As layoffs and legal battles loom large, will eBay face renewed scrutiny of company culture and its decision to continue operating on-campus pub, The Sellar?
The Sellar was originally named Walker's West and was commissioned by ex-CEO Devin Wenig to recreate his favorite New York bar as part of the eBay Main Street project in 2017.
The "Little Blue House", as it was previously known, is a historic building that previously served as office space for PayPal and Skype teams when those companies were owned by eBay.
The existence of Walker's West had flown under the radar for several years but came under scrutiny in 2019 as eBay had faced layoffs the year before, growing seller complaints about glitches and increasing fees, and activist investor pressure to streamline operations from Elliott Management and Starboard Value.
In a January 2019 letter to eBay's Board of Directors, Elliott Management expressed concerns about wasteful spending and inefficient management of the company:
Today eBay suffers from an inefficient organizational structure, wasteful spend and a misallocation of resources. By increasing operational efficiency, eBay can free up capital to invest in capability- and revenue-enhancing activities.
All of that raised the question - was a bar really the best use of eBay's resources?
Executive ire about reporting by EcommerceBytes on the existence of the bar and amplification of the story on Twitter by Fidomaster/unsuckEBAY, have been cited in court documents as a significant contributing factor leading up to the 2019 cyberstalking scheme aimed at changing EcommerceBytes' reporting and unmasking the identity of unsuckEBAY.
Wenig (Executive 1), Chief Communications Officer Steve Wymer (Executive 2), and SVP Global Operations Wendy Jones (Executive 3) communicated with Security Director Jim Baugh extensively about the issue in the months leading up to the criminal harassment campaign.
By the spnng of 2019, an anonymous internet user known variously as "Fidomaster", "Dan Davis", and "unsuckebay" (hereinafter "Fidomaster") had also become a source of frustration to Executive 1, Executive 2, Baugh, and others at eBay.
On February 22, 2019, for example, a communications employee asked Baugh and Popp to "dig up some intel" on Fidomaster, noting "He's been relentlessly trolling eBay and [Executive 1] on twitter .... "
At Executive 2's direction, Baugh caused the GIC to prepare a report concerning Fidomaster. The March 2019 report concluded that Fidomaster was an "anonymous twitter user that posts negative content about eBay and its senior leadership." It also asserted that "Fidomaster" communicated with Ina Steiner about issues pertaining to eBay, noting "Steiner and eCommerceBytes are known for publishing negative content about eBay and its executives."...
...On or about May 21, 2019, EcommerceBytes published an article entitled, "Did You Know eBay Built a Lavish NYC Pub-Style Lounge?" The article reported that Executive 1 had commissioned the construction of a pub--Walker's West-on eBay's corporate campus, modelling it after a New York City bar. The article contained links to a contractor's website,which featured pictures of the project and a description of the pub.
Baugh alerted Executive 3 to the article by email that night, with the subject "Fwd: Ina Steiner - Walker's West."
On May 22, 2019, at 9:10 a.m. (PDT), Executive 3 forwarded Baugh's email to Executive 2 and an eBay facilities employee, asking, of the contractor, "Why in the world would they think it's ok to do this and with this level of color???" eBay directed the contractor to take down its website. Executive 3, copying Executive 2 and Baugh, later emailed, "this is ridiculous and has caused serious problems."
Within hours, Executive 2 contacted a public relations consultant about the
Walker's West article. Executive 2 wrote: "I'm just no longer accepting 'ignore' as a broader strategy and want to fight back. Look forward to talking ASAP to get your assessment of how to do that most [e]ffectively."
The details about Walker's West that Jones believed caused a "serious problem?
A vague text-only description of the project and the fact it was commissioned by the CEO.
EBAY WALKER’S WEST LOUNGE, SAN JOSE
- Gensler Architects
- Tenant improvement to convert on campus historic house from office to lounge space
- Commissioned by CEO to replicate a known NYC restaurant
- Custom tin ceiling with intricate can lighting cutouts and LED lit perimeter crown molding
- New bar counter build out with custom mirrors and lighting
- High end finishes and detailed elements for historical accuracy throughout
It's difficult to understand how Jones could have felt this was a problem when she proudly appeared in a promotional video for the eBay Main Street project (which included these renovations to the historic "Little Blue House").
Culture Capital also posted a video in 2017 about the eBay Main Street project, including a short interview with Wenig as well as comments from then-VP Shopping Experience Product, Shervin Moghaddam.
When asked "what sorts of things does eBay do as a company to create more culture?", Moghaddam responded:
Having a fantastic campus like this is part of that. It sets a tone. It's a beautiful, innovative space. You know, there's colors, it's leading edge design that inspires people who are here to be thinking in that way when we're designing our products.
There's a lot of options for us to collaborate. You see our spaces here and lots of sofas, people sit down together, talk, discuss. People meet at the cafeteria and have lunch together...
...I enjoy the pub, I have to say. That's another great thing you know. Often we'll just say we've got a meeting at 3 o'clock, we'll just decide not to sit in a room, we'll go there, we'll have a drink, we'll chat about what we need to do and again it changes the dynamic. It enables you to have a different level of conversation, which I think is fantastic.
The fact that eBay still hosts videos showing interior tours of the pub on their official Vimeo and YouTube channels also belies any point the company might wish to make about supposed security threats from the details of the building being publicly available.
unsuckEBAY/FidoMaster's amplification of the story on Twitter, and criticism of what he called Wenig's "self-indulgent vanity project", also caught eBay's attention.
