OT: Louis Vuitton handbags eBay suit

[Archive]

Posted By: David Smith

Richard,

I know and I DON'T expect eBay to improve.

The founders are billionaires and have left the company to pursue other interests. I assume they have sold a LOT of their stock and diversified into other things thus leaving new people to run the company. People who are trying to please the shareholders while also trying to get rich themselves. Actions that don't necessarily mean good things for the company.

Back in the 1990's, I worked for Charles Schwab. Here is a brief history of the company.

Back in the day, Mr. Schwab was a broker for large brokerage company (Merril Lynch, I think). One day, he decided he could do what they were doing but with better customer service and for less. So, he quit and started his own company. His idea was to empower investors and allow them to make their OWN decisions about investing and to NOT have brokers pressure them to make trades.

His idea succeeded and he sold the company to Bank of America for BIG bucks. After a few years, BOA had messed the brokerage up and Mr. Schwab bought the company back for much LESS than what he sold it for. He then repaired the damage and made the company successful again. This time, instead of just selling out, he took the company public. That way, he could STILL retain control.

I was hired in 1995 and became a broker for them in 1996. After a couple of years, Mr. Schwab started to cede daily control of the company over to another guy and then he finally left day-to-day operations so he could pursue other interests.

Once in control, the other guy started making changes and putting new people into high powered management positions. These people started straying from Schwab's vision of what the company should be. They were turning Schwab into Merrill Luynch light. At that time, I saw what was going on and complained but very few listened. My main complaint was, if Schwab was going to become ML light, then WHY shoudln't customers jsut GO to Merrill Lynch?

After the tech bubble burst in 1999, Schwab stock started to tank. This was because the daily trading volume dropped, meaning less commissionable trades were being placed AND because of the POOR decisions the new guy and his management team had made.

Because of the CONSTANT changes (I had three different schedules and SIX different managers in six quarters), I quit the company in 2001.

Sometime after that, I read where Mr. Schwab came BACK to the company, fired the new guy and his management staff and took back daily control of the company. He then set about putting his rules back in place and getting the company back to his vision of doing things. I heard that part of the reason he did this was because his namesake was being ruined again and ALSO because the stock price had dropped by two thirds. So, even though Mr. Schwab was still a billionaire, he was worth far less than what he was when he turned control of the company over to the new guy.

So, for me, if eBay EVER wants to be a really good company again, the founders are going to HAVE to come back and take control.

Sorry for the looong post,

David