eBay Vs. Craigslist, Round II. Craigslist Punches Back With Its Own Lawsuit.
Following the lawsuit eBay filed against Craigslist two weeks ago, Craigslist is punching back today. In a countersuit (complaint embedded below), Craigslist wants back the 28.4 percent of its shares that eBay bought in 2004. It also wants the court to award Craiglsit eBay’s related profits, and punitive damages on top of it all. Craigslist is accusing eBay of:
unlawful and unfair competition, misappropriation of proprietary information, deceptive passing-off, business interference, false advertising, phishing attacks, free-riding, trademark infringement, trademark dilution, and breaches of fiduciary duty.
The complaint details how former eBay CEO Meg Whitman sweet talked Craig Newmark into the deal after it nearly fell apart, and then goes on to allege that eBay used its position as a large minority shareholder to try to learn competitive secrets from Craigslist, while launching competitor Kijiji in Europe. Now that Kijiji has entered the U.S. and is going straight for Craigslist, the gloves are off.
eBay filed first, though. So it has the legal advantage. But Craigslist has the reputation and publicity advantage. Everyone loves to root for an underdog. This legal brawl could lead to a customer backlash for eBay if customers decide to take sides.
In the complaint, Craigslist details eBay’s strong-arm tactics both during the negotiations for its equity stake and afterwards. One of the reasons Craigslist agreed to teh deal was because eBay founder Pierre Omidyar was named to Craigslist’s board. But he only served a year, and was replaced by Joshua Silverman, an the executive in charge of eBay Europe (who oversaw Kijiji). Silvreman was quickly replaced, speculates the complaint, because of “antitrust” concerns.
The complaint also describes how eBay tried to undermine Craigslist by buying Google ads for keywords such as “Craigslist.org” and “Craigslits.com,” which then redirected to Kijiji. Oh boy, this is going to get ugly.
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eBay Vs. Craigslist, Round II. Craigslist Punches Back With Its Own Lawsuit.
Following the lawsuit eBay filed against Craigslist two weeks ago, Craigslist is punching back today. In a countersuit (complaint embedded below), Craigslist wants back the 28.4 percent of its shares that eBay bought in 2004. It also wants the court to award Craiglsit eBay’s related profits, and punitive damages on top of it all. Craigslist is accusing eBay of:
unlawful and unfair competition, misappropriation of proprietary information, deceptive passing-off, business interference, false advertising, phishing attacks, free-riding, trademark infringement, trademark dilution, and breaches of fiduciary duty.
The complaint details how former eBay CEO Meg Whitman sweet talked Craig Newmark into the deal after it nearly fell apart, and then goes on to allege that eBay used its position as a large minority shareholder to try to learn competitive secrets from Craigslist, while launching competitor Kijiji in Europe. Now that Kijiji has entered the U.S. and is going straight for Craigslist, the gloves are off.
eBay filed first, though. So it has the legal advantage. But Craigslist has the reputation and publicity advantage. Everyone loves to root for an underdog. This legal brawl could lead to a customer backlash for eBay if customers decide to take sides.
In the complaint, Craigslist details eBay’s strong-arm tactics both during the negotiations for its equity stake and afterwards. One of the reasons Craigslist agreed to teh deal was because eBay founder Pierre Omidyar was named to Craigslist’s board. But he only served a year, and was replaced by Joshua Silverman, an the executive in charge of eBay Europe (who oversaw Kijiji). Silvreman was quickly replaced, speculates the complaint, because of “antitrust” concerns.
The complaint also describes how eBay tried to undermine Craigslist by buying Google ads for keywords such as “Craigslist.org” and “Craigslits.com,” which then redirected to Kijiji. Oh boy, this is going to get ugly.
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eBay Vs CraigsList Complaint Released
eBay has released a copy of its complaint against Craigslist (document above). eBay lodged the lawsuit last week in the Delaware Court of Chancery claiming that Craigslist executives took actions that unfairly diluted eBay’s economic interest.
From the document itself, the tipping point would appear to be eBay’s move to offer Kijiji, its classifieds service in the United States. Craigslist viewed Kijiji as a competitive activity that canceled some shareholder rights held by eBay since it became a Criagslist shareholder in 2004. The short story is that eBay believes Craigslist went to far when enacting the competitive activity clause.
