MerchantCircle has secured an additional $10 million in series B funding from past investors Rustic Canyon Partners, Scale Venture Partners, and Steamboat Ventures (Disney's VC arm), as well as new investors including Barry Diller's IAC and Square 1 Bank. The press release claims, "the investment validates the company's 'merchant-first' business model." I'd say, rather, it confirms that investors who should know better will sink cash into a disreputable business.
Silver-tongued entrepreneur Auren Hoffman was able to extinguish a growing wave of criticism directed at his people-search company Rapleaf with a single blog post. He promised to mend his ways and bring fixes to Rapleaf's privacy practices. We didn't have much faith in Rapleaf's reform — Hoffman's post was mostly rhetoric, little change. A week later, Hoffman has gone out of his way to prove our doubts by partnering with MerchantCircle. MerchantCircle, of course, is the local merchant directory we've criticized before. Of course, Rapleaf and MerchantCircle are in some ways a perfect match.
The first rule of Valleywag: Never pitch Valleywag. But sometimes the temptation just proves too great. In response to a post about Google and Yelp's rivalry in local search, a MerchantCircle employee contacted us to tout the company's supposed leadership in the market, pitching the site for some Valleywag love. Well, here's some tough love. We've looked into MerchantCircle's business model .. and found nothing but self-love.