherman knives, Freytag bags, Mont Blanc pens, Levis jeans, and lots of shirts from different brands. I did not have any other income at that time, so I planned to sell the goods in order to generate the cash I needed to finance my newly chosen lifestyle, at least for a while. I didn’t know when I’d be able to sell my first piece of art and surely could not predict how long it would take until I could make a living of it. I needed some reserves.
So I opened my first EBay account „tichnak“, a nickname I had received from a friend many years before. At that time, eBay was quite different from now: after opening an account, you could immediately buy and sell as many goods as you wished, and there was no need for verifications of any sort. Compared to today, there were only a few sellers; I remember that, when I started to sell the first Leatherman tools, I was one out of only five sellers offering Leathermans on the Austrian/German platform of EBay; today; more than 300 offers can be found. So I listed some Leathermans, and that’s how it all began…


LEATHERMAN
After a long weekend at the countryside with some friends, I came back to Vienna and could hardly believe it: I had sold more than fifty Leathermans (that was unfortunately more than I kept in my office, a fate that would hit on me many more times in the coming years, and one that probably every seller on eBay knows well). I also had more than two hundred emails in my inbox, which was the not so funny other side of the coin.
At that time, I handled everything myself, following a precise schedule: In the morning I answered all emails and wrote down the addresses and all information about the sales on a simple label. Next I checked out Paypal and bank accounts to see if a specific item had already been paid for; I marked the articles paid by transfer with a red cross, and the ones paid via PaypaI with a blue one. All information concerning a sale was recorded on a single label, and all the labels I kept together in my holy map; thus, there was no searching in databases or anything of that sort- it was a very efficient way of doing the job.
Remember that in those days, there was no connection between EBay and Paypal, and the process of selling on eBay was very simple; there was nothing like an internal mail system or sales managers etc. In the afternoon, I packaged everything and took it to the post office. Usually, it was 10 p.m. by then. When the barter-goods were gone, I started to sell everything in my household that I didn’t need anymore, and because I had sold more Leathermans than I had stored in my office, I was obliged to buy more; soon I received two to three Leatherman- deliveries each week. Every day, more than fifty tools were shipped out. Leatherman became my top item, and I made around twenty euros with each piece. That was, wait a minute…1000 euros a day! I had licked blood. Each day I counted the money I had already earned, more than 70.000 euros after two months. I didn’t want to do this forever, but I thought: if I keep doing this for yet a couple more weeks, I can work relaxed as an artist later on. It was like a dream. After four months I had over 150.000 euros; for the first time in my business career, I was my own boss, the only person I had to direct was myself; I had everything under control; I had no employees, no meetings, no brainstorming, but also no bookkeeping… On the other hand, there were a lot of things I had to give up in my life in favor of my new lifestyle: there was no fitness anymore, no hiking, no climbing, no partying; only seldom I had the time to spend leisurely weekends with my son… and my girlfriend was fed up pretty soon; at that time though I was so obsessed with the business that I did not care much anyway.




LEGALIZE
After two months in the eBay business, I rented out the largest part of the office and kept only 40sqms for myself. Before it had accommodated us, the place had been rent to some Russian business men, selling shoes to Moscow. After their bankruptcy and flight (probably both),we had moved in. One day, a black marketer came to my door. The man was about seventy years old and looked like he had just come all the way from a Siberian village. He introduced himself as Aleksey. Aleksey had an exclusive range of goods to offer: dried sturgeon, cigarettes, Cuban cigars, and finest, freshest Beluga caviar. It was pretty clear that he was not the representative of a new chain of supermarkets but rather the Vienna branch of the Russian black market. I right away checked the caviar prices on eBay and learned that one jar was worth more than 150 euros. Quickly I bought ten jars containing 113 grams of finest Beluga caviar each, and asked Aleksey to come back in a week with more. Immediately after his visit, I listed the ten jars of caviar in a Buy Now! auction at 119 euros, advertising them as „daily fresh from the Black Sea“. I bought freeze packs to ensure freshness throughout the transport. After only one day, all ten jars were sold. Caviar was hot! Two days later I realized how hot it actually was when Customs officers, equipped with huge bags to confiscate goods, rang at my door. The interrogation lasted about two hours:
„We know you bought hundred kilos of caviar! “
„Isn’t that a bit of an exaggeration, sir? “
„You better confess, we know you are a member of a smugglers ring“
„No, I’m not“
„Further denial is utterly useless, we have proof for this“
„So why do you need me to confess then? “
„We have taped your phone“
„Really, you have listened to all that crap? “
„Yes we did… anyway, we will search through everything“
„Please, go ahead“
My office and apartment were completely searched but there was nothing to be found anymore since the ten jars had been sent out already, and it wasn’t until the following week that Aleksey was scheduled to come back with more jars. So the guys from Customs had to leave with empty bags. They let me know that they had been informed by the German Customs officers who regularly scan through offers on eBay (I had guessed so, for Austrians are probably too lazy and not pedantic enough for this sort of actions). I had to take full responsibility for the ten jars of caviar I had already sold, and in the following months, I had to pay more than 7000 euros in fines for the violation of several rules, amongst them Custom rules, TVA tax, income tax, veterinarian medical rules, and, what really stroke me: the protection laws of species act.
After this action and given the fact that I had already earned more than 150.000 euros in that year, I thought I’d better legalize my business retroactively, which meant to print about 3000 invoices for the items I had sold black already.




