Brainstorm Green

Transcript: eBay CEO John Donahoe at Brainstorm Green

April 30, 2013: 9:32 AM ET

John Donahoe, president and CEO of eBay, joined Fortune's Adam Lashinsky on stage at the Fortune Brainstorm Green conference in Laguna Niguel, Calif.

John Donahoe

John Donahoe

Below is an unedited transcript:

ADAM LASHINSKY:  (In progress) -- the first time it occurred to me that you had -- that you think of eBay as an environmental company, which was when I turned on 60 Minutes and I saw you being interviewed by Leslie Stahl for a piece on Bloom Energy, which most of the public probably had never heard of at that point, and probably hasn't heard about since.  Why were you on that program?

JOHN DONAHOE:  Well, Bloom Energy is a fuel cell company.  And one of our employees came to us and said, "We have the chance to put fuel cells into our headquarters."  And so we looked at it and it's remarkable. We put Bloom Energy fuel cells into our San Jose headquarters I'm going to say five years ago now.  It's a stunning thing.  It powers a third of our power in that particular campus.

We also have 65,000 square feet of solar panels, which on a sunny day powers a third, but on a cloudy day powers 9 percent.

These fuel cells run seven days a week, 24 hours a day.  They make no noise.  In our case we're using biofuels to drive them.  So it's actually net carbon negative.

And it's worked so well that we now just signed up to be the first customer for Bloom to actually power an entire data center with fuel cells.  So our next data center in Oregon -- or in, sorry, Utah will be powered by Bloom fuel cells.  So we'll be able to run a data center completely in essence off the grid.  The grid will be backup.

ADAM LASHINSKY:  Has it worked out for you economically?

JOHN DONAHOE:  In headquarters we were able to make it pencil roughly with federal and state subsidies, but for the data center we couldn't, and that was just a case of I felt like it was the right thing to do to be an innovator, be a leader, as well as for our customers and our employees.  So we're very excited about it.

ADAM LASHINSKY:  Give me the -- well, let's start real high level, which is the -- you know, I like to think of this as the reverse of the Admiral Stockdale question, which is why are you here?  Why are you interested?  Seriously, why are you interested in this topic as the CEO of an e-commerce company?

JOHN DONAHOE:  Well, you know, Pierre Omidyar, our founder, when he founded eBay, the core purpose of eBay (EBAY) has a lot of social innovation in it.  And it has environmental innovation.  If you just think of what the eBay marketplace itself does, it helps extend the life of goods.  And Pierre didn't use green terms when he founded the company, but there's no doubt that social innovation is deeply ingrained in our core purpose.  And so this stuff is very on brand and on purpose for us.

So whether it's driving economic opportunity for people all over the world, that's very core to who we are, or whether it's powering charitable contributions, something we've always done, and then the green, the whole environmental area, enabling greener commerce is how we talk about it internally is --

ADAM LASHINSKY:  Yeah, tell me more about greener commerce.

JOHN DONAHOE:  Well, as I said, you know, in some ways the easy thing is to do as a CEO you can -- I can make decisions around Bloom Energy, I can do things inside of our company that make us hopefully a green leader as a company and for our employees and for our customers.  The more challenging thing is how do we take advantage of our business model to have a positive impact.  And again --

ADAM LASHINSKY:  We should pause for a moment.  I assume what you're saying -- what you were saying earlier with eBay's foundations, you're sort of the antidote to buy more stuff, right?  eBay let people rather than buying more stuff, sell the stuff that they already had to somebody else.

JOHN DONAHOE:  Yeah, well, I mean, we talk about it internally, we think about connecting humans, creating economic opportunity and extending the life of goods and products, and that's really what some of the core principles of eBay were from the founding.  And so we've continued that today.

Since its founding, eBay has allowed the extended life of over $100 billion of goods over the years.  And for many years it was almost done in a passive way.   We created a platform and used good trade on it, in the recent years are being much more proactive around it.

A good example, I saw Rick Ridgeway here earlier from Patagonia.  They have a wonderful problem, Common Threads, and now any -- someone that owns a Patagonia item, a jacket or a hat, can easily list it on eBay to resell it and it will also be co-listed on their website.  And we make it easy and it helps both communicate to the buyers that this is an item that is both authentic and has green value, and it helps it make it easier for the sellers.

