Forgot your password?
typodupeerror
The Almighty Buck Businesses

Dot Con: How Infospace Took Investors For A Ride 161

Posted by CowboyNeal
from the easy-money dept.
Jeff writes "On the subject of the dot com crash, the Seattle Times recently ran an outstanding three day series on the corruption at Infospace, with a follow up today on the company's continued relations with its founder, Naveen Jain. Sunday's cover photo of Jain's new office shows a birthday photo of himself and another self-portrait in the background. Only the reflecting pool is missing."
This discussion has been archived. No new comments can be posted.

Dot Con: How Infospace Took Investors For A Ride

Comments Filter:
  • by karmaflux (148909) on Friday March 11, 2005 @07:59PM (#11915788)
    I can't figure out why either company matters, what the hell this has to do with GNU, Linux, GNU/Linux, the F/OSS community, iPods, Eugenia from OS News, or Microsoft. It's not a MySQL story. Nobody's hammering the Mozilla Foundation. Firefox isn't even mentioned. And there's no question at the end like "what does this mean for Google's world domination plans?"

    I'm sorry, man, I just don't know what to make of this article.
  • by Anonymous Coward on Friday March 11, 2005 @08:01PM (#11915801)
    I'm still pissed that I lost the money I invested in Infospace. Oh well, I hope to make a large return from the money I've invested in CherryOS and the Phantom console.
    • I hear the Phantom will launch with... (suspense)... Duke Nukem Forever. Ooooh boy, i can't hardly wait!
    • Look on the bright side.

      If you had money, you could start a business advising people what NOT to invest in.

      That might turn a pretty penny... knowing you, it'd fall flat on it's face though.
      • In that case, I'm going to watch his company closely and do the exact opposite of what he recommends.

        Then, I'm going to pay him for it, so his company is successful.

        Then, the universe will explode.

        It'll be cool.
    • No wonder you're losing money, if you miss such amazing opportunities.

      (Sorry, I meant SCOXE)

  • by mjfgates (150958) on Friday March 11, 2005 @08:09PM (#11915839)
    Their technical lead proudly described the amazing fast database system he'd written to handle full-text search, because none of the commercial DB engines could possibly be fast enough.

    He was using binary search to look through what he was estimating would be about a million records on disk.

    Perhaps it was a mistake to explain that using a hash table would find the correct record in an average of 1.5 disk hits, as opposed to the 19 that his system was taking, because they didn't offer me a job. Then, again, maybe it wasn't a mistake-- after all, I didn't end up working there.
    • by phallstrom (69697) on Friday March 11, 2005 @08:11PM (#11915850)
      that's so funny! I was just thinking about whether or not to post the *exact* same story. I too interviewed there and that same gentlement told me quote "I wrote our own database because Oracle was too slow".

      It was at that point that I began to wonder if things weren't quite right with Infospace.

      • by PornMaster (749461) on Friday March 11, 2005 @08:15PM (#11915871) Homepage
        It's OK. Post the exact same story. We're used to dupes.
        • OK, They sang the praises of their home grown database while they tried to sell us $11MM worth of web links. Each of their page hits would serve up like 10 links or something silly like that. I remember trying to convince our CTO/etc. that this was the stupidest thing. We ended up not taking the deal, and a VoIP company took the deal. Suckers!

          Those were the days.

          openwap.org [openwap.org] wireless wap/j2me/midlet news
      • that's so funny! I was just thinking about whether or not to post the *exact* same story. I too interviewed there and that same gentlement told me quote "I wrote our own database because Oracle was too slow".

        It was at that point that I began to wonder if things weren't quite right with Infospace.

        Did he mention anything about the new Bubble Sort they were pioneering, because it was much less code?

      • by jd (1658) <.moc.oohay. .ta. .kapimi.> on Friday March 11, 2005 @08:44PM (#11916024) Homepage Journal
        Oracle IS slow. Of course, if they were going to buy a database, then they could still have gone with Informix or DB/2. Those aren't amazing, but they are better. For smaller datasets, then mSql and MySQL would have been logical choices.


