Dot Con: How Infospace Took Investors For A Ride

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."

It does make sense

[camcloud1]

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.

Re:This story makes no sense.

[slashdot_commentator]

I've seen something like this before. Wow, birth of a new Troll topic/response.

Re:Screw the greedy capitalist exploiters

[PurpleFloyd]

Investors aren't like you and me. They are you and me. Most of the people reading Slashdot right now probably have a nest egg stashed away in a 401(k), and many probably have investments in stocks and mutual funds.

The real reason there isn't the incredible outcry over conmen like Bernie Ebbers, Ken Lay, and the man linked is because people don't realize that they, too, are part of the "investor class." Many people think that Enron's failure resulted in nothing more than a few robber barons transplanted from the 19th century having to switch their Cuban cigars to Dominican; they don't realize that they are being hit in the pocketbook, and that people who invested large amounts their life's savings were taken for a ride.

As for investors not doing enough research, that's simply not true. If you will remember, it was a fairly large scandal a few months ago that stock analysts - people who are hired by brokerages to deliver an unbiased analysis - were rating stocks highly, but privately commenting that those stocks weren't worth the paper their certificates were printed on. The end result was that investors who did everything "right" and read all the research available were actually more likely to get ripped off than someone who simply picked stocks because they had a cool-sounding name.

Re:I interviewed there once...

[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.

Re:Screw the greedy capitalist exploiters

[mc6809e]

The real reason there isn't the incredible outcry over conmen like Bernie Ebbers, Ken Lay, and the man linked is because people don't realize that they, too, are part of the "investor class."

Why do you say that?

Aren't these men employees of these companies?

It seems to me the problem is that shareholders have basically given control of their companies to people that go on to pay themselves huge amounts of money at the expense of everyone else.

And why shouldn't they? They aren't investors in the company. They don't have an interest in the long term future of the company because they can make the company pay them big money RIGHT NOW.

Go right ahead.

[s4f]

It's OK. Post the exact same story. We're used to dupes.

Re:So what's the lesson here?

[the arbiter]

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.

Re:This is just one more reason why...

[YrWrstNtmr]

Let's see:

You don't trust Bush and the current administration. You think you are (and you very well might be) smarter than them. Yet you trust them with your money more than you trust yourself.

Nice disconnect there.

Re:This is just one more reason why...

[Alien Being]

"Yet you trust them with your money more than you trust yourself."

First of all, it's not just my money. Secondly, it's not a matter of trusting GW with the present system.

What matters is not letting him make changes whereby he can have control over the flow of trillions of dollars of investment and deficit spending.

The red-staters who put him back into office are the same people who depend most on Social Security. There's the disconnect.

Fortunately, there's evidence coming back from his roadshow that these people are starting to see the real GW, not the born-again-anti-gay-married-terrorist they voted for.

Re:Screw the greedy capitalist exploiters

[np_bernstein]

Wait, you're right, they should just lend out money to companies that might loose it for nothing. Lending a company money and then asking for them to share in the profits once the money you lent them starts making them money is greedy and vile.

Think first

Re:Give the devil his due

[King_TJ]

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?)

Re:Could it have happened in the Valley?

[DSP_Geek]

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.