"That particular blog was never about the money, but it definitely makes things more difficult if I have no chance of paying the writers," says White. "I’m torn because there’s so much news every day about them and I’d like to see someone cover it closely." We'll do what we can, Tim.

The site's disappearance is disappointing. But the whole episode served to reveal Craigslist CEO Jim Buckmaster as a control-freaky jerk who's sensitive to criticism, and not averse to litigation when he doesn't get his way. That's good information for people to have — and we wouldn't have learned it without White.

The humility of billionaires! No, the real "nerd values" on display are the ones responsible for this wealth. Like the $16 million Buckmaster and founder Craig Newmark got in brokering a deal to let eBay buy a 28 percent stake in their company. Yet they still make a point of posing as heroes of the ultraliberal working class, second-hand Prius and all. Worse yet, people continue to buy it.

And not just gullible reporters parachuting in from London, either. Larry from Minneapolis writes in a comment:

This is just about the finest article I have ever read about the craigslist phenomenom. My respect for Buckmaster and Newmark is increased 100 fold.

People don't understand that at it's core, craigslist is a revolution.

And no one can stop a revolution.
Larry, Minneapolis, USA

The real Craigslist phenomenon is that reporters keep writing up Newmark and Buckmaster as down-to-earth geeks — and Craigslist users eagerly buy the rhetoric. It's a masterwork of propaganda. But it's as true as Buckmaster's apartment is modest.

Craigslist executives said they abhor the fact that their site is being used for child prostitution but believe that the problem could be harder to track if they removed the category. "It would be a bigger problem if we removed that category and had those ads spread throughout the site," said Jim Buckmaster, chief executive officer of Craigslist.

Buckmaster certainly gives the role of concerned small businessman the appropriate gravitas, but it comes off as a little wooden. Personally, I would have pointed at Dave Elms, jailed proprietor of TheEroticReview and been all, "Why are we the focus of a scary CNN feature? Where's the salacious magazine piece about that guy, Ms. De La Cruz?"

Law.com went to a handful of lawyers to the startup stars to get their unofficial advice on how Craigslist could might have behaved better with counsel in-house, such as wrestling with eBay over the status of the few shares not held by Newmark and Buckmaster. Mike Godwin, general counsel to the Wikimedia Foundation, offered that at his organization no one would blog about a lawsuit in progress, as Buckmaster did. Yes, take a lesson from a lawyer who represents the organization founded by über-slut Jimmy Wales: no matter how nutty Craig and Jim's actions are, having a legal team on the payroll to answer for them is the solution. (Photo: miketippett)

When eBay's then-CEO Meg Whitman was wooing Craigslist founder Craig Newmark and CEO Jim Buckmaster, she was so nice! She even promised that they'd get lots of playdates on the board with dreamy eBay founder Pierre Omidyar, and Newmark and Buckmaster believed her when she said Omidyar held the same Sunday-school values they did:

Mr. Newmark and Mr. Buckmaster were impressed by Ms. Whitman's presentation; most notably the importance to eBay of its community and eBay's dedication to Pierre Omidyar's Community Values — particularly the values that "We believe that people are basically good;" "We believe than an honest, opn environment can bring out the best in people;" and "We encourage you to treat others the way you want to be treated." These were very similar to craigslist's own principles and, in reliance on eBay's expressed commitment to these principles, along with Ms. Whitman's representations, craigslist agreed to resume discussions.

At the time, eBay did not disagree with Craig's impression, but instead enthusiastically embraced it. For example, when Mr. Price [Ed. Note: Garrett Price, VP of new ventures] of eBay (who witnessed virtually all of the negotiations involving the transaction) was provided a late draft of Craig's blog entry, his response was "[I] Love it." However, eBay did not post a link to Craig's blog entry on its own website once the transaction had closed, as eBay had promised it would.

And that was only the start of eBay's bullying behavior. Included in the complaint is a screenshot of text ads on Google that Craigslist offered as evidence of eBay's trademark infringement, false advertising and anti-competitive practices.

