EBay CEO: Company Will Emerge Stronger After Tough 2016 For Tech

Since the start of the year, the markets have been unforgiving to technology stocks. As of closing prices on Tuesday, Apple shares were down nearly 10%,  Amazon.com  is down 26.8% and LinkedIn is down a crushing 55%.  eBay , coming off a fourth quarter of little growth, had dropped more than 19%.

"There are a lot of questions out there and I don't have any of the answers," said eBay CEO Devin Wenig to open up his talk at the Goldman Sachs Technology And Internet Conference on Wednesday. "There are really great companies getting hit hard."

While Wenig stopped short of declaring a Silicon Valley doomsday scenario, he suggested that the bankers, investors and analysts in the conference room at San Francisco's Palace Hotel should brace themselves for a potentially rough 2016, where a pull back in capital could squeeze both private and public companies. He likened the period to the beginnings of the recession in 2008, calling it a "painful" process that the industry has seen before with "stronger companies emerging stronger."

Wenig is hoping that internet veteran eBay can be one of the companies to come out on top. Though its 2015 fourth quarter results show stagnating revenue, the eBay CEO focused on the positives of his business, which continues to exhibit strong margins and projects free cash flow for 2016 to be anywhere from $2.2 billion to $2.5 billion. EBay, unlike the "hundreds of businesses that were formed in e-commerce that are not businesses," has strong underlying financials, Wenig emphasized without naming challengers like Fab and Gilt Groupe, whose poor financials and high capital burn rates led to less than favorable exits.

EBay's CEO also used his 40-minute talk to position the company as one in transition. Following its split from PayPal last year, the company is focusing on new efforts to think more as "merchandiser or retailer" as opposed to just an open marketplace. That will involve shifts to the eBay platform, which Wenig admitted was currently too complex, as it looks to show more relevant products to customers as opposed to surfacing a deluge of options that haven't been curated.

"We're changing from an unstructured to highly structured marketplace," said Wenig, who added that the changes will marginally "hurt" eBay in 2016. "That's not easy and it takes time."

One thing eBay will not be doing, however, is chasing Amazon. Though Wenig only mentioned his main competitor once by name during the talk, plenty of his statements were tinged with the idea that eBay is fundamentally different from the Jeff Bezos-led online retailer. He dug into Amazon's continued investment in infrastructure at the sacrifice of margin, noting that "other companies ground their value proposition in logistics" while eBay was focused on choice. The average shipping time for an eBay order is three days, he added, stating that the company's goal was to be "just good enough" on getting products to customers while offering them the most options for product.

In that sense, don't expect eBay to be getting into delivery any time soon with Wenig calling the space "a war on incremental profitability." The costs associated with the business of last-mile logistics is tough, he said, pointing to partnerships with Uber and delivery startup Shyp as the best way to get packages to customers.

"The last thing we should do is compete with Amazon by putting more concrete in the ground," said Wenig. "Let that war be fought on somebody else's margins.