Does craigslist have a Case?

Regardless of your opinion of the ethics involved in either party’s conduct, craigslist’s case against Ebay seems to be based entirely on the fact that they feel betrayed.  There is no doubt in my mind that Ebay behaved poorly and manipulatively gained the trust of Craig Newmark and Jim Buckmaster and has been trying to stab them in the back ever since.  However that does not mean that Ebay will lose any rights they may have to acquire more of craigslist.  I’m going to attempt a layman’s analysis.  You guessed it, I’m not a lawyer – I just play one in my blog.

craigslist’s claim is that Ebay backed a cement truck over the feel-good intentions they layed out during “negotiations.”  I put “negotiations” in quotes because it appears as if craigslist had no say in what actually happened, despite the appearance that they were an actor in the talks between the former shareholder and Ebay.  This is apparent because Ebay ultimately purchased an option without the involvement of craigslist, and craigslist executed the option without objection.  At that time, craigslist was not yet comfortable with the acquisition.  Why then would they have gone along with the purchase if they actually had veto rights over the transaction?  It appears that while the former shareholder and craigslist made efforts to have an agreeable sale, that was really just out of the generosity of the former shareholder – a generosity which ultimately ran out when a multi-million dollar check was handed to him.

If I’m wrong and craigslist grudgingly went along with the sale, even with the power to stop it, then Craig and Jim were seriously hoodwinked by far more savvy professional business people.  Perhaps at the time Craig and Jim did not understand how companies, and public companies in particular, work.  Board members and executives turn over rapidly and are pushed around and out by demanding shareholders.  If the people running the show are turning down money because they made some vague oral promises to some company they invested in, shareholders will apply pressure and those executives will change course or be disposed of.  Any feel-good vibe does not mean a thing when transacting with a large company, and you believe any such vague promise at your peril.

Warren Buffet likes the saying “only invest in companies that an idiot could run, because eventually one will.”  A corollary might be, only enter into business transactions where it is still to your advantage if your partner becomes your adversary.

The craigslist motion is an interesting read, but it feels more like an appeal to good taste than a legal proceeding.  Based on that feeling, and a lack of substantial concrete violations, my intuition is that they have a weak legal case and are therefore making their case to the public.  They will succeed in temporarily getting Ebay off the board, stopping the deceptive advertising, recovering some damages, and perhaps limiting some shareholder request rights, but any economically valuable shareholder rights are unlikely to be terminated.  My sense is some powerful shareholder options are the real target here, but the private nature of the companies leave that unclear.  I have positive, but mixed feelings about craigslist and the way it is operated, but like Craig and Jim, I think an Ebay acquisition would be detrimental to the public.  Unfortunately, unless there are antitrust issues (which are extremely difficult to prove,) public interest is not the basis for decisions in these sorts of civil proceedings.

Links:

Pennsylvania alcohol – Live free and or die in PA

In Pennsylvania:

  • you can’t buy wine or liquor in a beer store
  • you can only buy wine and liquor in a state run monopoly shop
  • there are beer stores (they call them distributor shops,) but you can’t buy less than a case (24) of beer in a beer store
  • if you want a six pack, you can only get it “take out” in a bar, at a hefty margin

Before I start ranting about what an imposition on freedom this is, I’ll say this has some pretty interesting (but unintended) positive effects.  First, lots of people go to bars since it’s such a pain to get beer otherwise, and you might as well sit down and drink it instead of take the $1 discount you usually get for taking the beer home.  Second, there are these tiny little box bars in random places in quiet suburban neighborhoods that basically serve as beer corner stores.  These spots are a neat community development.  As often happens, good things come from bad things.  Great relationships, realizations, and renewed communities can rise out of natural disasters.  Of course, that doesn’t get me praying for typhoons.

Americans often like to connect economic freedom with political and personal freedom.  When Russia and China open their economies, they will ultimately be forced to open their political system – or so the theory went 20 years ago.  We know it’s not that simple now, but let’s take a look these Pennsylvania liquor laws for an interesting contrast.

You can buy beer, baijiu (Chinese rice vodka-ish drink,) and cigarettes (not to mention beetlenut and bootleg DVDs) on literally any corner in China.  You can open your beer in the store, walk down the street, wave to a policeman, and take the subway – all sipping your beverage.  Not that I’m a lush, but that sounds like freedom to me.  Economic freedom means anyone can sell me beer in any reasonable location.  Personal freedom means I can take that beer and drink it where I want to, as long as I don’t get wasted and start bothering people.  Political freedom means nobody wants to take that right away from me.  The first time you walk down a street with a beer in your hand on a lazy Sunday afternoon, you feel slightly awkward but oddly liberated by this simple pleasure.  By the time you get back to the “land of the free,” you start wondering where you feel more free – totalitarian China or the USA.