Of course, none of this will be settled any time soon — a case management conference isn't scheduled until October 10. And based on how nasty this is getting, I doubt a settlement — at least one not involving lollipops — will be reached anytime soon.(Photo by AP/Jeff Chiu)

Buckmaster may win points in the court of public opinion. Ordinary Craigslist users may well believe his spin, that eBay is the bad guy in this fight for seeking to protect its rights to a stake in the company it bought fair and square (and at a substantial profit to Buckmaster and Newmark).

But the complaint eBay filed makes clear what happened. Newmark and Buckmaster, upset that eBay had launched a competitive classifieds site, Kijiji, invoked a provision that cancelled a right of first refusal they held over eBay's shares — a right that forced eBay to offer its shares first to Craigslist, should it wish to sell. They landed in trouble with eBay by trying to force it to sign a new right-of-first-refusal agreement.

Newmark and Buckmaster, in short, are idiots. In a snit over Kijiji, they cancelled a valuable power they held over eBay. They are now engaging in what appear to be dirty boardroom tricks to reinstate that power, using means eBay finds questionable. It is understandable that they dislike eBay's competition. But had they just kept quiet about it, Newmark and Buckmaster could have kept eBay at bay indefinitely, and kept raking in the lion's share of Craigslist's profits. The trouble they are in now is entirely of their own making.

(Ilustration by Ismael Rodan/WSJ via Craigslist)

But Newmark and Buckmaster have always operated Craigslist more as their private money machine than a real company. That they issued shares to themselves without discussing the matter with eBay, a major shareholder, is merely typical for them.

Here's one more thing that's interesting. A source familiar with Craigslist's stock ownership told me that, of the shares left over after eBay's stake, Newmark owned roughly 60 percent of the remaining shares, and Buckmaster 40 percent. That means Newmark's owns 41 percent of Craigslist, and Buckmaster 27 percent. Here's a disturbing thought: If Buckmaster were ever to switch his loyalties, he and eBay combined own enough of the company to outvote Newmark.

The two appear utterly sympatico, so a Buckmaster defection seems unlikely. But Buckmaster has taken the lead in Craigslist's dealings with eBay. The auction giant, so far, has been the target of Buckmaster's Machiavellian scheming. But he is the swing vote. If Buckmaster turned against Newmark, Craigslist would no longer be Craig's.

[B]reaching their fiduciary duties of care, loyalty, and good faith by implementing certain self-dealing transactions challenged herein which were designed specifically to benefit themselves to the detriment of eBay.

• In 2005, Buckmaster complained that eBay's unfortunately-named classified service Kijiji competed directly with Craigslist, telling then CEO Meg Whitman "we are no longer comfortable having eBay as a shareholder."
• Whitman responded that eBay loved Craigslist, and that "we would welcome the opportunity to acquire the remainder" of the company.
• In October of 2007, Buckmaster and Newmark met with lawyer Edward Wes, and issued themselves "reorganization shares" which diluted eBay's stake under the 25 percent threshold that gave eBay special rights in the election of board members.
• They further tried to poison the share well through right of first refusal clauses that eBay alleges would "make Newmark, Buckmaster, or the Company they control the only possible acquirers of eBay's shares."
• Newmark and Buckmaster didn't bother to tell eBay about these moves, as well as changes to the corporate charter, until January 3rd of 2008. Now eBay wants the moves overturned in the courts.

Unlike the typical Internet site, just about every function on Craigslist, if you're successful in your transaction, is going to involve you meeting the other person in person; whether it's for a job interview, or to look at an apartment, or to buy a used sofa or to go out on a date.

Dear Craig's List, I LOVE U VERY MUCH!!! PRETTY-PLEASE let me know if I can do ANYTHING to support you. I am a Powerful,Licensed Massage therapist in FL who will use ALL of My intellectual BICEPS & anything I've got to be your dutiful minion.

