What You Can Learn From eBay's Stumbles

Remember the days when eBay was a quirky place you could offload vintage jewelry from Grandma's attic or buy toys for your kids on the cheap? An Internet company so low-tech that most payments were made via post office money orders?

A lot has changed since the company's early days. High-profile CEO Meg Whitman, who grew the company into a Silicon Valley powerhouse, has left to stump for John McCain. And many longtime sellers have left the Web site, citing ever-rising fees and lower traffic.

These aren't easy times for any e-commerce site. But things seem to be coming to a head for eBay: Its stock recently hit a five-year low, and last week came news that the company may be cutting up to 1,500 jobs, or about 10% of its workforce. In its quest to be a tech power-player, eBay showed impressive growth, but now it's paying the price.

No matter what the size of your business, it's tempting to chase growth to show that you can thrive in new arenas. But not if your company's DNA gets diluted along the way. Downplaying your core competency can cost you core customers -- and once rejected, they're not easy to win back.

The original eBay was one of the great Internet success stories. The company had a catchy back story (remember how it all started with Pez dispensers?), a simple, clear concept, and a sense of community. But over the years, as the company felt pressure to boost its stock price, management began to focus more on fixed-price sales, and the site's independent spirit fizzled.