I found a couple of the original Epinions commercials on Youtube. These were a classic example of dot com advertising and one of the early examples of user-generated content for advertising purposes.

Jay and his iMac:

Jeff trying to snowboard Alta:

[one minute version]

[30 second version]

Perhaps I'm biased, but I think they are still funny today.

The SJ Mercury News ran an interview with Bill Gurley, a VC at Benchmark Capital. On the subject of Epinions:

____

Q Speaking of the shape you're in, was the first Epinions case resolved? I noticed a newer, related case arise just this month with different plaintiffs. What's up?

A EBay settled the suit a year ago, and I wouldn't consider any of the marginal activity (including the newest suit) very material.

Epinions was founded at the height of the bubble. The team ramped to 130 employees and lots of mistakes were made at that point. When the bubble burst, the business was cut down to 21 employees who spent the next few years working really hard. We held merger discussions with seven companies, got four or five offers and sold to the highest bidder. Then it went public. Some people said we knew it would happen. We didn't. And if you talk to any of the employees who lived through the hard days, they were extremely excited about the outcome.

Q Another person named in the suits has been Epinions' co-founder Nirav Tolia, who later became COO of Shopping.com and made tens of millions of dollars from its IPO. He left that post when it was discovered he'd long lied about his work history and educational background, including that he'd graduated from Stanford when he hadn't. And yet I hear you might back him again in another venture.

A We've no commitment to him at this point in time, though I would back him again. He made a mistake, but it happened 10 years ago.

______

I'm not sure about the specific headcount numbers, but directionally the statement is 100% correct. I haven't seen details of the latest lawsuit and would welcome more info.

When I was at Epinions, we knew Froogle was coming. Needless to say, this was the source of some consternation. Google had traffic (and lots of it), money (and lots of it) and, well, mojo (and lots of it). So there was some concern that Froogle was going to be a game-changer in ways that would adversely affect Epinions.

That was before we learned that not everything Google touches turns to gold. So when Google recently "demoted" Froogle by removing it from one of the coveted home page/search page links, it was a tacit admission that Froogle hasn't taken over the world. I can only assume that Froogle's traffic is going to drop substantially; and I for one have never found Froogle all that useful. Google's failure to hit a home run is a pretty dramatic development for those in the shopping comparison business.

I do think there's a lesson to take away from this. While a start-up can't ignore the competition, it shouldn't overreact either...and in Google's specific case, it is temptingly easy to overreact when Google moves into a business given Google's spotty history with new projects.

UPDATE: The likelihood of Froogle's demise is growing, with Google saying that it will "de-emphasize" Froogle, eliminate it as a standalone site, and integrate Froogle's results into its standard search results page.

The American Lawyer runs a thorough status report [registration required] on my old law firm, Cooley Godward. Back in the 1990s, the firm struggled with the balance between servicing start-up enterpreneurial clients and institutional clients--a balancing act that appears to continue today.

Epinions has settled the lawsuit brought against it by common stockholders frozen out in the DealTime/Shopping.com acquisition. Financial terms were not disclosed. Alas, because this was not a class action lawsuit and I did not individually participate, the settlement has no bearing on my financial situation. Fortunately, though, it should mean that I avoid a deposition (a low probability, but a possibility nonetheless).

While the settlement should close a messy and divisive lawsuit, it leaves open some questions--most obviously, what is the scope of venture capitalist liability for their dual roles as board members and preferred stockholders in private companies? More guidance on that front would have been helpful. Without the guidance, I wonder how much this lawsuit will affect VC behavior.

A couple of items came across my desk that may be apropos of the lawsuit over the Epinions/DealTime merger.

First item:

Jesse M. Fried and Mira Ganor, Common Shareholder Vulnerability in Venture-Backed Startups, UC Berkeley Public Law Research Paper No. 784610.

The abstract (the bolding is mine):

"The capital structure and governance of venture-backed startups have received significant attention from economists and legal academics. Much of this literature has focused on venture capitalists' use of preferred stock and control rights - including board control - to reduce agency costs. Recently, it has also been suggested that VCs' use of preferred stock is tax-driven. However, scholars have failed to notice that these arrangements, whatever their explanation, lead to a highly unusual and perhaps unique corporate governance structure: one in which preferred shareholders, not common shareholders, control the board and the corporation. The purpose of this paper is threefold: (1) to highlight the unusual governance structure of venture-backed startups; (2) to show that this structure leaves common shareholders vulnerable to opportunistic behavior by preferred-holding VCs, especially under current corporate law doctrines; and (3) to consider changes in these doctrines and the tax laws that would reduce common shareholder vulnerability and enlarge the startup pie for all its investors."

Another interesting item:

Montgomery Cellular Holding Co. Inc. v. Dobler (Delaware Supreme Court 8/1/05). Though the Supreme Court decision turned on a denial of attorneys' fees, the underlying litigation turned on the failure of the majority shareholder to get a valuation when doing a merger to squeeze out the minority shareholder.

A few details here. The deal already cleared the FTC. Deal announcement.

The eBay acquisition of Shopping.com cleared the Federal Trade Commission's Hart-Scott-Rodino review. This probably isn't all that surprising, but still it removes one potential snag.

Red Herring is reporting that some motions to dismiss (with leaves to amend) were granted in Ravikant v. Tolia. Previous coverage.

Interesting.

Forbes (this is the best of the early articles).

NY Times article.

AP Story.

Internetnews.com Story.

