Valleywag was the first to report, back in 2007, how Newmark and co-founder Jim Buckmaster required the equivalent of a $16 million bribe from eBay to honor an early employee's 25 percent stake in the online classifieds company. The employee, purported Craigslist co-founder Philip Knowlton, had previously agreed to sell his equity to eBay in desperation, for a separate $16 million, after Newmark and Buckmaster tried to dilute his holdings with new shares. People would speak about the incident only anonymously at the time.

But an eBay executive laid out the same story in testimony today in Delaware court, saying Newmark and Buckmaster demanded $16 million and threatened to block the deal if they didn't get it — their ownership award to Knowlton be damned. Their demand amounted to "essentially extortion," the executive, Garrett Price, testified, according to NBC Bay Area and the San Jose Business Journal.



What's more, Price also testified that Newmark and Buckmaster asked that the payment be hushed up to protect Craigslist's altruistic image. That way, Newmark could continue to float preposterous, image-enhancing deceptions like this one, swallowed by Wired and printed as part of an August 2009 profile of Newmark:

Newmark abandoned the idea of running Craigslist as a nonprofit, which would have required him to learn and follow too many rules.... in the meantime he handed out a significant portion of his ownership to others as a way to avoid acquiring too much authority.

So on the one hand, Newmark is telling the press he's intentionally diluting his ownership in the company to keep his ego in check; on the other, he's frantically bolstering that ownership, a process he only halts when he gets a payoff, made to him, at the expense (effectively) of a major shareholder and former employee/co-founder. What's more, as a result of these shenanigans, his quirky indy SF startup is now partly sold out to a big bad tech giant.

Newmark has yet to take the stand. It should be interesting to see how he spins his way out of this one — not only in the court of law, but in the court of public opinion and brand image.

A hockey enthusiast called Josh Koll has set a reserve of $50 for each item. Which is a bargain, depending how much you value slightly-used hockey equipment worn by minor celebrities. (Related: couldn't Playgirl stump up to buy new stuff?)

Here's your new holiday shopping list:

• The pads.
• The pants.
• The stick.
• The gloves (which you might want to give a wash before use, judging by this picture).
• And finally the helmet.

This zoom-able map is for Black Friday, the climax of America's annual holiday shopping orgy, when eBay processed 1 million deals; the online auction company sold even more items, 1.4 million, on Cyber Monday, which is supposed to be the busiest online shopping day. There's a graphic of that day here. City dwellers should take the maps as hints to sell more of their junk. If the heartland can let go of its junk, why can't you?

[via Cool Infographics]

Lacey's description, from Ebay:

The sixth painting in the Gawker series, which is an elaboration on the Rachel Maddow riding a be-saddled Keith Olbermann into battle with a lance and pancake shield against a comparably-though-perhaps-differently-armored Limbaugh riding Hannity suggestion. The suggestion was made before the full assention of Beck and includes a completely gratituous full bodied although one-legged Sarah Palin with pancakes on her head. Obama and Penelope the Unicorn insert themselves into the center of the fray but are powerless to stop the slaughter.

Provocative. Bid on this artwork that you, the Gawker commentariat, spawned, at Ebay.

[Previous paintings in the series here]

Skype founders Janus Friis and Niklas Zennstrom are dropping suits against eBay, to whom they sold Skype in 2005, and against a consortium of private finance companies trying to buy Skype from eBay. The founders had accused both groups of intellectual property theft. They're dropping those lawsuits in exchange for 14 percent of Skype.

But former Wall Street Journal reporter Kara Swisher reported last night on Dow Jones' All Things D website that the founders would get not 14 percent but up to 13 percent of the company — 10 percent outright and an option to buy another 3 percent. Sacrebleu! Rob Wauters of rival TechCrunch was quick to rub Swisher's face in the minor error, writing that the founders "are getting 14 percent of Skype back for rights to the... technology their company... controls... and not 10% like previously reported by other media" (emphasis from original). Meow!

The press release issued by Skype actually confirmed Swisher's reporting that the founders had to put in money to get some of their shares. Swisher later acknowledged that the figure was 14 percent, just one percent higher than she had written. But she also engaged in a lengthy Twitter fight with Wauters and his colleague Erick Schonfeld (see below) over their public nitpicking and fact-bending. Maybe everyone involved in this fracas needs to take the next couple of days off. Oh, look at the calendar!

(Top pic via)

Sixty jobs is less than one half of one percent of eBay's 15,000 worldwide employees, in line with the company's earlier statement that internal rumors of a five percent reduction were "not even close" to what was planned. Without commenting on chatter that the axe will fall Thursday, eBay said it plans to provide details to employees within a week, meeting a commitment it made to them on Sept. 21 to outline restructuring plans within 30 days.