And since that we've done a similar thing with PGA Tour on selling used golf clubs.

So over 50,000 Patagonia items have sold in its first year on eBay, 75,000 golf clubs have resold in eBay in the first six months.

ADAM LASHINSKY:  So you've saved 75,000 golf clubs from the landfill?

JOHN DONAHOE:  Yes, yes.  The only thing they can't do is make you better.  I bought some.  I'm no better with the golf clubs I bought on eBay than I am elsewhere.

ADAM LASHINSKY:  I saw a nugget that one of the things that eBay has done is allowed merchants who are selling things to filter for good things, if you will, things like if shoppers want to find an organic product, that you've proactively added filters like that to the shopping engine I guess.

JOHN DONAHOE:  Yes.  Over the years, different ways you can filter your results.  You can filter your results through Giving Works, our program where the seller agrees to commit some percentage of the proceeds to charity, the charity of their choice.  We have buyers that really care about that.  Or World of Good, items that have authentic created by artisans in certain parts of the world, you can filter by that.

So we've done different things to -- because buyers care.  There's a subset of buyers that really care.  We call them the green consumer or the socially conscious consumer, and we try to do everything we can do reinforce that.

ADAM LASHINSKY:  Can you talk about some of the measurement you've done on the business around this?  You have a measurement called digital service efficiency that you've likened to miles per gallon.  What is that?

JOHN DONAHOE:  Well, the guys running our data center are passionate around the whole area of green.  They're the guys that drove, came to me with saying, "John, we can take a data center off the grid.  We can be the first guys in the world to do it working with Bloom," and have worked with Bloom to do this.

And Dean Nelson, the guy running it, also believes that the ultimate metric is can we run our data centers in the most cost efficient and environmentally effective and efficient way.  And so he's put a dashboard of metrics that overlap with our business metrics that is part of the way we evaluate our data centers.  And again it's a great sense of a great way that it's actually our best innovations come from our people, and it's our people that care enormously about these things.  And so it's one of the ways we're measuring our data centers now, and it's in essence how energy efficient can we deliver power through our data centers.

ADAM LASHINSKY:  You've had the benefit now of having been through different cycles in your time as the CEO of eBay, and they've not necessarily been alongside the economic cycles.  But times were quite tough when you joined the company.

JOHN DONAHOE:  Yes.

ADAM LASHINSKY:  Times are quite good now --

JOHN DONAHOE:  I remember.

ADAM LASHINSKY:  -- relative to that.  Can you comment or comment please on how the company's mentality around -- you said the employees want this sort of thing.  Has that changed over that period of time?  Is it easier now that the company is on a surer financial footing?

JOHN DONAHOE:  Well, you know, in many ways when your backs are against the wall, that's when things like purpose matter.  So interestingly, it was in the tough times that the purpose of the company mattered, because people need something to bond to.  They need to know why am I here.  And that's where the core purpose of eBay that I talked about earlier, what we now call connected commerce.  We've rearticulated our shared purpose, but many of the same elements that Pierre had.

It's in the tough times that those things matter, and it's in the tough times when we take actions that they know may not be economic in the short term but do the right thing, and live out that purpose.   Those things mean a huge amount during difficult times.

ADAM LASHINSKY:  But let me play cynical journalist, because it's a real stretch for me to do that, which is in the tough times aren't people really just concerned about keeping their jobs?  And my question is, do they really say, "John, we've got to do what's right for the environment right now?"

JOHN DONAHOE:  Well, you know, the best people, the best people always are asking the question, why am I here.  And I think any -- we have a lot of great enduring companies that are on this program over the next couple of days.  Over time, your purpose ends up mattering more than the short term financial results.  And for your most talented people that have choices where they can work at any given time, they differentially care.  The ones that have choice most aren't worried about getting laid off, they're the ones that actually care about the purpose of the company.  And so that's served us well in the tough times and now in the better times we're trying to double down and investing behind that.