        Of course, if the data was flat, rather than relational, the choices would have been Berkeley DB, Gnu DBM and NDBM, which all store data by hashes.


        Binary trees are great for high-school projects. Now, trees are used in serious projects. Game AIs tend to use B+ and B* trees, for example. I'm pretty sure ReiserFS uses trees. One way to write a compiler parser is via an n-ary tree, because the memory and CPU requirements scale much nicer than hash tables. However, none of these are binary trees, they exploit some very specific characteristics of the data, and they aren't intended as a substitute for Oracle.


        People do write their own database engines, but usually only for very specialized needs. I am sure there are plenty of applications out there which are simply not suitable for any existing engine, for reasons of speed, complexity, or whatever.


        From what I understand, Infospace did not have such a need. From what others have said, I doubt anyone working there would have recognized such a need, if one HAD existed.


        It is utter insanity to build a system that is inefficient and unsuitable as a replacement for something that is utterly different in nature. The guy probably swapped his Rottweiler guard dog for a guinea pig, too. Hey, they both make noises and the guinea pig IS cheaper!


        I'll tell you why the Dot Com era went broke. It had nothing to do with technology or expectations. It had to do with rich idiots giving money to wannabe rich idiots so that they could all be fleeced and the consumers with them.

        • It all depends on how quick the developer was and how dirty the code was. Oracle is expensive, and MySQL and Postgres were not nearly as advanced as they are now in 1995-8 when this custom DB was written.

          His tree system could have been written in just a week or so, and if they only had simple data structures it might have been cheaper then Oracle. OTOH, using a real RDBMS would have allowed them to be much more flexable in what they created, and they could always have simply thrown hardware at the situat
          • It all depends on how quick the developer was and how dirty the code was. Oracle is expensive, and MySQL and Postgres were not nearly as advanced as they are now in 1995-8 when this custom DB was written.

            Oracle licenses for a large system can easily run to seven figures and you have to put up with the Oracle DBAs whose agenda usually consists of buying more Oracle and hiring more DBAs.

            If you can fit the database into RAM you can use completely different data management techniques. RAM ande brute CPU is

        • by King_TJ (85913) on Saturday March 12, 2005 @12:30AM (#11917207) Journal
          Basically quite true, but frankly, the dot-com era died mostly because of the belief put in the flawed idea that it made good business sense to grow market share at all costs (worrying about the quality of the product or service offered secondarily, if at all).

          There were plenty of "rich idiots" around - but I don't think it's fair to act "holier than thou" about it, claiming to have known all along it was all just a bunch of idiots giving money to other idiots. If this were true, you'd have to ask why eBay is still useful and successful today, or Amazon.com for that matter.

          Some of these dot-coms had viable concepts that "made it" - but they were the minority. Probably, a number of them were even really good business ideas that *should* have made it, but got drug down with the rest of the startups as stockholders decided they were pretty much all a ripoff. In other cases, they just didn't know how to make the good idea succeed in the long term. Better management might have saved them.

          (For example, I still think those "we deliver groceries to your door" ideas like peapod, webvan, etc. were viable. People just didn't quite figure out a profitable way to pull them off. I could see a large food service corp. launching one of these on a nationwide scale (say Pepsi Co. or Frito-Lay or somebody?), and maybe even subcontracting deliveries out to local courier services?)
          • You should come to NYC. The grocery business is alive and well with freshdirect.com.

            Damn good stuff too, some of the best cuts of meat I can find without traveling all over town.
          • Actually, Peapod is doing quite well out here in Boston, Via Stop 'n Shop. It makes more sense to get into door-to-door delivery if you already have distributions and infrastructure in place.

