InfoSpace, which says it has gone in new directions since the days of dubious financial dealings, has signed a three-year contract with Naveen Jain's latest Internet company, Intelius.
After firing founder Naveen Jain, suing him and alleging he misappropriated InfoSpace’s technology, InfoSpace is now doing business with Jain’s new company, Intelius.
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The Internet companies, which sit across the street from each other in Bellevue, have signed a three-year exclusive contract.
Jain, who founded InfoSpace in 1996 and Intelius in 2003, confirmed the deal Wednesday. But both he and an InfoSpace spokeswoman declined to discuss the value of the deal or how it will work.
When someone requests a background search on InfoSpace.com, the person is connected to the Intelius Web site.
The contract marks a new chapter in the hot-cold relationship Jain has had with InfoSpace. The board of directors fired him in 2002.
InfoSpace has repeated over and over again that Jain is ancient history to the company, no longer part of InfoSpace.
“There’s been a line drawn and there’s new stuff going on,” Jim Voelker, the current chief executive, said last year.
A Seattle Times investigation published earlier this week found that in 2000 Jain and other InfoSpace executives boosted the company’s stock value with accounting tricks and dubious deals, concealing revenue shortfalls and making “lazy Susan” deals, in which company officials invested in other firms that, in turn, sent money back that InfoSpace could count as revenue.
Between 1996 and 2000, Jain had turned the tiny startup, an online directory of e-mail addresses, into the Northwest’s largest Internet company, eclipsing even Boeing’s stock value. It then took a nose dive with the dot-com collapse.
While Jain sold more than $400 million in InfoSpace stock, faithful investors lost billions of dollars.
Voelker said the company has new managers and a new direction.
In late 2002, InfoSpace’s board of directors fired Jain as chief executive officer when he refused to hire Voelker to replace him.
Right before he left, Jain sent an e-mail to the entire staff saying he was “disgusted” with the management and board. In the e-mail, Jain called Voelker “unqualified,” writing that Voelker had been “out of a job for the last 2 years” and that “his last job was to take nextlink in to bankruptcy.” (Voelker left Nextlink, now XO Communications, several years before it filed for bankruptcy.) In the e-mail, Jain also accused a director of insider trading.
Three weeks later, Jain started Intelius with several other former InfoSpace employees. He called it a homeland-security and personal-safety company. The Web site sells personal background checks collected from public-records databases.
Soon after Intelius was founded, InfoSpace sued Jain and another former InfoSpace employee in King County Superior Court, accusing them of violating contracts that barred them from competing against InfoSpace for two years after they left the company.
InfoSpace accused Jain of boasting that he intended for Intelius to replace InfoSpace as an online White Pages service.
Jain, in return, claimed that InfoSpace had tried to hack into Intelius’ Web site to learn its business plans, and that it was “pounding” the Intelius server with repeated requests in order to crash Intelius’ Web site.
The judge ruled against shutting down Intelius, and the parties settled the case in December, along with other shareholder litigation.
Sharon Pian Chan: 206-464-2958 or email@example.com.