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Naveen Jain's Latest Quest For A Trillion Dollar Company May Be In Trouble
from the how-about-that? dept
Naveen Jain is nothing if not confident in himself. Back in 2000, as founder and CEO of InfoSpace, he famously declared both that InfoSpace was bigger than the internet, and that it would be the world's first trillion dollar company. More specifically, he said: "There are two kinds of people in this world... those who don't believe in God, and those who believe in God and InfoSpace. That's OK -- the nonbelievers will be converted when we become a trillion-dollar company." Now, it's one thing to be confident, but it's another thing to be cooking the books to try to get there. After InfoSpace imploded and Jain was sent packing, an investigative report uncovered all sorts of evidence about how much of InfoSpace's revenue was a huge scam, involving outright lies and "lazy susan" deals, where InfoSpace would "invest" in a company, who would turn around and pretend to buy InfoSpace services as a way to boost revenue.
Jain moved on and started a new company called Intelius, which claims to help you get background information on people -- though it's not hard to find many, many, many people who claim that the information is next to useless. Still, it's managed to bring in a ton of revenue, and with that has been planning to go public. However, Mike Arrington did a fantastic bit of sleuthing to discover that much of that revenue seems to come from a very questionable method.
Basically, Intelius gets you to cough up some money for the "information" it has on someone. Afterwards, it asks you to take a short survey, promising to give you $10 for your time. The survey is quick, but down below, in tiny gray-colored hard-to-read print, it notes that in submitting the "survey," you're actually agreeing to sign up for a $20/month "service" that, according to Arrington, doesn't appear to do anything other than charge you $20/month. As for that $10? Well, it's never mentioned again (nor is the $20/month you'll be paying... other than on your credit card bill). The "service" is a separate company (though Intelius gives them your credit card info), but clearly pays Intelius a fee for each signup. Arrington does a few back of the envelope calculations and figures that nearly all of Intelius' "growth" comes from these scammed deals, which, some claim are also difficult to cancel.
The whole thing stinks, and you would think that, given the situation with InfoSpace, the backers of Intelius' IPO would have done a bit more due diligence before agreeing to take the company public.