            Personally I'm surprised more grocery stores don't deliver in such a fashion. You would have to find a way to tie your inventory to an online interface, but overall it is a great way to get lazy people to shop with you... Especially in the winter when it's 5 degrees out and your car is buried under three feet of sno
          • Grocery deliveries are one of the big internet successes here in the UK - most of the food supermarkets do it.
          • I could see a large food service corp. launching one of these on a nationwide scale

            Yes, what with gas and insurance being even cheaper nowadays. {rolls eyes}

            Home delivery services will ALWAYS be niche-related. These niches are primarily (1) urban, (2) rich, or (3) subsidized. Hence, the customer who will most prompt a home delivery event is a disabled retiree living in the city. The antitihesis of that would be the healthy suburban or rural worker ... in short, the vast majority of Americans.
        • You do know that oracle gives you the choice between b-tree and hashed indexes don't you? You need to be a database designer to take advantage of any database engine properly, no matter which one it is.

          Apart from that, you're bang on about the rest of it, especially the rest of it. The only difference between net-enabled businesses and others is communication. If the company can't explain how they leverage that, they're a no-hoper.

          Justin.
        • People alread know how to manage B* trees? Maybe I am not very up to date, bot a very short time ago, they didn't.
      • Go right ahead. (Score:2, Insightful)

        by s4f (523726) *
        It's OK. Post the exact same story. We're used to dupes.
    • by Anonymous Coward
      Actually a hashtable based lookup would work for an exact key match, however full text indexing and searching in realtime is an altogether different class of problem and oracle/sybase/informix etc don't quite handle that kind of load under those kind of constraints (realtime). Granted this company doesn't need the realtime performance, but still the idea is intriguing.
    • Hey, I once knew a guy who, having just graduated from Harvard, made the rounds of all the interesting high-tech firms that were hiring newbie computer scientists. One company made him a really good offer, but he walked away because he thought the guy in charge was an insufferable idiot.

      Do I need to mention that the II in question was Bill Gates?

    • Interesting. So how would your hash algorithm work for

      LIKE 'Sun%'

      ?
  • by coldmist (154493) on Friday March 11, 2005 @08:13PM (#11915859) Homepage

    I don't care about any "reflection pools". I want that 24"+ widescreen LCD monitor you can see in the reflection!

  • tech, who? (Score:3, Interesting)

    by lonb (716586) * on Friday March 11, 2005 @08:19PM (#11915891) Homepage
    This image displays three desks in this man's office. Yet I don't see any electronic device more complex than a telephone. Um.... He ran a tech firm?
  • It does make sense (Score:1, Insightful)

    by camcloud1 (758094)
    If you consider that he just wanted to be like Bill Gates and he achieved that by being a cunning and ruthless manipulator. Only difference is he is going to go to jail.
    • There's a difference between being a "cunning and ruthless manipulator" and illegaly trading stock on insider information. The later means you're a criminal, the former: just an asshole.
  • by nvrrobx (71970) on Friday March 11, 2005 @08:26PM (#11915928) Homepage
    I'm a (bitter) former InfoSpace employee.

    I was a member of the famed wireless division, who was all laid off because we didn't make the company any money. This was after Jain et al took the company for a ride and nearly got us delisted. I disliked senior management, but my peers at the company were some of the best people I've ever known or worked with, and I still miss that environment.

    Whenever Naveen or Anu (his wife) would get infront of the company and speak, I instantly felt slimy. I got the worst vibes from the man. He honestly thinks he's a fantastic person and was the best thing to ever happen for the company and anyone involved. I hope they have fun explaining to their children how they robbed their trust funds in their insider trading scandal.

    Shortly after my last day in December 2003, the entire executive board was replaced. Now InfoSpace is posting good numbers and wireless makes money.

    Coincidence? I think not.
    • by Anonymous Coward on Friday March 11, 2005 @08:36PM (#11915985)
      Shortly after my last day in December 2003, the entire executive board was replaced. Now InfoSpace is posting good numbers and wireless makes money.

      Coincidence? I think not.


