This is big news. Back in 2011 Magento was acquired by eBay for over $180 million. Now, after pretty much floundering around with it for 3 years eBay is going to cast it out for either full/partial acquisition or listing on the stock exchange (IPO). Not just that, but eBay Enterprise (formerly GSI) is also cast aside in the same division so that eBay can focus on it’s flailing Marketplaces Division.
Well, well, well.
eBay has stated in their quarterly results they are ‘Redeploying resources to top priorities. Scaling back/stopping other initiatives‘. Reading between the lines here it sounds like they need more money to refocus on Marketplaces, which they admit is struggling, and they have given up the ‘Amazon fight’ around providing a full end-2-end solution for merchants small, large and giant, including on the potentially lucrative fulfillment side. Amazon won.
Having worked in large companies before my experience is that those at the top are always worrying about the financial markets, the share price, shorter term goals (1-3 years max), their investors, their bonuses ultimately. By separating eBay into three there are some easy wins, they get cash, the share price will rise just on the imminent change of the CEO, the share buy back, and the simplification of the company.
On top of this eBay are laying off 2400 staff (7% of workforce) including across eBay Enterprise (which seems already stretched to me).
Listening to the Earnings call and the subsequent questions one thing that strikes you is that there is very little talk of eBay Enterprise. Which really indicates that the financial markets care about Paypal and they care about eBay Marketplaces.
The downside is that for us in ‘Magento Land’ we are now at the whim of what happens next, and it is totally out of our control. eBay Enterprise is the part of the division making the money, have no doubt that the Magento side is only really making money around the PayPal revenue it generates, nothing more. And with PayPal going then that relationship totally changes. You would hope (or maybe not) that Magento and eBay Enterprise will stay together, but there is clearly a risk someone acquiring will not see the value of Magento.
What I suppose is most disappointing is that from my perspective I see a team that pretty much is getting itself sorted, the cogs running smoothly and is clearly deeply passionate about Magento 2. This uncertainty around what will happen to the staff and the division really could not have come at a worse time. We are in the middle of major investment in updating this platform so it will serve merchants for the next 4-5 years, and who knows what the purchaser or next CEO will want to do. Let’s hope that eBay stick to what they have stated and provide the ‘stability and continuity‘ during this change period.
It sounds like eBay Enterprise will be cast off before Paypal, so really as soon as someone is interested. I personally don’t see an IPO, I think a company like Accenture, IBM, Oracle even will step in here and make an offer.
And the Conclusion
Will this affect us? Maybe not, maybe slowly, maybe sooner. What’s clear to me as a technology provider is that relying on one platform for your source of revenue could be a dangerous game. What I also know is that this community has tremendous momentum. If the right company can get behind Magento it has the ability to truly fly (it’s doing pretty well right now even with eBay around). And I believe the true revenue model is in the affiliate side of an App Shop (kickback fees), not in the Magento Enterprise sales. I’m ignoring eBay Enterprise here, thats a whole separate discussion.
What’s also clear is that Magento 2 could have issues with timelines. It’s going to be very hard for the division to focus when you basically have a carve up going on. I’d expect to see some key faces in Magento walk away by the summer.
If the right company doesn’t get behind it then you will see a fork, because there are just so many companies now where Magento is the core of their business, and this community has some very intelligent people within it. It would require organisation but you would be surprised what a motivated community can do. I personally don’t see that happening anytime soon.
Maybe I’m naive, maybe I’m way off the ball, but what’s clear is that eBay wasn’t able to keep up with eCommerce, security or SEO, and now they are paying the price.
What’s the saying “The King is dead, long live the King“.
Bring on the next chapter of Magento. Microsoft, please don’t buy it 😉