EBAY'S FOUNDER STARTS GIVING
(FORTUNE Magazine) – Pierre Omidyar, 38, is one of the world's richest idealists. With stock in eBay worth $8.4 billion, the founder of the auction giant and his wife, Pam, are starting to give money away. In early November they made their biggest gift yet: $100 million to Tufts University, where they met as undergrads. But the money came with an unusual stipulation: It can be invested only in microfinance--tiny business loans (about $600 on average) to entrepreneurs in the developing world. FORTUNE's David Kirkpatrick spoke to Omidyar about the plan hours before Pam delivered their third child.
Why focus on microfinance?
Business can make the world a better place. And there's no better example of that than microfinance. Look at the social impact eBay has had. Hundreds of millions of people have learned that they can trust complete strangers. Microfinance can have a similar social impact by providing opportunity for economic self-empowerment to poor borrowers. And that can lead to social and political empowerment. For example, many microloans go to women in developing countries. Their social status is elevated.
Does Tufts expect this fund to make money for the endowment?
Yes. But the microfinance sector today is pretty nascent. It has been primarily donor-supported, like charity. In order for it to scale, it needs to access the private capital markets. There aren't yet investment-grade products. Our first goal is to encourage that and to accelerate the growth of the entire sector. The social mission is to unleash at least $1 billion in microloans to the poor throughout the world over the next decade, as we make loans that are paid back and then recycled. Half the returns go to Tufts.
Did you start eBay to do good or just to help people sell Pez dispensers?
I was thinking about how to put tools in the hands of regular folks to level the playing field. With the Internet, I thought we could create an efficient market that was open and transparent. What I learned was that this is a deeply human social phenomenon, connecting around shared passion. That got me very, very excited. In our first focus group I remember a truck driver who was a collector of Barbie dolls. He felt a lot of validation connecting with others who said, "It's not weird to collect Barbie dolls, and by the way, you've got one I really want to buy."
Given the scale of your wealth, you have the potential to do a lot more.
We feel a sense of responsibility and opportunity to put this wealth to good use. We organized the Omidyar Network to invest not only in nonprofits but also in for-profits. We think of it like a $400 million venture fund to deploy over the next five years. It focuses on a very broad mission of encouraging self-empowerment.
What else has Omidyar Network done?
We're interested in businesses and nonprofits that help connect people to information. A recent for-profit example we've invested in is Digg. It's a neat sort of technology-news service where articles are found by the community, and people vote on the good ones.... Sorry, but I've got to head home and take Pam to the hospital. She's just waiting for me.