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The Pez Dispenser Story eBay Never Happened

Abstract

The most widely told origin story for eBay, that Pierre Omidyar founded it so his fiancée could trade Pez dispensers, was invented in 1997 by the company’s public relations manager, Mary Lou Song. The real origin was less romantic: Omidyar launched AuctionWeb on September 3, 1995 as a weekend hobby project and an experiment in peer-to-peer markets. Song made the Pez story up because reporters kept declining to write about Omidyar’s actual explanation, which was a theory about building a perfect market. The invention worked: the Pez story ran worldwide, drew in exactly the collector communities eBay needed, and outlived its own public correction.

The Actual Origin

Pierre Omidyar was a software developer at General Magic, a mobile computing startup, in 1995. He put up AuctionWeb on September 3, 1995, over the Labor Day weekend, as a personal project: a marketplace where individuals could buy and sell directly, with price set by auction rather than by the seller.

The site lived on ebay.com, a truncation of Echo Bay Technology Group, Omidyar’s consulting firm; echobay.com was already registered to a gold mining company. The first item sold was a broken laser pointer. Omidyar had listed it to test the system, someone bid $14.83, and he emailed to check the buyer understood it was broken. The reply: “I’m a collector of broken laser pointers.”

Omidyar ran AuctionWeb as a side project while employed at General Magic. The site grew through word of mouth in hobbyist and collector communities. By early 1996, the site was generating enough revenue (from small listing fees) to pay for its own server hosting.

Mary Lou Song’s Decision

Mary Lou Song was eBay’s public relations manager, one of its earliest employees. Pitching the company in 1997, she found that journalists would not run the truth: a developer had built an auction site over a holiday weekend to test a theory about efficient markets. So she supplied a better story, in which Omidyar had built eBay to help his fiancée Pam Wesley trade Pez dispensers. It had what the market experiment lacked:

  • A human protagonist, the fiancée as collector
  • An emotional hook, a man building something for someone he loved
  • A specific, memorable object, Pez dispensers rather than generic “collectibles”

It ran everywhere, and it did commercial work as well as media work: the coverage pulled toy and collectible traders onto the site during eBay’s fastest early growth. The September 1998 IPO (priced at $18, closing its first day at $53) made the founding story a permanent fixture of the business press.

Adam Cohen published the correction in The Perfect Store (2002), having researched eBay’s history with the company’s cooperation. eBay confirmed it. The Pez story continued to circulate anyway, which is the usual fate of corrections.

What the Story Reveals About PR

The eBay Pez story is a case study in how founding myths are constructed and why they endure. A charming false story, told consistently and repeated by credulous journalists, can displace a true story that is less interesting. The correcting accounts (Song’s admission, Cohen’s book) received far less coverage than the original fabrication.

The story also illustrates the systematic pressure in startup culture toward mythologizing founding. The dot-com era’s press coverage was hungry for narratives; PR professionals supplied them; the narratives attached to companies regardless of accuracy.

📚 Sources