Just heard from my soon-to-be ex-Crackle colleagues that Sony is sick of tossing money down the ol' 2.0 hole (~$100m after the $65m purchase) and offering some the chance to re-apply for their current positions in Culver City before they move the operation out of Sausalito in three months. Seems that if you stick around (for what is unknown) for that amount of time, you'll get a month or two of severance pay... I'm sure there're a few newly minted middle managers comtemplating individual contributor roles once again.

Sounds like they're fretting over what to do about the $1.25m datacenter we built at L3 in Emeryville, but will probably end up forklifting the stuff to the Sony online group's DC in San Diego. Hope they can get a 10Gbit feed down there or it'll be a waste of a lot of expensive Cisco modules; then again, Crackle never cracked a Gbps in 'natural' (not purchased) traffic while I was there (I was part of this group)

(Photo by Ted Johnson)

Blame Crackle's founders and Sony execs for the company's woes, commenter agentX told us in August 2007:

Grouper succeeded at making the founders and a few execs a lot of money and screwing its employees in the process. Crackle is an attempt from the money greedy slimey founders to milk more cash from Sony. ...the name change buys another year of high rolling paychecks for the execs.

Josh Felser, Dave Samuel, Mike Citrin, and Aviv Eyal screwed their employees. Stay away from any venture any of these people are involved with.

TechCrunch blogger Michael Arrington, for example, says YouTube traffic justifies his own crazy valuation. It's a scaled-up version of the recent $65-million purchase of Grouper, "when you look at relative traffic."

I hate to correct a well-educated Valley lawyer who's worked with tech companies since 1995, but how could he even pretend anyone cares about relative traffic?

Let's explain clearly: Sony did not buy Grouper for its traffic. Sony didn't need Grouper's audience (how many of your friends ever heard of Grouper?). It needed Grouper's video-sharing technology, an innovative peer-to-peer system for sharing video over the web and distributing it on many devices. In contrast, YouTube is a vastly trafficked site with a simple, easily replicated technology. Nothing wrong with that — it's just a whole different ballgame.

Who knows whether Arrington is misinformed, fudging, or just drunk. But watch out — anyone who tries to value YouTube based on Grouper's traffic count is not worth reading.

YouTube's Magic Number - $1.5 Billion [TechCrunch]

• Sony bought video site Grouper (pictured) for $65 million; analysts say it's for the technology, not for the traffic. [NYT]
• Microsoft wins the ad provider contract for Facebook, which one Times source calls a "consolation prize" for losing the MySpace contract. We prefer to call it "prom date plan B." [NYT]
• One day later, the cold reality of YouTube's announcement (that its brave new business plan begins with Paris Hilton) finally sinks in, and we finally acknowledge it. [Mercury News]
• In an agreement in U.S. District Court, the government drops all charges against Frank Quattrone, an investment banker who blew up the tech bubble in the 90s. He may be "not guilty" under the law, but in the hearts of those who spent millions based on his foolhardy predictions, he will always be "that bastard Quattrone." [WSJ]

Last Tuesday, I wrote:

Online video startup Grouper (pictured) denies any impending deal with Sony, despite an e-mailed rumor.... The Sales and Marketing VP of Grouper...says the company will not be joining up with Sony.

Last night, TechCrunch wrote:

Sony Pictures is announcing the acquisition of online video startup Grouper tonight, Tuesday, at midnight EST. The acquisition price, confirmed by Grouper, was $65 million in cash.

If that's true, VP Jonathan Shambroom was either:

A) Lying to the press on-record about a business deal, or
B) Clueless about a deal his company was already making.

Grouper has an executive team of six. We're gonna bet on option A.

Wow - Grouper Sells for $65 million [TechCrunch]
Earlier: Grouper denies Sony merger [Valleywag]

The Sales and Marketing VP of Grouper, which is running on $5.25 million of funding, says the company will not be joining up with Sony (market cap $45.19 billion). Avoiding a Sony deal would make sense for Grouper; where would Grouper find office space for Sony's 152,700 employees?