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Blodget Says Facebook Is Only Worth $9 Billion, Hypothetically Speaking
Putting a value on private companies is hard enough for insiders and venture capitalists who have full access to the company’s financial statements. When outsiders try to do it, even well-informed ones, it is nothing more than a guessing game. But it is nonetheless perhaps one of Silicon Valley’s favorite parlor activities.
Today, Henry Blodget & Co. at Silicon Alley Insider try to peg valuations on 25 private Web companies. Facebook is at the top of the list, but it is valued at $9 billion instead of the $15 billion that Microsoft’s investment put on the company. Why? Because everyone knows that the $15 billion is too high, so SIA decided to apply a 25X multiple on Facebook’s 2008 revenue forecast of $350 million. Does that make its valuation correct? Probably not. But in the absence of any true market pricing, anyone can go ahead and make a guess.
The same goes for any of the valuations on the SIA 25 list, which puts Wikipedia’s worth at $7 billion, Craigslist’s at $5 billion, Mozilla’s at $4 billion, LinkedIn’s at $1.3 billion, Ning’s at $560 million, RockYou’s at $325 million, and Spot Runner’s at $250 million. Note that three of the top five (Wikipedia, Craigslist, Mozilla) are essentially not-for-profits sitting on very valuable assets. The valuations for those three are based on what they would be worth if they were run differently with an eye towards maximizing revenues—which, of course, could impact how consumers interact with them, which in turn would impact their valuations.
Another 25 startups make up the contenders list, which includes Federated Media ($245 million), Yelp ($225 million), Meebo ($220 million), Mahalo ($150 million), Digg ($125 million), Etsy ($115 million), Powerset ($80 million), and Twitter ($75 million). A full list that changes dynamically every 20 minutes, based on changes in the Nasdaq, can be found here (although, exactly how the valuations are linked to the Nasdaq is never clearly explained)
Some of these valuations have more merit than others. Some have none whatsoever. For instance, SIA gets at its $125 million valuation for Digg by “splitting the difference” between a $200 million buyout rumor we reported and the $60-to-$80 million that Kara Swisher came up with. Splitting the difference between two rumors is not exactly the height of financial analysis.
But what are you gonna do? At least SIA acknowledges that the list is an imperfect work in progress. Don’t get too caught up in the actual numbers. It is more useful really as a starting point to think about relative valuation between different startups. Is Meebo really worth three times as much as Twitter? Is Ning worth as much as Slide? Let the parlor game begin.
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Craigslist Competitor OLX Raises $13.5M
According to co-founder Fabrice Grinda, “OLX is probably the largest classified site no one has ever heard of.” And now it’s also the most funded classified site no one has ever heard of, having secured an additional $13.5M in Series B funding today from General Catalyst, Bessemer Venture Partners, Founders Fund, and DN Capital.
The round brings OLX’s total funding up to $23.5M after raising a previously undisclosed Series A round of $10M in September 2007 with the same VCs and various angels.
Americans are not likely to have heard of OLX because its popularity lies mainly outside of the United States in places like Spain, India, Portugal, Mexico, South America, China, and the Philippines. It has established a presence in a total of 40 countries while supporting 15 languages. Much of its success in the Philippines can be attributed to its white label partnership with Friendster. Its offices are also spread over the globe with 92 employees working out of New York, Buenos Aires, Beijing, and Moscow.
The idea behind OLX, in addition to becoming Craigslist for the rest of the world, is to improve on the technology of first generation classified sites. Grinda prides OLX in its Web 2.0 features which include social network widgets, better search, Ajax-based editors, interactive maps, and mobile versions.
OLX was launched in June 2006 by Grinda with co-founder Alec Oxenford. In addition to taking on Craigslist, OLX faces off against eBay’s Kijiji, which poses the biggest international threat because it has also taken an aggressive global campaign.
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Craigslist Launches Official Blog
Craigslist launches their official blog today at blog.craigslist.com. Previously founder Craig Newmark would would get the word out via his personal blog, but now Craigslist has it’s own voice. The blog is lacking a RSS feed and has only rudimentary comments, but it is a true blog nonetheless.
By the look of the first few posts the new blog will make for interesting reading. There is commentary on the recent Oregon “take all my stuff” issue (our coverage), as well as a discussion of the new phone verification system for their erotic services category.