      Don't be so hard on yourself. I'm sure it had nothing to do with you leaving.
    • personally, Infospace fell off my radar a couple years ago, I never did know it had experienced any difficulties, thanx for bringing me up to speed ...
  • I RTFA but I'm still not clear on what the outcome of all this is. So this Jain guy gamed the system, rode the dot-com bubble and made tens of millions $, got in some trouble with regulators but settled it, and now he's sitting pretty, aside from some negative press?

    So I guess the lesson is that the stock market is a con job and capitalism sucks?

    • Jain slipped through the cracks of our justice system and now you are ready to toss the whole idea of capitalism aside? What's your preferred alternative?
      • Slipped through the cracks, my ass.

        The whole system is designed to allow people to do exactly what he did, and if he'd even bothered to take the slightest care in his written communications, he'd be sitting pretty on a gigantic pile of your parents' money and no one would be the wiser.

        Only when we stop allowing CEOs to loot the companies they're employed by will this kind of crap stop. Sadly, that day is not even on the horizon.
        • Tell me how to stop allowing CEOs to loot companies. Be specific and be sure to point out things that are not already part of current law.
          • Note how this guy and Ken Lay and others walk free. Do you really think they will get around to doing anything to Lay? LOL!
            • Ken Lay's criminal trial is scheduled for 2005. In 2004, every publicly traded company in the US was held to higher accounting standard practices than in the past. This is known as the Sarbanes Oxely process, federal legislation passed in the wake of the Enron scandal.

              Are you still ready to put an end to capitalism? Describe a better alternative.
        • There's a lot of games that can be played in the accounting and finance end of things in a large company, I'm afraid. Laws are good for punishing, but preventing is another thing. Ethically-challenged con-men can fool boards just as easily as shareholders if they're sufficiently clever.

          What is happening with those executives who were the most responsible for the bubble are being punished. There are guys sitting in federal prisons. What more do you want? Investment is, by its very nature, a gamble.

      • So many falsehoods, so little time to apply the 2x4 of logical correction upside your stupid fucking head.

        He didn't "slip through the cracks". He walked with purpose through a gilt-edged door after swiping his American Aristocrat {tm} ID card to gain entry.

        And, yes, we must toss the "whole idea of capitalism aside" if we're NOT going to moderate the excessives of the system with a necessary dose of social controls (i.e. Socialism). A Republic like we had was Republic = Capitalism + Socialism. We ar
        • Your arguments are strong if measured by volume and emotion. Your arguments are weak as measured by logical argument.

          Please describe what you mean by 'moderated capitalism' that America had and how America lost it. If you were given absolute authority, how would you remake America's systems of laws to prevent con men like Jain from being successful? Please be specific. The strength of your arguments will be found in well considered detail rather than emotional attack.
          • More cognitive resistance on your part. I actually have to explain moderated capitalism, assface? How about this:

            UNMODERATED CAPITALISM: Go into forest, hack down all the fucking trees you can, haul them out, sell them. Tell your migrant workers to take a fucking hike and don't pay them.

            MODERATED CAPITALISM: Check with bevy of Federal, State, and local laws before you step into that forest. Abide by ALL of their provisions as regards labor relations, surface access, tree cutting, equipment maint
            • Your hysterical straw man world of unmoderated capitalism does not exist today. Ken Lay's criminal trial starts this year. There is more transparency in corporate accounting now, by law, as a reaction to Enron and WorldCom.

              Does that work for you? What would do differently today if we handed the keys of power over to you? You've proved your ability to find fault in today's world. Now, describe the utopia you would create if we wipe the slate clean and let you dictate the new order.
    • Yes and no:

      "Until he agreed to the $65 million settlement, Jain had avoided paying any claims out of his own pocket, according to interviews and court records. InfoSpace or insurance policies had covered the tab.

      Jain is hoping he won't have to dip into his wallet for the $65 million judgment, either. He has hired new lawyers and is suing his old law firm, Perkins Coie, for legal malpractice. He says the insider-trading snafu was the firm's fault.
      "

      SO he got a judgement against him for $65 million and i

    • Yes, that is the lesson here: the stock market is a con job and capitalism sucks.