MEMORY CARDS
In order to legalize the business I needed an existing company fast, so I used one that belonged to me and my former business partner Davies Guttmann, the company through which we had also published Street fashion Magazine earlier on: qentis. Davies did not have a business at that moment, and so we teamed up in the eBay venture. It was the ideal time for joining the market, but first, we needed fresh goods. The barter goods had been sold; three more sellers had joined the Leatherman market in the meantime, not an unusual development on eBay, and margins were shrinking. With Davies’ contacts to an old friend in New York, we eventually found new products to sell: Memory Cards.
I have never, neither before nor after, seen a (correctly listed) offer on eBay having a comparably great impact: We bundled SanDisk 256 SD Memory Cards together with LED Lenses (a newly introduced LED Flashlight - it was fairly uncommon to operate Flashlights with LEDS at that time), and in a single buy-now auction, we sold 800 items - the maximum number of items one was allowed to list. By combining all sorts of memory cards with small goodies such as RC-cars, LED lights, tripods, bags, and other schmonzes, we practically overnight became the biggest sellers of memory cards on eBay Germany, France and the UK. From then on, the business boomed; each day we sold up to 250 items, mainly memory cards. They had to be shipped every day, but sending them through the Austrian postal service was a bad idea: it took far too long for the articles to reach our customers, with the inevitable effect that too many angry emails landed in our mail boxes, all waiting to be answered; so we had to hire drivers who would bring the envelopes to Passau in Germany, which is the closest German postal office to Vienna. Getting drivers for the job wasn’t easy. After answering emails from seven or eight in the morning until noon, we had to check the payments (still working with the label system) and then package 200 to 300 memory cards, together with the goodies. At around 2 p.m. we were usually done, but the postal office closed at 6 p.m. and the drive to Germany alone took more than three hours. We paid a lot of speed ticket fines in those days, but it was definitely worth it. In any case, the job was stressful for all of us, and we constantly had to look out for new drivers.
One day, Davies called one of the drivers; we urgently needed him for the following day, but he did not want to do the job, and in the course of a conversation quite awkward, Davies found out that the driver’s mother had died only two days earlier. We decided to give him a rest, but two weeks later I again asked Davies to call him again for we had, one more time, run out of drivers. Unfortunately, he called him precisely the day of the funeral. Yet another two weeks later, it was impossible to get Davies to call him again, so I called him myself and learned that just the night before, his father had suffered a stroke. We decided not to call him anymore as we feared a mysterious connection between our calls and the incidents happening in the unfortunate drivers’ life- we joked about not wanting to cause any more harm with our calls. But after a month, we were yet again in desperate need of a driver and decided to phone him once more. The chain of bad luck came to a surprising end: The driver had just won one million euros in the lottery and therefore wouldn’t do the job anymore. Two years later though he called us, asking whether we were still in need of drivers; after buying two Mercedes and a new house, he had run out of money…



POWERAUCTIONS: THE FIRST BACKLASH
Right from the beginning it was our policy to list items in Buy Now! auctions parallel to very similar but not identical items in regular auctions starting at one euro, for both ways of buying traditionally attended different audiences: Buy Now!s are perfect to raise the prices of auctions. It is a common trick to list Buy Now! auctions at a very high price that no one would ever pay only to raise prices of 1 Euro auctions. You list, for example, a Buy Now! at 600 euros, even if the item is worth only 30 euros; buyers will be influenced by the alleged high value of the product. So in those early days of our eBay business, we made our first big mistake. I used a Buy Now!  auction for a Sony memory stick at 279 euros with 244pcs, and offered and relisted it as a 1 Euro auction; the mistake was that I forgot to change the number of items offered to 1 piece, leaving it at 244pcs. I think, at that time, I did not even know that it was possible to sell multiple items in one auction. For one week, we did not realize our mistake; as most bidders probably knew that it was an accidental slip, they never sent a message concerning the auction. When the listing ended, we sold 244 Sony memory sticks that had cost us 36.000 euros in wholesale, at a total price of 21.000 euros. Let me clarify what Power Auctions are about: through them, it is possible to sell multiple items in a single auction, 244 pcs in the case described. The bidders will then bid on a designated number of items, reaching from 1 to 244.  At the end of the auction, the 244 highest bids will receive the goods; the price per piece will be determined by the lowest of the 244 highest bids. In this case, the lowest of the 244 highest bids was 87 euros for one Sony memory stick, forming a sum total of (87 x 244=) 21.228 euros cash flowing from the auction. Our loss consequently added up to approximately 15.000 euros plus fees. For the first time in the business, we had a problem. We sent out an email stating something like „Sorry, we made a mistake“ and hoped for the buyers’ understanding-  an error had occurred, and we couldn’t afford to loose the mentioned amount of money. But charmingly, all of the buyers insisted on delivery. Some of them immediately sent us letters from their lawyers and threatened us with legal action if we didn’t deliver right away. Consulting our own lawyers, we discovered that we had no other choice but deliver the goods and take the loss. Commercial law wasn’t adapted to the new world of online business at that time. But the event yet had another effect: we discovered the true identity of our buyers. They turned out to be all the other memory card sellers on eBay, and we learned that they were truly angry with us, because due to our introduction of imported cards to the market, the prieces had dropped delicately. We agreed to create a platform to reach price agreements on a daily base thus giving rise to the memory cards cartel that was used for almost a year until too many new sellers captured the market.