Spokesman John Pluhowski wouldn't get into whether the layoffs would be focused on the executive suite vs. rank and file, but did say they would fall "principally" within the product and technology areas. The restructuring, he added, is intended to "help improve our customer experience, build a global product team and speed up innovation." In other words, further details are still to come.

(Pic: by Chong Fong Liew)

The online auction company told us earlier this month it planned a "small" round of layoffs as part of an ongoing restructuring. Inside the company, staff whispered that eBay might shave the bottom five percent of performers, GE style, but a spokesman told us the number of lost positions would be "not even close" to five percent. A rumor also spread that laid off workers would get no severance.

An eBay tipster who helped bring the layoffs to our attention writes that they are now set to happen on Thursday. We've asked eBay for comment and will update this post if they provide any. As always, if you have any additional information, we'd love to hear from you.

UPDATE: eBay says a layoff impacting fewer than 60 positions should be announced by Oct. 21. See post here.)

(Pic: eBay CEO John Donahoe at the eBay Developers Conference in June. Getty.)

The online auction giant does plan layoffs, a spokesman confirmed to us, as part of a restructuring that fuses product and technology leadership at the company and unifies internal organizations devoted to buyers and to sellers. CEO John Donahoe, a former Bain consultant, has been trying to finely tune eBay's core auction and retail sales businesses while positioning the company as a sort of online Costco.

But inside eBay, staff are worried for their own hides. The eBay spokesman said layoffs should be "small" in scale. But one eBay-er we spoke with believed the MBA-led company is planning to cut the lowest-performing five percent of staff, emulating an old General Electric tactic. eBay said five percent is "not even close" to the limited layoffs planned — way too high.

So staff should cast a skeptical eye on the other rumor going around, that eBay plans no severance for laid off workers. Still, given Donahoe's apparent readiness to break with past company culture — or, as he calls it, "religion" — it's no wonder some employees worry they'll be lost in the shuffle.

(Pic: Donahoe at Allen & Co. Sun Valley schmoozefest in July.)

"We thought auctions were a religion," Donahoe says in the video excerpt above. "Auctions are nothing more than a format." Writes Ina Steiner of AuctionBytes, where you can find the full video: "This is a rather amazing statement for the head of eBay to say, given that auctions are such an important differentiator" for the company.

Indeed, but they're also a pain in the neck: eBay's auctions are famously a favorite playground for fraudsters and scammers and occasions for heated disputes between even legitimate buyers and sellers. Multiply those headaches across millions of users, and you can understand why the company's MBA CEOs — first Meg Whitman, now Donahoe — have decided to shift the company's focus elsewhere. Whitman pushed eBay into sales of new goods while jacking up auction fees; Donahoe has emphasized the growth potential of PayPal, as well as bulk sales from partners like Buy.com.

But solving tough problems is, ultimately, the best way for a business to protect its profits from competitors. Take, for example, PayPal, the acquisition that has become eBay's crown jewel. The company beat back rival startups as well as huge competitors like Citibank above all else on the strength of its relentless approach to combatting fraud, co-founder Max Levchin explained in the book Founders at Work:

The financial industry people understood the risk, but they weren't willing to do the sort of stuff we did... I remember all these companies announcing that they were going out of business and they expected PayPal to go out of business soon too, because the fraud numbers were so staggering they could not see anyone handling this sort of thing.

Levchin ultimately solved the fraud problem with a combination of human investigators, and computer algorithms to funnel select cases to those investigators. He eventually decided PayPal was a "security company pretending to be a financial services company." It's possible Donahoe realizes that eBay is, likewise, a security company pretending to be a retail services company; he has talked about revitalizing the core of the company and focusing on small sellers. But when he brags to a retail conference about taking auctions to 25 percent of eBay business from 80 percent, it sends the signal that eBay is retreating from his company's central lucrative challenge rather than attacking it. And who wants to bet on a quitter?

Skype founders Janus Friis and Niklas Zennstrom (pictured) appeared to have it made before the computer wizardly was allegedly stolen. They had eBay, to whom they sold their internet phone-call service in 2005, on the ropes. The online auction company was trying to sell Skype, but Friis and Zennstrom's barrage of software-licensing and copyright lawsuits against eBay scared off potential buyers like Google. eBay, it seemed, would be forced to accept Friis and Zennstrom's own lowball offer to buy back Skype.

Then a consortium of private finance companies swooped in with an offer — ultimately accepted — valued at a cool $2.8 billion. It just so happened that one of the buyers, Index Ventures, employs a guy named Mike Volpi, who used to work for the Skype founders. One of Volpi's tasks for Friis and Zennstrom, according to their suit (embedded below), was to learn how to replace the "Global Index" software code at the heart of their various internet communications software, including Skype. Being able to remove this software would potentially moot many of Friis and Zennstrom's Skype lawsuits, thus making Skype much more valuable to its owner — the company Volpi now works for.