The top post takes the prize though. They accuse Connecticut Attorney General Richard Blumenthal of slander for his recent accusations that Craigslist “profits from prostitution:” “Connecticut craigslist users are no doubt curious as to why their AG is spending time attacking freedom of speech and law-abiding companies that provide much-needed free services to the people…”
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Craigslist Thieves Caught
An interesting end to the Craigslist hoax story over the weekend that left an Oregon man minus his stuff: A couple named Brandon and Amber Herbert apparently placed the ad as a cover to a planned theft of two horse saddles. They placed the ad on Craigslist, which said that all the belongings were free for the taking at an abandoned house. They then joined in the mob that showed up for the goods.
Their IP address was tracked by police through information supplied by Craigslist.
It’s funny how few people understand how easy it is to track activity via IP address. For example, the startup CEOs who leave comments here under their real name, and then suddenly go trolling under an anonymous name, all under the same IP.
Photo via The Raw Feed.
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Craigslist, Coming Soon In A Language Near You
The Craigslist phenomenon continues, and it isn’t just in English any more.
The site dominates the U.S. market for classified advertisements, with nearly 27 million unique monthly visitors (Ebay’s Kijiji, by contrast, has just 2.3 million U.S. visitors/month). But the fact that the service was available only in English hurt it internationally, where Kijiji is a close second.
Craigslist is now available in Italian, French, Portuguese and German. “Basque, maybe Klingon” are coming soon. 
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Craigslist Is Our Mirror, Nothing Better (Or Worse)
I flipped on the news today (yes, my actual television, not sure why) and the big story was Craigslist gone wrong. Someone placed an ad on Craigslist saying that anything at a home in Jacksonville, Oregon was up for grabs. People responded, and carted away most of the belongings of resident Robert Salisbury. He arrived home to thirty people picking over the last of his stuff. Even the man’s horse was taken.
It’s common for people to offer stuff for free on Craigslist, as long as you come and pick it up. It’s a bit of a stretch to imagine that people would think that an entire home’s worth of belongings would be given away on the site, but that’s a post for a different day. It’s worth pointing out, though, that this isn’t the first time something like this has happened.
I spoke to a couple of attorneys this afternoon about the potential liability of Craigslist for stuff like this. The victim has little recourse, other than insurance (I’m betting he has none) and a possible civil case against the person who posted the listing should he or she be caught. Could a litigiously minded individual find a winning argument to get Craigslist to pay for the damages? Perhaps, said the attorneys. And there are certainly plenty to lawyers who’d consider taking the case on contingency, hoping for a quick settlement/shake down to keep PR exposure over this to a minimum.
But what I really think is that Craigslist is just a mirror, and we have to take the good with the bad. Countless connections and transactions are made on the site, and the vast majority are of benefit to everyone involved.
Sure, mainstream press feasts on the occasional accident scene, making it seem like the site is a den of predators waiting to strike at anyone who drops by. Craigslist has it all - Sex, drugs, humiliation and more.
But for the most part Craigslist is just a really good place to find a job, or a boyfriend, or buy cheap furniture for your dorm room. The situation today is simply an exception that proves what an important place Craigslist has taken in our culture. I feel bad for Mr. Salisbury and I hope he gets all his stuff back (especially his horse). But pointing the finger of accusation at Craigslist for what happened is not what should happen next.
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Bootstrapping Event In San Francisco – Get The Last Five Tickets Here
On the evening of March 6, 2008 I’ll be moderating a Churchill Club panel discussion in San Francisco on “Bootstrapping As A Start-Up.” Participants include Sean Byrnes (CEO Flurry), Craig Newmark (Founder Craigslist), Gabe Rivera (Founder TechMeme), and Stephen Weir (CEO MadeIt). The discussion will be around starting and growing a startup without outside funding.
This is a very small event - just 30 attendees total (hopefully they’ll video so that more people can watch it afterwards). The tickets are now gone - but the last five have been reserved for TechCrunch readers (and are free). If you want to go, please leave a comment below telling us why you think you would benefit from the event or have something interesting to contribute. Also, given that there are so few seats available, please don’t ask for a ticket unless you are sure you can attend. I’ll choose five in 24 hours.
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