ADAM LASHINSKY:  Talk, if you would, John, about advocacy from eBay's perspective.  What are you advocating for using government levers?  How do you choose where to focus your energies there?

JOHN DONAHOE:  Well, we're in the midst of one right now.  You know, the small guy is creating economic opportunity for entrepreneurs, or the small guy is really at the core of eBay's essence.  And so we're always advocating for the small guy because in many cases no one else is.  And so whether right now that's an Internet sales tax, at other times it's been on lower regulation, we try to make life easier for the small guy so they can compete with the large people.  And so that's been a source of real focus.  And job creation, we see an awful lot of job creation on our platforms.

And these are people that are -- you know, we have so many examples of you take someone that gets laid off from their job, they live in an economic area -- they live in a geography that may not have other good opportunities, and they're creative, they're entrepreneurial, they find a way to start supplementing their income selling on eBay.  Then maybe they start making their living selling on eBay.  Then maybe it grows a little bit and their family members or others join.  And before you know it, two, three, four, five years later we have dozens and dozens of examples of people who may have eight employees, 10 employees, six employees, and they're building small businesses and supporting themselves, and the job creation is something that inspires us.

ADAM LASHINSKY:  This is a little off topic but remind me, you're against the national sales tax being debated in Congress right now, is that right, the Internet sales tax?

JOHN DONAHOE:  Well, we're not against the Internet sales tax.  The Internet sales tax has to work.  But what we believe is that the burden that's going to be put on the smallest businesses is going to disadvantage them.  And in particular the fact that state jurisdiction, state taxing bodies can mandate, can legislate, can audit the smallest businesses, they don't have the ability to respond to that.

And so we're just asking for a small business exemption so that what happens online mirrors what happens offline.  When a small business on Main Street in the offline world sells to someone in another state, they don't have to collect sales tax.  And the reason was you can't -- the concern was that the taxing authority from state A could put burdens on a small business in state B that would in essence hurt that small business.

At the end of the day, it's not going to impact our company one way or another, because the marketplace will still sell, but larger sellers will benefit at the cost of smaller sellers.  So that's just a case where we're advocating for the small guy so that they can hopefully continue to compete.

ADAM LASHINSKY:  The small guy benefits from the services provided by the state as well, right?

JOHN DONAHOE:  Well, no, when you sell to a consumer in your state you have to collect sales tax.

ADAM LASHINSKY:  Got it.

JOHN DONAHOE:  That's true in all 50 states, no matter what the size.  The question is, when you're selling to someone in a different state.

And again we're trying to get an exemption for people I call micro businesses, relatively small businesses.

ADAM LASHINSKY:  We have time for one question if somebody would like to ask it.  Even with my hand up to my head, I don't see one hand for who that question is going to be.

When I asked about --

JOHN DONAHOE:  Must be really compelling.  Either that or we're the only thing between now and cocktail hour.  (Laughter.)

ADAM LASHINSKY:  We're not giving them cocktails just yet.

Last thing then.  One of the concepts that has become popular is the sharing economy.  What does that mean to eBay?  Can you explain what that is?

JOHN DONAHOE:  Well, eBay is the sharing economy, right?  We're the sharing economy for products.  A lot of the sharing economy today is for services.

So the notion that when you buy a mobile phone, that you use it for when you want to use it and then you share it or someone else can use it, you don't throw it away, or golf clubs as I described earlier, or clothing.

So the eBay marketplace in some ways was one of the first places that communicated that notion that when you're done using a good you don't just throw it away or give it away, that you can promote it being given and reused by someone else.

So it's that same concept, and now that's being applied quite powerfully and quite in a very inspiring way to other areas like services and other goods and items.

ADAM LASHINSKY:  It's sustainability without having tried to be -- without having called itself sustainability.

JOHN DONAHOE:  Yeah.  And I don't think Pierre, as I said earlier, when he created the company he didn't use the word green, but anyone that knows who he is, and anyone that knows the core values he put in, that was -- he used different words but that's very much what he cared deeply about.

ADAM LASHINSKY:  Well, John, I am not too proud to end on a high note like that.  Thank you very much.

JOHN DONAHOE:  Thank you.  (Applause.)

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