Wednesday, April 23, 2008

(ebay and craigslist) some of Jim's apparent ramblings start to make sense...

EVEN MORE: see comments to this entry

MORE: (4th comment to a prior entry)

re: Jim: "Ensuring the future well-being of craigslist and the craigslist community is admittedly very important to us."

did craigslist issue more shares? (and thus dilute ebay) -- if so it looks like they can't possibly win... not while raking in estimated $100 mill or so this year alone while spending precious little... (what kind of "sound financial reason" could they realistically claim to have had? -- good post otherwise...)



craigbites said...

Craig did issue more shares. there is no other way to dilute ebay's stake then issuing new shares.

Question is to who and how.

To get 10% dilution you need to issue approximately 10% new shares. At a $3 billion valuation thats more than $300 million worth of new shares.

1. craig issued to new investor at market price. ebay might be upset that they didn't get the opportunity to buy the new shares but this might be considered fair dilution although i'm not a lawyer.

2. craig issued to a new investor at discount price. this would be unfair to a minority holder because it is giving value away at their expense.

3. craig granted to employees and performance incentives or stock options. A certain amount might be expected but what team of 25 people requires a $300 million stock option pool?

4. craig granted or gifted new shares to a non-profit foundation. I wonder what would happen here. I suspect ebay would have a strong case though.

D. said...

the quote I gave (from Jim) appears to imply they "raised money" --> the claim that they *needed* to do this for any foreseeable future wellbeing seems ludicrous to me... (regardless what means they might have used to achieve that) D.

craigbites said...

Debatable. To me the quote implies they want craigslist to remain independant and out of the hands of a corporate - which is what I think he means be wellbeing.

I don't think the purpose of this was to raise funds. It was to dilute all shareholders by gifting new shares to a foundation for example. I think Craig and Jim will have diluted themselves too.

D. said...

re:"they want craigslist to remain independent and out of the hands of a corporate"

right! *lol* --> since craigslist turned for profit, the worst "corporate hand" around appear to be the hands of Craig& Jim! astronomical profit margins that continue to grow at a dizzying rate every year while the community that built craigslist and continues to make it work has to put up with almost non-existent customer service and improvements...


P.S. I see nothing in what they've done so far to suggest they would want to give away 300 million to a foundation, unless that was some sort of a scheme that would get them *personally* even more money than what they appear to be currently pocketing...

If they would have been for real they would have stayed List Foundation and used whatever money they could get through fees or other means to serve the craigslist community... like they were supposed to do... or at least voluntarily disclosed their profits so people could see what they are made of... D.

craigbites said...

Sorry, I meant out of the hands of professional corporate that would make everything transparent and not hide that it is in reality, for-profit.

There is no doubt Craig is hiding behind a cloak of altruism. But that is why I think he could actually pull off a foundation stunt like the one I described. For publicity sake, which in turn brings more users to CL.

At least in tha hands of Google, eBay or Microsoft, we would not have to put up with his whole show.