Friis and Zennstrom are alleging that ex-employee Volpi stole secrets from them, and breached his fiduciary duty as chairman of one of their companies, online video company Joost. In so doing, they are not only kicking off an epic, $2 billion nerdfight, they are also cementing their reputations as among the most litigious entrepreneurs in tech. In addition to suing eBay in both U.S. and British courts, and Volpi, they've also filed three separate lawsuits against the investment banker who represented them in their sale of Skype, according to the New York Times.

For a couple of guys whose product is revolutionizing global communication, Friis and Zennstrom have a distinctly old-fashioned way of sending a message.

Joost lawsuit

Coverage elsewhere: VentureBeat, TechCrunch

(Top pic by Steve Jurvetson)

The event in question, a forum being put on by the Silicon Valley Leadership Group, will bring all the big gubernatorial candidates, including Gavin Newsom, a conversation on the state's many, many problems and how to fix them. Sadly for those who support the right-wing Whitman, she's going to be too busy at Fortune Magazine's "Most Powerful Women" Summit.

Sure, she helped John McCain last year, he's helping her and she knows how to be a flip-flopping demagogue, but that doesn't mean she's ready for the big leagues. She's already missed at least one event: a debate at the Sacramento Press Club. And she hasn't yet sent her RSVP for an October debate. Her flack insists she will participate in some debates down the line and stressed that she's holding "Meet Meg" events around the state, like one where she spoke at Yahoo's offices.

Good grief, these media mavens mulling public office sure are messy. Yes, we're talking about you, Carly Fiorina.

Although, seriously, if Meg Whitman wants to blend into the state's political scene, she needs to stop trying to separate herself from the pack. People trust politicians who can play the game. And that means playing with others. But, what do we know? We're just computer geeks — a group that has no place in politics whatsoever, right?

If deference to Blue Water Comics, who provide the lead image, their comic book biography Political Power: Ted Kennedy was announced hours before his death, but they must have smelled the inevitable on the horizon, too bad it won't be available until November.

Before the Franklin Mint can churn out some commemorative plates, eBay is teeming with death profiteers today, offering everything from memorial graphic art and pins to Ted Kennedy trading cards. Our favorite though is this Teddy bear that was made during his unsuccessful 1980 run for the presidential nomination. The creepy thing is the "I Shall Return" sticker actually came with the bear.

Another repository for Kennedy salutes is YouTube. Of all the crazy video montages and personal remembrances, two really stand out. The first is from Senator Orrin Hatch (R-Utah) who sings a song he wrote called "Heading Home." For some strange reason, this isn't available on the official "We're Sorry Ted's Dead" site.

Kennedy also inspired prolific rapper Rah HoWard, who spits his rhymes over a montage of Kennedy images. Cause nothing says "dead Senator" like hip-hop.

Whitman's support for a 2008 anti-gay-marriage ballot initiative became a hot topic at a recent gathering of high-profile Silicon Valley women, the sort of crowd from whom Whitman would eventually like to raise money. The conversation inevitably turned to Whitman's gay marriage stance. One guest — we hear it was All Things D editor Kara Swisher, a longtime Wall Street Journal tech reporter, but haven't been able to confirm with Swisher — grilled the Republican candidate on why her lesbian family should be second class:

'I have children who are unprotected... I pay taxes just like you. Why do you get more rights than I do?' "

In the past, Whitman's campaign spokesman has parried questions like these, emphasizing Whitman's support for civil unions. On her own, Whitman took things a step further, her interrogator told the San Francisco Chronicle:

"Whitman said, 'You know, I just wish we could have one term for everything: civil unions,' I said, 'Bingo, sold, I'll take it.' "

But Whitman quickly backed down from the idea of making civil unions the sole relationship recognized by the state. According to her questioner, Whitman

"wouldn't say anything. ... She wouldn't say yes. ... She would not say, 'OK, I will do that.' " ([The Chronicle's] own efforts to get confirmation from Whitman's campaign team, in preparation for this item, failed. Calls were not returned).

At eBay, Whitman took on the image of a tolerant social liberal; after cozying up to Republicans Mitt Romney and John McCain in 2008 she came out against gay marriage. At a gathering in socially liberal Northern California, she said the government should get out of the marriage business; when the San Francisco Chronicle called to confirm, she couldn't be pinned down.

With a consistent statement on gay marriage, Whitman could cultivate California's social conservatives or its social liberal, and maybe win over enough moderates to become governor. With all this flip flopping, though, she just looks as confused as the trainwreck political party she's attached herself too, rather than one of its rising stars.