Why is the law in PA so insane?  I’m guessing it’s a decendent of the temperance movement.  Now, as with most laws, there is an entrenched economic interest rolling in dough that will fight tooth and nail to stop rational reforms.  According to my favorite source of mostly accurate data, Wikipedia, the state run liquor stores rake in $1.6 billion, while the state’s other hand happily collects an 18% liquor tax and 6% sales tax on top of that staggering number.   Of course the state liquor board is a monopoly, so it does not pass their volume discounts or efficiencies of scale to consumers.  In fact, stores in neighboring states that don’t get volume discounts sell to consumers for up to 40% cheaper, but it’s illegal to bring those to PA.

Well, it’s taxes so it goes to running state services, you say.  Sure, but you can be certain that so much money flowing through such a draconian institution does not go untapped by those in the know.

Other entrenched interests include the “beer distributors” which are those stores where you can only buy 24 packs.   They’ve got a nice monopoly on reasonably priced beer sales, and consumers are forced to buy from them in quantity.  Bars also make a nice business selling one-zies and siz-packs to those not looking to throw a superbowl party, but who want to sit down with a beer and watch the hockey game.

What’s worse, the county where Pittsburgh resides adds an additional 10% tax on liquor.  Boy do these taxes add up!   That money is supposed to fund the Port Authority which operates the public transportation system.  Let’s see what we are getting for that money on the bus system, which is all I’ve used at this point:

  •  Zoned pricing
  • $2.00 starting rate for a ride one way on one bus
  • $2.50 for a ride with a one time use transfer – if you ride three buses, it’s $2.50 + $2.00

and compare that to San Francisco, the second most expensive housing market in the country (Pittsburgh is the fourth cheapest)

  • $1.50 for unlimited bus rides for 1.5 hours

Conclusion?  There’s something very, very fishy going on in Pennsylvania liquor industry.  There is clearly a lot of money at stake, and nothing pisses me off more than mobsters raking in cash at the expense of my freedom.

Advantages of EC2

I have been using Amazon EC2 for a number of months now to host CribQ.

In a few words, EC2 allows you to spawn virtual servers whenever you need them and pay for them by the hour.

I thought it would be helpful to post a list of pros and cons based on my experience.  This is in response to a question about shared hosting, so the response is somewhat in that context.

Pros:

  1. No long term commitment.  You’re paying by the hour.  ($0.10 – $0.4o cents)  Your balance sheet will thank you.
  2. Internal expertise.  As opposed to using a shared host, you will have the internal expertise to set up your system from scratch, whether you choose to start with a LAMP image or a base Linux install.  There are many many free public images that will get you started, and may require little modification to run your application.
  3. Play space.  You can create additional instances of your application for load testing (client and/or server), testing new architectures, rewrites, versions, etc.  I especially like the ability to create load testing clients, something that is very hard to do cheaply any other way.  How else can you pay $1.20 for 3 hours with 4 CPUs and free bandwidth to load test your application.  (Make sure to use the internal IP address to get the free bandwidth.)
  4. Scaling.  You can easily scale vertically (upgrade to a larger 2 or 4 CPU instance) or horizontally (add instances).  Rather than trying to predict your needs, if you understand how to scale on EC2, you can scale as your demand picks up, and even scale dynamically from hour to hour.
  5. You get tons of RAM.  A small instance has 1.7Gb.  A large instance has 7.5Gb.  Compare that to what you get with other virtual hosts.
  6. You can more easily and cheaply leverage S3 for backup, storage, and serving of large files, and even SimpleDB for persistent storage.
  7. They have excellent bandwidth.
  8. Less worry about hardware failure.  Failures do occur, although it should occur less often than a dedicated server, and recovery is much easier.
  9. No CPU throttling or other usage limitations.  At a shared host, it is common practice to kill long running scripts that are using significant CPU.
  10. Dedicated IP address.  It’s yours and yours alone, as long as you keep your instance running.

Cons:

  1. No static IP addresses.  You’ll need to look around and decide on how you want to manage this.  Hopefully Amazon will address this problem soon.  Basically if you change to a new instance, you will probably also get a new IP.
  2. No international presence.  S3 storage can be located in Europe, but everything else is in the US – all in Seattle I think.  If you’re running a site targeted at Hong Kong, EC2 is not your best choice.
  3. Virtualization does have a performance impact.  You are not getting something as fast as the specs would indicate.  The difference depends on what your doing and you’ll have to read around about this.
  4. Lack of “persistent” primary storage.  This is a bit of a red herring, but if you shut your instance down you will lose the main storage where you database most likely resides.  You must explicitly back up your data.  I view this as a positive because it forces you to have a good backup/restore process, and S3 is knocking on your door.   Equate the extremely low chance of instance corruption with primary hard drive failure and you would be in the same situation.
  5. Not the cheapest option.  The price starts at $72/month for a single CPU instance.  Shared hosting can be as low as $6/month.
  6. Lack of support and management tools.   You’re not buying into a full service shared hosting solution with frequently updated install scripts and 24 hour support.

