May 1, 2008 03:40 PM
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Tue Feb 9
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Jim Buckmaster has just set himself up for a messy court fight. Responding to eBay's lawsuit against Craigslist and its board — the board being Buckmaster and founder Craig Newmark — he has claimed that he and Newmark issued additional shares in the company to themselves "for the sake of protecting the long term well-being of the Craigslist community." Let's leave aside the question of how the community benefits from Buckmaster and Newmark increasing their ownership. Craigslist is registered as a for-profit company; as such, its only legal responsibility is to its shareholders, not its users.
Buckmaster may win points in the court of public opinion. Ordinary Craigslist users may well believe his spin, that eBay is the bad guy in this fight for seeking to protect its rights to a stake in the company it bought fair and square (and at a substantial profit to Buckmaster and Newmark).
But the complaint eBay filed makes clear what happened. Newmark and Buckmaster, upset that eBay had launched a competitive classifieds site, Kijiji, invoked a provision that cancelled a right of first refusal they held over eBay's shares — a right that forced eBay to offer its shares first to Craigslist, should it wish to sell. They landed in trouble with eBay by trying to force it to sign a new right-of-first-refusal agreement.
Newmark and Buckmaster, in short, are idiots. In a snit over Kijiji, they cancelled a valuable power they held over eBay. They are now engaging in what appear to be dirty boardroom tricks to reinstate that power, using means eBay finds questionable. It is understandable that they dislike eBay's competition. But had they just kept quiet about it, Newmark and Buckmaster could have kept eBay at bay indefinitely, and kept raking in the lion's share of Craigslist's profits. The trouble they are in now is entirely of their own making.
(Ilustration by Ismael Rodan/WSJ via Craigslist)
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