It looks like the brouhaha surrounding social-app moneymaker Offerpal Media is bigger than founder Anu Shukla's "sh*t, double sh*t, and bullsh*t" response to the accusation that its business is built on scamming consumers. It's got upcoming developments in two lawsuits, one in which it's the plaintiff and one in which Shukla is a defendant.
VentureBeat's Dean Takahashi reported Thursday that a lawsuit was filed in an Alameda County, Calif., superior court against Shukla and co-founder Michael Liu on behalf of Kevin Halpern, who alleges that he helped found the company and was then shut out. In a court complaint, Halpert says that in exchange for offering his social-networking expertise to what would become Offerpal, Shukla promised him a 15 to 20 percent stake in the company that never came to fruition.
The defendant's motion to dismiss the breach-of-contract suit is scheduled for November 24, according to public court documents. On Wednesday, Offerpal had announced that Shukla would be leaving her post as CEO and would be replaced by digital-ad veteran George Garrick.
But that's not the only legal dispute that Offerpal is in. There's a judicial settlement conference scheduled for Friday in the trademark infringement lawsuit that Offerpal filed against Kickflip, a former customer that went on to create a competing business, called Gambit, according to a person familiar with the court details. The suit was originally filed in April, and the status of a potential settlement is currently unclear because most of the events thus far, as well as Friday's scheduled meeting, have been behind closed doors.
But the reason why Offerpal has been in the news so much as of late has been because of Shukla's public altercation with TechCrunch's Michael Arrington at last month's Virtual Goods Summit in San Francisco. In response to Arrington's allegations that Offerpal's profitable business, used by many social-gaming companies as a way for users to earn virtual goods in-game, actually misleads players into signing up for paid offers and subscriptions.
Following the Arrington-Shukla spat, a number of high-profile names in the gaming and social-networking world came out against developer-app scams and misleading ads. Offerpal maintains that it runs a legitimate business. But it's clear that this company's issues run quite a bit deeper than a single PR fiasco.
Offerpal Media, a company that helps social-network app creators make money from offers and surveys, on Tuesday announced that it had replaced its CEO in the wake of a high-profile onstage argument at a conference and subsequent press over whether it's scamming consumers who fill out offers in order to earn virtual goods in social games.
Anu Shukla, who founded the company and had been serving as CEO since its 2007 launch, will be replaced by George Garrick, who has served as the CEO of Flycast Communications, Wine.com, Jingle Networks, and Mochi Media. Shukla "will still be involved and help guide the company," an Offerpal representative told CNET News.
A statement from Shukla makes it sound like the company's been CEO-hunting for months ("I have known George for a long time...After many months of searching, I believe that George is the best CEO to scale the company to new heights. I am looking forward to working with him closely"). But the timing is a little too good to be coincidental: a firestorm erupted over Offerpal and other companies in its niche after TechCrunch's Michael Arrington confronted Shukla while she was on a panel at the Virtual Goods Summit in San Francisco last month. Arrington accused Shukla of running a scam operation that tricks consumers into unwittingly spending money--and of course, he then blogged about it.
Shukla's response to Arrington was "sh*t, double sh*t, and bullsh*t."
But the industry has taken the controversy seriously. Social game makers like the massive Zynga have come out and said that they would ban potentially shady and misleading offers, even though those might make up a sizeable chunk of revenue, and on Tuesday social network MySpace joined the debate and said that it had modified its terms of service to outlaw "app scams."
Shukla was interviewed by VentureBeat's Dean Takahashi in a lengthy article published on Tuesday.
This post was expanded at 4:55 p.m. PT.
Sex. Money. Incriminating instant messages. From the news that's been pouring in recently, you'd think Wikipedia founder Jimmy Wales were the tech industry's own Client No. 9.
In a series of embarrassing peccadilloes that were originally relegated to gossip blogs like Valleywag, Wales' failed relationship with former Fox News commentator Rachel Marsden took center stage when Marsden "leaked" some of their online chats to the Web and made quite the public display of auctioning some of his clothes on eBay. The usual blog storm followed: photos of other women with whom Wales had reportedly been involved, hints that he may have acted inappropriately in editing Wikipedia entries to scrub details of the scandal, and what have you.
But with all eyes on the Wikipedia founder, other allegations have come into play, and they don't have anything to do with sex. First, there were reports that Wales misused foundation funds; now his ties with a high-profile Silicon Valley venture capitalist are calling into question Wikipedia's nonprofit aims. The New York Times notes a $500,000 donation to the Wikimedia Foundation, Wikipedia's parent organization, on behalf of Elevation Partners' Roger McNamee, with another $500,000 in the works. (Elevation Partners is the venture firm that counts U2 front man Bono as one of its founding partners.)
Considering McNamee's status in the Valley, it's easy to speculate that these massive donations could constitute an investment rather than a donation. That's bound to raise more prominent eyebrows than a trashy sex scandal. McNamee told the Times, "I am a Wikipedia volunteer--I help with strategy, fundraising and business development--it has nothing to do with Elevation Partners. And no one should be confused about that."
A representative from the Wikimedia Foundation told CNET News.com that it has not released an official statement addressing the speculation about McNamee's involvement. But Wikimedia Foundation chair Florence Nibart-Devouard said to the Times that she was "not comfortable with the concept" of the nonprofit accepting massive funds from donors best-known as capital investors, and the article went on to say that the foundation's board has passed a measure requiring approval for all donations that total over 2 percent of Wikimedia's revenues.
But despite the shift of "Jimbogate" concerns from personal to professional indiscretions, the musky tinge of sex-scandal still hangs over it. The latest, per Valleywag, involves a tipster who implied that Wales had a tryst in Amsterdam with Wikimedia Foundation executive director Sue Gardner, who has remained one of his staunchest supporters throughout the controversy. It appears to be thoroughly unsubstantiated at this point, but the Valleywag blogger hinted that camera phone photos existed.
Even juicier, the tipster just had to bring Amsterdam, home to what's arguably the world's most famous red-light district as well as notoriously lax regulations on some substances that are frowned upon in the U.S., into the equation. It's all starting to read like the script of a made-for-TNT movie.
Eliot Spitzer, this Silicon Valley dirt might be one-upping you.
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