      The ensuing introspection that progressives like me are trying to promote is that we should stop thinking that paper and electrons have primacy over the gathering of materials, performing skilled labor upon them, and producing real products.

      Since I'm NOT talking about gaming the financial system to make millions, no doubt that all you're hearing from me above is blah-blah-blah. Money is your religion ... hence, enjoy yo
  • Holy crap the man couldn't get a date with his own hand yet people entrusted him with enough money to make a century worth of snakeoil salesmen turn in their graves.

  • by Anonymous Coward on Friday March 11, 2005 @08:39PM (#11916002)
    I apologize for posting this AC, for obvious reasons.

    I first met Naveen Jain while he was still with Microsoft. It was 1995, and Naveen was telling a bunch of Time Inc. New Media honchos (the folks that brought the world Pathfinder - remember that? First commercial website?) that the Internet was _dead_.

    It seems that Microsoft was intent on replacing all Internet technologies with its own "embraced and extended" versions. A binary version of HTML that allowed for 8 different types of hyperlinks. IRC, but with additional functions. That kind of thing. Pathfinder would be extinguished as the commercial Internet baby was stabbed in the cradle by the upcoming "Winternet". No kidding, he used that term.

    The Time Inc. honchos ponied up a huge sum to get Pathfinder's url on the upcoming MSN. In classic Microsoft style, they took the money, and then hid the icon several levels of navigation down. No one ever saw it, but then again, MSN 1.0 had very few users anyway.

    Naveen started Infospace, and I was sent on a fact-finding group mission to see if Pathfinder wanted to use their technology. Their office looked like a dump - they didn't have a data center, they had a huge mass of PCs piled almost randomly, hooked to the Internet. That was Infospace in '96/'97. They were so arrogant that they thought that'd impress the folks from Time Inc, who served Pathfinder on Sun (and only Sun), and had a datacenter that was a model of datacenters. I remember Time Inc. sysadmins' argument about whether the faraday cage was constructed correctly... but I digress.

    At any rate, the best part of the tour was Jean-Remy showing off all of their home-grown technology. He claimed that _everything_ was home grown - database servers, DNS, web, even the operating system (!). In fact, he confided to me that he had "borrowed the best pieces of NT", including the kernel, in creating their home-grown operating system. And as others have said, he bragged endlessly about how his database was faster than Oracle.

    As before, Time Inc. drank the Kool-Aid and signed up with Infospace - despite these kinds of issues - because they thought that they had to do so, for some stupid .com imperative that I can't recall.

    Naveen Jain is an amazing huckster, I'll give him that. Pity that he escaped the SEC's special brand of torture.
    • by delmoi (26744) on Friday March 11, 2005 @11:44PM (#11917003) Homepage
      Like most of the instant millionaires, [Jean-Remy] Facq and the others were not able to sell their stock for six months. But that didn't mean they couldn't start shopping.

      A month after InfoSpace went public, Facq ordered a $103,000 Dodge Viper. He shipped the Viper to Hawaii, where he commissioned an artist to paint its hood with a Hawaiian scene -- the sun setting over dolphins cavorting in blue waters. Tab for the paint job: $150,000 ... Not to be outdone, Facq two days later walked into a dealership and wrote a salesman a $1.1 million check to buy a Lamborghini Diablo and a Ferrari F50. "I just wanted to see the look on his face," Facq said ... Anything Facq wanted, he could have. Disappointed by the jewelry at Tiffany & Co. -- "I wanted something more pimpish" -- Facq designed enormous rings and commissioned a jeweler to make them. He called himself the "Lord of the Rings."
  • to go for a ride.

    Naveen Jain seems to be at the reins, making a company that directly competed with his previous company incite a war, make Infospace come to an agreement. And now they are partners, with Naveen Jain still getting paid in essence by Infospace, regardless of his current companys success or lack thereof.

