Monday, August 30, 2010

A Brief Look at Meg Whitman

Meg Whitman, the Republican candidate for governor of the state of California, is running her campaign based solely on her experience as CEO of ebay.  Her ads claim she took ebay from a company of 30 people in 1998 to 15,000 in 2008, raising revenues from $4 million to $8 billion.  Like most political ads, this information is technically true, but a closer look at her time at ebay is in order.

Meg built ebay up by restructuring and dividing.  She split the company into factions and built up each faction and on the surface that strategy looks to have been successful, however if she is going to lead our state, we need to look deeper than the surface.  Under Meg ebay's stock soared to its highest value of $58 in November 2004.  This would be a laudable accomplishment were it not for the fact that the stock had fallen to $33.53 when she left.  That doesn't sound too bad, but consider that Meg stayed on as an advisor for another year and that period saw the stock fall to its lowest level since ebay became public, selling at $12 a share in November 2008.

John Donahoe took over the reigns of ebay when Meg stepped down and one his first tasks was to reduce the spending, including salaries, that Meg had put into place.  Over 10% of the workforce was let go.  As is evidenced by the falling stock prices, Meg's growth was not sustainable.  

There was also the matter of how to pay for this expansion.  Meg did not seem to take this into consideration, apparently spending with wild abandon and raising fees to pay the bills.  In fact, under Meg Whitman ebay's fees increased in 2001, 2002, 2003, 2004, 2005 and 2006.  During this time many of the "ebay stores" that were small Mom & Pop operations were forced to close.  It should also be noted that in this same period, Meg's salary quadrupled.

I have to wonder what would happen if Meg became governor of California.  She has already stated she will create a "Grand Jury" that will clean up the problems in our state.  She hasn't said where the money will come from to pay these people.  Nor has she mentioned how big this jury will be, what their salaries will be, what their benefits will be or how long they will remain employed by the state.  

Her "Grand Jury" is just the beginning of her design to change the state.  What else is she planning and where will the money come from?  Looking at her record at ebay, it is fairly certain that she intends to raise taxes to fund her schemes.  Can California afford Meg Whitman?