Dissecting The InfoSpace Dot Con

Wall Street

from the revenue?-we-don't-need-no-steenkin'-revenue... dept

InfoSpace was a company that definitely scared off a lot of people, thanks to the sheer hype spewing from the CEO’s mouth. During the boom years, there were a lot of people wondering just what the company actually did. In 2002, we noted that atheists were rejoicing when InfoSpace was delisted just a couple years after CEO Naveen Jain was quoted as saying: “There are two kinds of people in this world… those who don’t believe in God, and those who believe in God and InfoSpace. That’s OK — the nonbelievers will be converted when we become a trillion-dollar company.” It turns out that Jain wasn’t just over-emphasizing the future prospects of the company, that (at the time) was nothing more than a random collection of content services (white pages, weather, horoscopes, etc.), he was outright lying about the existing business situation for the company. The Seattle Times is running a fascinating look at the con-job pulled by Jain to take a company that wasn’t anything special, take it public, and then do anything and everything to boost the stock, including lying about the company’s prospects and eventually doing a bunch of “lazy susan” deals, where InfoSpace would invest in a company (including one owned by Jain’s brother) who would then turn around and “buy” services from InfoSpace — turning existing cash into revenue. Meanwhile, the folks at Silicon Beat wonder if this sort of scam would have happened in Silicon Valley — noting that all of the worst dot con scams all seemed to happen outside the Valley. (Updated to correct: InfoSpace was delisted, but did not declare bankruptcy).