    If Infospace had any brains they would get rid of all affiliation with its former founder where he obviously knows how to play his cards. Which has never been good news for Infospace in the p
  • Business as usual (Score:2, Interesting)

    by nodehopper (839304)

    I think we are starting to realize that after the .com boom, bust and now resurgence these businesses are just like all other businesses. You will find the rebel upstarts who do rocket to fame and fortune, the solid business model, and the Enron type corruption.

    During the boom it seemed the .coms were beyond real business....almost "magical". The sector is maturing and along with this comes all the problems that have plagued business since time began because behind all the slick tech are people, common or

  • next thing you know, they'll merge and form intelija, inc. or some shit like that.

    wake me up when they're shipping a product, not dedicating their lives to service.
  • That building you see out his window is the one I work in. I drink starbucks in their building on a regular basis...
  • privatized social security is equivalent to no social security. Why does George Bush think it's a good idea for the government to entrust Wall Street with the responsibility for securing the social status of all Americans?

    Is he...

    a) too young to remember the 1929 crash?
    b) too stupid to see what's going on around him?
    c) just a puppet on a string?
    d) a greedy mofo planning to cash in somehow?
    e) a samsquamch?

  • by mihalis (28146) on Friday March 11, 2005 @09:27PM (#11916275) Homepage

    They had a channel on AvantGo, so every day I'd have updated tech news on my Palm Pilot.

    It was absolute garbage

    . It seemed like it was being written by an intern surfing CNET in the mornings, then writing the stories from memory in the afternoons, whilst watching MTV.

    I removed the channel!

    • Same here. I hadn't heard anything about Infospace since those AvantGo days and I never would have thought that content any more than what could be produced by a couple folks grabbing headlines off of Yahoo. I also never would have considered actually paying for any of that content. And now the company makes millions selling RING TONES?!

      The value system the world then (and still) operates under is close to being FUBAR. I just don't get it.
  • by Beryllium Sphere(tm) (193358) on Friday March 11, 2005 @10:56PM (#11916784) Homepage Journal
    Someone in the blogosphere claimed that in the close-knit gossipy Silicon Valley community, a dishonest CEO would get bounced out and become unemployable before doing much damage. The claim is that there's zero tolerance for anything more unethical than insider trading.

    Anyone from the Valley care to comment? Seems to me that I remember someone who cheated his garage partner and is a CEO today. If someone is making money for investors, or creating the illusion of making money for investors, can s/he really get blackballed?

    If there's really something about the Northwest that makes scandals more likely, then what exactly is the difference?
    • by DSP_Geek (532090) on Saturday March 12, 2005 @04:58AM (#11918268)
      Oh, honey, we can't even get rid of the dumb ones. How long did the HP board take to ditch Carly? Three years after the Compaq merger, and well after she screwed up everything else at HP too? Another example: I worked for a guy at [ConsumerProductCompany] who insisted we stick to the the original memory spec even though Moore's law told us we could count on twice the memory by release. Recoding to fit the tight space delayed ship long enough the original RAM was obsoleted, forcing us to redesign the memory controller, and all of which pushed the release late enough that Sony stomped us like a steamroller crushing baby chicks. That guy's now a CTO at another outfit. Hell, Apple alone endured a number of inept CEOs, including a guy who'd crawl under his desk when the going got rough.

      And remember, the VCs funded all the dot-bombs five or six years ago and told them to spend like mad to get "first-mover advantage", so we're not necessarily talking the brightest bulbs on the tree here.

      Long story short, if even the dumb CEOs get multiyear grace periods and chances to screw up again repeatedly, how do you expect to catch the sharks smart enough to cover up their schemes? Especially, I should note, when luminaries such as Gates and Ellison have both prospered and made their venture investors prosper while being accused of sharp trading. That'll tend to discourage scrutiny so long as the numbers remain rosy.

      Long story short, whoever in the blogosphere wrote that fatuous thing you paraphrased is talking out his ass.
  • Watch Dot Con [pbs.org], a Frontline [pbs.org] episode dedicated showing how corporate America cajoled the media into feeding a runaway train of hype which bilked billions.

Chemist who falls in acid is absorbed in work.

Working...