Two things I remember from the webvan era- 1) how benchmark navigated / debated their investment (chronicled in https://www.amazon.com/eBoys-Inside-Account-Venture-Capitali...), 2) at the precise time that webvan was failing, fresh direct was succeeding but no one outside of NYC heard about their success because webvan failed so spectacularly.

For those curious about eBay financing, check out the book "eBoys: The First Inside Account of Venture Capitalists at Work" http://www.amazon.com/eBoys-Inside-Account-Venture-Capitalis... (the book is 10 years old, likely to be available at your local library).

It was definitely not a slam-dunk idea, and even Benchmark partners felt uneasy about financing an online classifieds site that would be easy to replicate and invite large players to compete in case there was a valid market (Yahoo! indeed made a move at eBay with Yahoo! Actions priced at $0 listing fees, since Yahoo! had other sources of revenue).

While Meg Whitman was being recruited for the CEO role, she browsed the dinky classifieds site and was not super-impressed - Benchmark guys basically bought her and her family air+hotel to at least sell her on California prospects, if not eBay's future.