Craigslist-eBay's David vs. Goliath battle
Craigslist is being sued by eBay because it claims it’s management team “unfairly diluting” its holdings in Craigslist.
The online auction site has had a nearly 30 percent stake in the classifed-ad Web site since 2004.
The two companies are essentially competitors, but EBay, with thousands of employees, dwarfs Craigslist, which only has about 20.
And it’s a whole different mentality over at Craigslist.
Last month, I interviewed Jim Buckmaster, the CEO of Craigslist, for
a story I wrote on how MBAs were not the be all and end all when it came to becoming successful in the business world.
The guy was quite refreshing. To him, it wasn’t all about money.
When I asked him why he didn’t want to hire MBAs he said, “Generally speaking, the discipline taught to MBA students is useful in getting ahead in the business world. As a company we are not trying to get ahead in the business world, and we’re not looking for individuals trying to get ahead in the business world.”
I know, he doesn’t sound like your typical CEO.
Here’s some of his bio from the company Web site:
“Possibly the only CEO ever described as anti-establishment, a communist, and a socialistic anarchist, since 2000 Jim has led Craigslist to be the most used classifieds in any medium, and one of world's most popular Web sites, while maintaining its public service mission, non-corporate vibe.”
You’re probably wondering why the company hooked up with auction giant eBay if money wasn’t the major motivator.
According
to a Newsweek article eBay “was an unsolicited suitor to quirky Craigslist in 2004. An unnamed former Craigslist shareholder sought out eBay and sealed a deal whose financial terms were never disclosed.”
The article also stated that a company spokesperson at the time said Craigslist “never sought any outside money, and that's not going to change."
So what’s a small business owner to do if a big giant starts pounding its chest?
Craigslist went after eBay in
the company blog:
“Coming from a shareholder that views Craigslist as a prime competitor, filing suit without so much as mentioning these assertions beforehand seems unethical, and hints at ulterior motives.
Ensuring the future well-being of Craigslist and the Craigslist community is admittedly very important to us. But eBay has absolutely no reason to feel threatened here — unless of course they’re contemplating a hostile takeover of Craigslist, or the sale of eBay’s stake in Craigslist to an unfriendly party. In which case, they’re out of luck.”
By blogging, the company gets their side of the story out to the world, but mainly it’s customers. From the 99 responses to the blog post most were siding with Craigslist.
One post summed up many of the responses: “EBay is really a big bully crying foul when they themselves are the real aggressors.”
Even though it's unclear how eBay even got the Craigslist shares in the first place, entrepreneurs from all walks of life should use this battle between the two companies as a lesson to be cautious when bringing in investors.
“Not all money is good money”, says Craig Jurecka, who works with the investment capital practice group of accounting firm CBIZ’s Mayer Hoffman McCann. “My recommendation when you’re raising money or bringing in investors is to do extensive homework.”
And the key when you choose an investor, he stresses, is “you have to have similar views.”
Clearly, EBay and Craigslist don’t appear to be of like minds.