Plaxo Data Loss

I’ve found Plaxo to be a very cool tool. It keeps people’s contact info up to date and serves as a nice online repository and backup for my contact data. However keeping track of contact data is hard enough without having data loss.

Unfortunately, I have started to see random contacts and data fields disappearing when using Plaxo. This may or may not be related to using their new “de-duper,” which merges duplicate records. The de-duper seems to be generally careful about making mistakes, but that doesn’t mean it doesn’t. The lost data seems to be sparse and random – not enough that you notice right away, but eventually you just don’t find something you knew was there.

I’ve restored my Mac Address Book from a backup before de-duping and the records are there. The only software I can blame is Plaxo. I have seen a references (see comments) to similar problems.

Anyone with a similar experience?

“You must always work not just within but below your means. If you can handle three elements, handle only two. If you can handle ten, then handle five. In that way the ones you do handle, you handle with more ease, more mastery and you create a feeling of strength in reserve.” — Picasso

Who is paying e-rewards?

I have been a member of e-rewards for a while now.  They e-mail me offers to make $5 to $15 in funny money in exchange for answering mind-numbing surveys.  The funny money compensation can be easily converted into gift certificates and loyalty program points.

Every once in a while I actually torture myself and answer one of their surveys.  I don’t know why.  Maybe it makes me feel important.  Maybe it makes me feel better about my own failures.

Anyway, they are truly horrendous.  I’ve got to wonder if the venture money pits that hire these guys even look at how the surveys are done.  They are a lesson in outsourcing – always check up on what you’re buying – you might end up with a company like e-rewards.  In fact, the business folks at e-rewards may well be brilliant, as they seem to have marquee customers and partners.  Unfortunately, business people seems to be all they have.

Here is a screenshot of the latest question I stumbled over.  Needless to say, I don’t use my brightest brain-hours for this waste of time, so I spent more time balancing my algebra than answering the question.  Would you do any better?  Are there developers really this inept that they can’t think of a better way to ask this question?  (Hint: Yes you need to calculate everything yourself – no clever javascript helpers allowed.)

Worst Survey Question Ever - e-rewards

This is just the beginning of how awful these surveys are.  The software asked me at least 10 times in a row about the range of revenue my company has.  (How many ways are there to say $0?)  Often it asks multiple checkbox questions like “which of these are brands do you know?”.  Then you get to answer the cartesian product of all the brands you checked with 20+ poorly worded questions – one per painfully slow un-Ajaxified screen load.  Often the questions require more thought about how to fill in the many small text fields than about how to answer.

Of course, if you’re in it for the funny money, you quickly learn to check only as few options as it will let you.  Check more and you’ll be there for hours.

I’ve said enough.  The screen shot speaks for itself.  I’ll even leave out the ironies of this sort of a customer research company having such a bad end user experience.

If anyone has the connections to make a better e-rewards happen, contact me.  We’ll be up and running in a few months.  Selling against e-rewards would just be too easy.

The Value of Paid Links

Patrick Altoft asks if people ever report paid links.

I’ve never reported paid links.  The idea had never even occurred to me since I’ve never been encouraged by a search engine or anyone else to do so.   It seems to be one of those things that you only know how to do if you are somewhat obsessed with the issue, like the four people who complain about wardrobe malfunctions when most people just shrug.

Beyond that, paid links are a form of advertising.  I don’t see how they are inherently wrong.  I think it is much more valuable to report splogs – sites with no original content and sometimes no meaningful content – that exist as advertising venues.  These do far more to ruin our collective experience than paid links.  How can I report splogs?

Some very respectable directories (e.g. Yahoo!) charge for the pleasure of being in their directory.  This serves a few purposes:

  1. It destroys the economics of splogging and provides a first-level quality filter.  Sites that exist only to provide referral traffic would hopefully be priced out and newer sites that have real content, and few incoming links, can pay to be seen.
  2. It allows high quality directories like Yahoo! to recover their costs when verifying that a site has legitimate content.  In theory, this should improve the quality of the directory.

In fact, and this is just a theory, it may be that if paid linking were more widespread, it might balance some of the overblown voices of the new media elite (e.g. the 100 top Diggers and Commander Taco,) and push splogs to the bottom of the results.  New voices could pay to be heard.  If no one liked what they said, they would have to keep paying.  If people did like it, the new site would get organic links and may be able to stop paying.  Sounds like a decent result to me.

As someone who is trying to build traffic to a new site, paid links can offer an attractive way to get some early users.

Back in the olden days, the old-timers felt the internet was dying when advertising first appeared on the inter-web.  Today, Google is making billions by putting advertising next to your baby photos and no one seems to mind.  My belief is that paid linking and even paid blogging will gain acceptance once the ethics of disclosure and honesty are better understood.