[SF Chronicle]

Although the salient details are slim as of now, here's what we know from today's press release announcing the "New GM", aka the "General Motors Company.":

"We're also working on new ways to make car buying more convenient for our customers, including an innovative new partnership with eBay in California to revolutionize how people buy vehicles online," Henderson said. "Customers will be able to bid on actual vehicles just like they do in an eBay auction, including the option of choosing a predetermined 'buy it now' price. We'll be testing this and other ideas with our dealers over the next few weeks, and hope to expand and build upon them in the coming months. In all cases, our goal is to make the shopping and buying process as easy as possible for GM customers - on their time and their terms. Stay tuned."

We're told by GM CEO Fritz Henderson that it's "just an experiment." But they are "really excited about it."

So no idea yet as to whether it'd be for all vehicles, whether it would be for just a select few vehicles. The biggest hurdle such an idea faces is the dealer network. More than likely the line in the press release of "testing this and other ideas with our dealers over the next few weeks" indicates it'll more than likely be the dealers who'll be providing these services as opposed to direct-from-manufacturer sales. Either way, as long as the consumer experience is eBay-like, it won't matter to them as they'll perceive it to be direct-from-manufacturer — which is often how they perceive the experience now.

It was all a big misunderstanding though. It probably just got flagged for having "Michael Jackson memorial ticket" in the description. So then Ebay put it back. But now they've pulled it down again. "Ebay has told me that they need to consult with their legal department before allowing the painting to be relisted," says Lacey.

What are you afraid of, Ebay? Is the truth about the MJ-JJ-Pancake connection a little "too much" for the boardroom types? We wouldn't want material like this falling into the wrong hands, hmmmm? You cannot hold the people down, Ebay. We are legion.

In the meantime you can buy this other MJ-related painting by Dan Lacey, which is equally dramatic:

You can buy the cufflinks now for $100,000, but the bidding currently stands at $0. The seller is obviously a man of wealth and taste, and very possibly unemployed. Instead of reaping the windfall yourself, sir, consider donating them to be auctioned off at ASSME's upcoming Swag-A-Thon, a party of unemployed media types that will benefit even worse-off homeless AIDS patients.
Nobody wants those ugly cufflinks unless homeless AIDS patients will benefit. Seriously. [Ebay]The image associated with this post is best viewed using a browser.

Despite her stature in the tech industry, Whitman is "little recognized" statewide, as the Associated Press puts it. Her speech at the Republican National Convention bombed; she's not much of a voter; and then there's the issue of her seeming flip-flop on gay rights.

But she went to bat for two Republican presidential candidates in the last election, raising money for Mitt Romney and then co-chairing McCain's campaign. Both failed Republican presidential candidates have now endorsed her in the governor's race, as has former California Gov. Pete Wilson, lending her the support of party heavy hitters her opponents lack.

McCain, who touted Whitman as a potential Treasury Secretary during his presidential campaign, is a natural supporter of her campaign. But his support for her has the side effect of creating a new name to rival Sarah Palin, the former running mate McCain's has noticeably snubbed on recent occasions. Palin might not be on McCain's list of Republican "rising stars," but it's a safe bet that Whitman now is — much to her own good fortune.

The Ebay bit: a matchbook, allegedly given by Kari to some dude at a restaurant in Greenpoint, with the inscription "The only meat in my mouth comes on a six foot stick. Love Ping Pong." Whoa how come everybody in Brooklyn except us got these things? A sad statement about us. Important Myspace sections below:

[And currently: is not for you]

Vancouver Sun managing editor Kirk LaPointe showed how you can't run from Twitter.

Former Engadget editor Ryan Block failed to alter people's assumptions about him.

All-caps boremonger John Byrne, the editor of BusinessWeek.com, made sure people wouldn't listen to his podcast by accident.

Salon.com editor Joan Walsh witnessed teabaggers in action.

eBay founder Pierre Omidyar got punked by Larry and Sergey.

Did you witness the media elite tweet something indiscreet? Please email us your favorite tweets — or send us more Twitter usernames.

The company ought to be swimming in cash from taking a cut of every auction it runs, right? Nope, according to the New York Times:

eBay had $3.19 billion in cash at the end of last year, but $2.8 billion of that money is overseas and would be subject to repatriation taxes if the company were to invest it in its ailing United States e-commerce marketplace, according to analysts.

Luckily, it's found some eager buyers: The founders of the startups it enriched through purchases. Garrett Camp and Geoff Smith (right) have just bought back StumbleUpon, a social-news startup it bought for $75 million two years ago, with the help of some venture capitalists. Janus Friis and Niklas Zennström, the founders of Skype, are hoping to buy Skype for considerably less than the $3.1 billion price eBay paid for the company in 2005.

$390 million in the kitty isn't exactly bankrupt. But it's hardly enough to fund eBay's efforts to fix its U.S. marketplace and efforts to expand into consumer credit with Bill Me Later, an online-lending startup it bought last year.

Silicon Valley venture capitalists and entrepreneurs like to think they're putting their resources behind innovation. But what are they doing here? Funding middle America's shopping habits.

(Photo of Zennstrom and Friis via Joost)