On May 21, 2019, for example, the Newsletter reported that eBay had built on its campus an expensive replica of Walker's — a popular Manhattan bar— noting,"(it's probably news to sellers (and shareholders?) that eBay has a pub-like lounge on campus - especially one built with what appears to be no-expenses spared."
FidoMaster1 tweeted a link to the article, noting "@[Newsletter] posted about @eBay's beleagured [Executive 1s] self-indulgent vanity project 'Walker's West' campus bar." The tweet continued, "The bar, [Executive 1's] recreation of iconic @WalkersBarNYC is a throwback to internet and gaming company CEO's lavish overspending on 'legacy' facilities and landmarks."
FidoMaster1 also criticized Executive 1 for undertaking the project while eBay was experiencing "cost reduction, layoffs, and scrutiny by activist investors."
Source: Steiner et al v. eBay Inc. et al 1:21-cv-11181 Doc 1 Exhibit A
The executive leadership team was so concerned about the optics of the story, Jones requested to "huddle" about the matter over lunch.
According to Baugh's legal team:
At the lunch meeting, Jones asked Mr. Baugh if he could find a way to deal with the issue “off the radar since comms and legal couldn’t handle it.”
Jones told Mr. Baugh, “Just get it done. I don’t want to know the details, just make sure you sync with Wymer.” Mr. Baugh thereafter provided regular updates to Jones.
Source: USA v. Baugh 1:20-cr-10263 Doc 227
The details revealed by Hillhouse Construction about Walker's West were even less detailed than a recent release by M Moser Associates about eBay's new Sydney, Australia offices.
Since eBay has not similarly scrambled to have those details taken down, we can only surmise the supposed emergency status of the Hillhouse release was entirely due to executive embarrassment rather than legitimate security concerns.
Unfortunately, that embarrassment and the ongoing legal implications of the cyberstalking scandal have not been enough to convince current eBay CEO Jamie Iannone or the Board of Directors that perhaps continuing to serve free alcohol to employees is not the best look for the company.
Details revealed in court documents paint a picture of an alcohol-fueled corporate culture where drinking was pervasive throughout the workday, even beyond happy hour at Walker's West.
During sentencing for his role in the scandal in 2021, former eBay security manager Philip Cooke tried to use alcoholism and a "culture of heavy drinking at the company" as a mitigating factor for his criminal behavior.
Meanwhile, Wenig appears to have little remorse for the cultural tone he set during his tenure and can still be found joking about 9 AM tequila shot "smoothies" on Twitter.
In recent filings in the cyberstalking civil case, eBay admitted a bar was built on the campus during Wenig's tenure, but Wenig downplayed the significance of this fact by dismissing the pub as merely a "cafe."
As part of the deferred prosecution agreement in the criminal case, not only is eBay paying the maximum fine of $3 Million, they will also be subject to 3 years of enhanced compliance monitoring requirements.
In addition to the curious inclusion of M&A due diligence and risk monitoring, the agreement also included a provision requiring the company to develop policies and procedures that address "the consumption of alcohol to excess on Company premises and during Company-sponsored travel."
eBay does have a section in their Code of Business Conduct & Ethics that appears to have been carefully crafted to meet this bare minimum compliance requirement stating:
From time to time, the Company may sponsor events where alcohol is served. You are always expected to drink responsibly at Company-sponsored events or choose not to consume alcohol.
Neither the deferred prosecution agreement nor eBay's corporate policies define "to excess" or "drink responsibly", leaving plenty of wiggle room to skirt liability and accountability.
That statement also fails to disclose that "from time to time" may actually mean happy hour from 3 PM- 6 PM daily, according to reports from eBay employees.
eBay has not responded to requests for comment about the current status and operating hours of The Sellar.
After all the bad press, the $3 Million criminal fine, and the still ongoing civil litigation that could possibly result in multi-million dollar damages, one might think the best move current leadership could have made would have been to revert the Little Blue House back to productive office space or at least a place for non-alcoholic recreation and relaxation.
If that wasn't enough incentive, another round of layoffs announced this week, impacting ~1,000 employees, should also be cause for executive leadership to carefully consider spending priorities as "headcount and expenses outpaced growth" and the company faces "macroeconomic headwinds."
But it would appear Iannone, Chief Legal Officer Marie Oh Huber, Chief Risk and Compliance Officer Ryan Jones, and the Board of Directors have no plans of stopping the taps flowing and the corks popping any time soon.
In fact, eBay recently hosted a Farmer's Brewing Co. tasting party for employees at The Sellar, as shown in a LinkedIn post from Farmer's Territory Manager Marty Naylor on January 26, 2024.
It's not clear if this event occurred before or after this round of layoffs was announced, but either way, the optics aren't great.
Just as Elliott Management noted in 2019, eBay still suffers from an inefficient organizational structure, wasteful spend and a misallocation of resources.
Iannone's "focus vertical, high value, enthusiast buyer strategy" has also significantly invested in expensive physical warehouse and authentication operations with ballooning costs, pivoting away from previous asset-light model and exposing the company to increased compliance and labor-relations risks.
Taking alcohol off the table at Walker's West/The Sellar would send a clear, unambiguous message both internally and externally that they are committed to a radical culture change in the wake of a shocking corporate scandal and to reining in wasteful spending across the company.
If the current executive team is either unable or unwilling to send that message, it's time for investors to insist that the Board find leaders who will.