I'm sure we'll hear more about the strategic implications of the deal over the next few days.

UPDATE: Text of letter from eBay to its seller community:

"To Our Community:
I'm excited to let you know that eBay plans to acquire Shopping.com
(www.shopping.com), a leader in online comparison shopping and consumer reviews.
Many of you have been evolving your businesses on the Internet and we want to continue to help you succeed. We also recognize that more eBay sellers are starting to have success with in-season products. This acquisition will give you, our sellers, a new sales channel and access to a new set of buyers. Shopping on Shopping.com will be enhanced by the addition of eBay's listings to the product selection already available on the site.
Shopping.com also provides consumer-generated product and merchant reviews on Epinions (www.epinions.com). We've been hearing from eBay buyers that product reviews would help you make better buying decisions. Epinions is complementary to eBay's community-driven marketplace; there are currently more than a million consumer product reviews available to Epinions and Shopping.com users.
As you may know, the acquisition is subject to regulatory and Shopping.com shareholder approvals. We expect our acquisition of Shopping.com to close in the third quarter of 2005. We will work with the Shopping.com team to refine plans as the deal closes. We'll make sure to keep you informed.
Stay tuned!
Sincerely,
Bill Cobb
President, eBay North America"

UPDATE 2: Interesting critique of the deal from Motley Fool.

An Israeli perspective (and some commentary from Dan Ciporin).

A scorecard of who made what.

UPDATE 3: Epinions has posted an FAQ.

UPDATE 4: ComputerWorld Australia article with more speculation.

Shopzilla sold to Scripps.

BusinessWeek runs an AP story on the Ravikant v. Tolia lawsuit over the Epinions-DealTime merger. Defendants’ motion to dismiss is scheduled for May 24.

New York Law Journal (registration required) reports on in-house lawyers sitting in cubicles rather than offices, reporting on a survey finding that “7 percent of law departments use cubicles exclusively, another 16 percent have a mix of cubicles and offices and 18 percent don't have cubicles but may add them in a year.” For my experience with in-house seating arrangements (including an unfortunate encounter with a buzzsaw), see my write-up of my first three months at Epinions. You might also consider my notes about how to get employees to adhere to legal standards.

GQ article on Google by John Heilemann. This article has a ton of great behind-the-scenes stories about Google and the Silicon Valley VC community generally. My favorite dirt was the story about Larry sitting in a plate of crème fraîche during the IPO, and Schmidt’s response (“we’ve seen worse”).

The article explores a running theme about the interaction between boy entrepreneurs and adult CEOs. This theme really resonated with me based on my experience working with several boy entrepreneurs in my past, including the founders of theglobe.com and Epinions. I think the article neatly captures the tension of encouraging youthful brilliance while channeling the energy towards productive ends. There is a fine line to walk, and it takes a rare and unique talent to do it successfully. This is why I thought the article passed the spotlight too quickly over Bill Campbell, who “coached” us at Epinions and made a real difference with us as well.

John Dzienkowski has an interesting post about the former Silicon Valley law firm Venture Law Group. John ponders if the demise of VLG as a standalone firm has any lessons about the viability of its unique business model. I competed with VLG in their halcyon days and then was a VLG client when I was GC at Epinions, so I have some pretty strong opinions about this question. Rather than saying something I might later regret, let me only make 2 observations.
1) John puts a partially-flattering but perhaps unsupportable gloss on the VLG model. VLG was a law firm first and foremost, and their principal value to clients derived from providing legal services. They marketed themselves as being different from other Silicon Valley law firms by claiming to be both legal and business advisors (i.e., investment banker/strategic advisor/lawyer), but in reality their services were very comparable to what most other lawyers in the Silicon Valley did for their clients (i.e., many lawyers had VC contacts and tried to help promising new start-ups find money). The principal difference is that VLG charged more than the competition—they charged hourly rates at/above the market rates, plus took an equity kicker on top of that. (Only suckers took equity in lieu of fees). Other firms took equity kickers too, but VLG was more systematic and unrestrained in their practices. Nevertheless, many entrepreneurs were willing to pay VLG's premium rates because VLG did a very good marketing job.
2) Epinions switched law firms six months after I became GC.

Good article recapping the lawsuit.

I have been thinking a lot about the Ravikant v. Tolia complaint filed January 19. This lawsuit arises out DealTime’s acquisition of Epinions in 2003. In that merger, all of the common stockholders got wiped out (including me). The plaintiffs are some of those common stockholders who feel wronged by the washout merger and would like to share in some of the post-merger success.

This lawsuit has already received some press in the New York Times and the San Jose Mercury News (quoting me). In part this press is attributable to the high expectations that people once had for Epinions and its unexpected rebound from the dot com crash.

While personally I’m fascinated by the legal duties that preferred stock (and a board controlled by the preferred) have to common stock when the company’s valuation is below the preferred stock’s liquidation preference, this lawsuit is getting some attention because venture capitalists rarely sue each other. Here, a couple of VCs (including Naval Ravikant and Kevin Laws) are suing other VCs. In particular, Naval used to work for August Capital but is now suing his old firm and John Johnston, one of his former August partners. The VC world is clubby and driven by personal relationships. Given the prospect of repeated interaction between VCs over a career, most VCs find a way to resolve disputes out of court. Already, Naval and Kevin are feeling some of the consequences from their decision to break ranks.

I will have more to say about this lawsuit as it develops. For now, I have to choose my words carefully because I was company counsel during some of the relevant time periods.