eBay Inc. founder Pierre Omidyar and his first full-time employee, Jeffrey
Skoll, recently turned over stock now worth almost $2.4 billion to repay
loans of $1.5 million.
In the new math of Internet company finance, though, the steep price of the
loan was probably worth every penny, Bloomberg News said.
In June 1997, when the Internet auction site was in its infancy, the
executives each pledged 6.9 million shares as collateral for two $750,000
loans from Benchmark Capital, a Silicon Valley venture capital investor. The
stock wasn’t yet publicly traded, and the shares were valued at 11 cents
apiece.
Benchmark in January exercised a clause in the loan contract that let it
collect the collateral as payment, getting almost 13.8 million shares that
today are worth $171.75 apiece–for a total of more than 1,500 times the
loan amount.
“While it was a good investment for us, it was an even better decision on
their part,” Robert Kagle, one of Benchmark’s founders and an eBay director,
told Bloomberg.
Without the 1997 loans, eBay’s founders might have sold the company for $50
million to one of several newspaper chains, Kagle said. The loans gave
Omidyar and Skoll enough liquidity to let them continue running eBay as an
independent concern. Now that it’s the largest auction site on the Internet,
eBay commands a market value of about $20.7 billion, based on today’s share
prices.
Omidyar, the company’s chairman, now holds a stake worth almost $6.5 billion,
even after giving up the stock pledged as loan collateral. And Skoll, now
vice president of strategic planning, owns more than $3.9 billion of company
stock.
