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InfoSpace bag-of-worms: Could it happen here?

Seattle Times continues its coverage of one of the more outrageous dot-cons of the bubble era, Seattle's InfoSpace. Great reporting, but now we're REALLY interested in tomorrow's installment about how the SEC responded. Yesterday, we asked whether the InfoSpace debacle could have happened here in Silicon Valley. An additional protection layer we have is the established venture community, where many partners are already accomplished, put a lot of stake in their reputations and so have little interest in breaking the rules. InfoSpace's Jain financed InfoSpace with $1.5 million of family money and that of friends, publicly eschewing venture capital. Keeping things inside the family certainly increases odds of insular thinking, and Silicon Valley has no shortage of such start-ups. None, though, achieved InfoSpace-like profile during the bubble. Mike Langberg, a colleague who has covered the valley's tech world longer than we have, comes up with two examples, but they're both well before the bubble: Media Vision (story here), coincidentally run by a guy named Paul Jain; and Miniscribe, which got caught for shipping bricks instead of disk-drives -- though while it had a prominent local investor, it was actually based in Colorado.

Speaking of venture capital, the Seattle Times reports that Microsoft co-founder Paul Allen's Vulcan Ventures pumped $426 million into Go2Net, the company that merged with Jain's InfoSpace in 2000, a year before the stock crumbled. That's a huge amount of money. Wonder how much Vulcan was able to sell before shares hit $1?


Ah, Miniscribe. I recall their 85MB drives well - we shipped many Symmetric 375's with those drives. They were quite cheap and quite good. But I also remember how they tried to claim we signed for a pallet never delivered. Turned out the signature was an obvious fake, and Miniscribe dropped the claim. We never did get those bricks.... We did however have one of their drives catch fire in testing - came into the office to the smell of phenols and a "squeek, squeek" sound of a slowly (for a disk drive) turning disk. I bet the engineers at Miniscribe spent a lot of time on that RMA!

Lynne Jolitz on March 9, 2005 11:01 AM
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