After sale, Web site founders learn that success doesn't always mean reward

The International Herald Tribune: "In 1999, they were celebrated as the embodiment of dot-com bravado when they quit great jobs at companies like Netscape and Yahoo to create Epinions, a Web site that reviews consumer products. Their story should have had a happy ending last week when Shopping.com - the company formed in April 2003 by the merger of Epinions and a comparison-pricing site called DealTime - went public.

Shopping.com enjoyed the most successful first day of any initial offering in the United States since JetBlue went public in April 2002, according to Richard Peterson, the chief market strategist for Thomson Financial. But the founders of Epinions - Nirav Tolia, Naval Ravikant, Ramanathan Guha, Dion Lim and Mike Speiser - have learned that success does not necessarily mean a company's creators will be rewarded.

August Capital and Benchmark Capital, two venture capital firms that invested $4 million each to help start Epinions in April 1999, profited handsomely in the public offering. They had both made additional investments, and each now owns a stake in Shopping.com worth roughly $60 million. Over all, Shopping.com was worth $750 million at the close of the market on Friday.

By contrast, four of the five founders of Epinions did not see a dime from Shopping.com's public sale - their shares in Epinions were rendered worthless when it merged with DealTime.

Today, the Epinions portion of Shopping.com is worth hundreds of millions of dollars, but at the time of the DealTime merger, Epinions was valued at roughly $30 million, which rendered all common shares worthless. "The question we're asking," said one former Epinions employee who asked not to be identified and who plans to be part of the lawsuit, "is how this company supposedly worth only $30 million was suddenly worth $300 million only 18 months later."

The 70 or so former Epinions employees who were not hired by Shopping.com, the lawyers assert, are owed as much as 2.4 million shares of Shopping.com, a stake worth $65 million at Friday's closing price of $26.97 a share (the shares were initially priced at $18 each)."