Language Selection

English French German Italian Portuguese Spanish

Dot-con job: How InfoSpace took its investors for a ride

Filed under
Web

Five years ago this week, at the height of the dot-com stock frenzy, a young Bellevue company called InfoSpace was worth more than Boeing.

Wall Street analysts hailed the startup, which promised to bring the Internet to everyone's cellphone, as "a new Microsoft," and its charismatic leader, Naveen Jain, as a visionary.
Microsoft co-founder Paul Allen had hundreds of millions invested. Small investors such as Bev Hess, a real-estate agent in Phillips, Neb., poured their retirement savings into what appeared to be a sure bet.

At its peak, InfoSpace was the Northwest's biggest Internet business, worth more than $31 billion. Jain, a man obsessed with being more successful than Bill Gates, was himself worth $8 billion. He bought a palatial waterfront home in Medina down the street from his idol and another nearby on Mercer Island, along with two yachts and a piece of the Seattle SuperSonics.

What Paul Allen, Bev Hess and hundreds of other shareholders didn't know was this: InfoSpace's success was an illusion, created by lies and deception.

Jain and other InfoSpace executives deceived the public by making the company appear far more successful than it was, a Seattle Times investigation has found.

The investigation — built on internal company e-mails, confidential documents filed in court and scores of interviews — found that Jain and others created the illusion of revenues with accounting tricks and dubious deals.

One e-mail from a venture capitalist to Jain captures the nature of the deals. The man refused to participate in an investment that Jain had proposed, bluntly telling Jain that if he did so, "I believe that I could go to jail."

Full Story.

More in Tux Machines

64-bit STB SoC supports 4K video and Android TV

Marvell announced an “Ultra” version of its Android-focused Armada 1500 STB SoC that advances to a 64-bit, quad-core Cortex-A53 foundation for 4K delivery. The Armada 1500 Ultra (88DE3218) is designed to “enable PayTV operators and set-top box (STB) manufacturers to cost-effectively deliver small form factor devices with feature-rich 4K entertainment and gaming services,” says Armada. As with earlier Armada 1500 system-on-chips, it’s primarily focused on Android, with specific support for Android TV Read more

Android is finally beating Apple in this one key metric

The iPhone is widely considered the "rich man's phone," but Android is finally beating Apple in one key metric — revenue. According to new data from Digi-Capital, for the first time, Android is making more money from apps than iOS is. Android has long beaten Apple in terms of absolute downloads, because it has a far larger install base. Last year, more than 1 billion Android handsets shipped, compared to a (relatively) paltry 192.7 million for the iPhone. But this is largely a vanity metric if it doesn't translate into actual money, and the largest audience in the world won't persuade developers to use your platform if there's no way to monetise it. Read more

EU study recommends OpenBSD

Nice to see recognition from the trenches of bureaucracy. Read more

Linux Freedom vs. Convenience

One of my favorite websites that illustrate this point is WhyLinuxIsBetter.net. As the page loads, you're immediately presented with clear, easy to understand reasons why Linux is better than proprietary operating systems. Now granted, the website is a bit dated. But the overall message is timeless and positive. What this site does well is show its readers exactly why Linux on the desktop is awesome. From its features to its built-in safety, everything is clearly illustrated and easy to understand. Read more