Why, precisely, is Craigslist trying to dilute eBay's stake? Silicon Alley Insider's Peter Kafka speculates that Craigslist is looking for an outside investor. Nonsense; as Kafka himself points out, Craigslist doesn't need the money. Far more likely: Newmark and Buckmaster are angling to issue more shares to themselves so they don't have to share as much of the company's profits with eBay.

Blodget's costs, too, are off base. He estimates per-employee labor costs at $125,000, reasoning that founder Craig Newmark and CEO Jim Buckmaster run things "like a nonprofit." Try "like a prison camp," Hank; Newmark and Buckmaster pay ludicrously low salaries and don't offer any equity, having learned from their (highly profitable) mistake in issuing shares to an early employee. True labor costs are more likely in the range of $4 million to $5 million. A commenter on Blodget's post revises his estimate of bandwidth and server costs down from $50 million a year to a more realistic $7.5 million. That gives you a business with something like 90 percent profit margins. Where does the money go? Not to the Craigslist Foundation, by and large. Mostly straight into Newmark and Buckmaster's pockets, from what we understand.

Blodget then goes on to suggest ways Craigslist could be making more money. Why not start charging for erotic services ads, since people like Connecticut attorney general Richard Blumenthal are already inclined to believe Google profits from prostitution? That seems easier.

If Buckmaster is a pimp, he's doing it wrong. But Blumenthal isn't completely offbase. Craigslist is still the Web's one-stop shop for young women looking to secure an apartment and the escorting gig they need to afford it.

We've been hearing increasingly from newspaper reporters who confide that they are only allowed to write negative stories about Craigslist these days, because we're viewed as competition by their newspaper's business managers.

Given reporters' propensities for spreading gossip and taking self-righteous stands, I'd think we'd have heard of someone quitting their jobs in protest over such a ham-handed move by a newspaper publisher. Granted, I may be wrong — but if there is, in fact, a reporter brave enough to confess this to Buckmaster but too cowardly to go public, drop me a line. I'll be glad to protect your anonymity — but as for your integrity, well, probably too late.

In a couple of conversations on phone and Facebook, Newmark said he was still working at the company as a "customer service representative." He had no explanation for Best's comments about his lack of involvement in the company's "daily affairs" — "customer service" seeming to be one of those "daily affairs" companies must deal with — save to say that she told him she didn't make the comments attributed to her by the Journal-Constitution, and that he's still engaged in "heavy customer service" every day. As to his disappearance from the Craigslist management page, Newmark didn't know why it had been recently changed to remove him, but pointed out that the updated page now matched his claims, put forward for years, not to be involved in the company's management.

Phillip Knowlton, the employee in question, is believed by friends to be a cofounder of Craigslist, although the company does not recognize that status. He had earned a 25 percent stake in the company. But he held common shares, while Newmark and Buckmaster held preferred stock. That allowed Newmark and Buckmaster to try to squeeze Knowlton out of the company by issuing new shares to dilute his ownership stake.

Desperate to protect his ownership in Craigslist, Knowlton got in touch with people at eBay, who struck a deal for their employer to acquire his stake. Publications as august as Fortune have reported this as a straightforward sale, without Craigslist's consent. Here's what Adam Lashinsky wrote in 2005:

The transaction only occurred because Newmark had given a quarter-share to an employee, Phillip Knowlton.... As for the money eBay shelled out, that went to Knowlton, not Craigslist.

So what actually happened? eBay, my sources tell me, agreed to pay an amount around $16 million to Knowlton, and an equal amount to Craigslist, bringing the total paid by eBay to more than $30 million. The company, in turn, immediately paid out that $16 million sum as a dividend to Newmark and Buckmaster, according to their stakes in the company. Buckmaster reportedly holds 40 percent, with Newmark owning the rest, which would suggest Buckmaster got about $6 million and Newmark $10 million.

And those amounts, in turn, are dwarfed, insiders believe, by the amounts Newmark and Buckmaster take out of the company in salaries and other forms of pay. With only around 20 employees and an estimated $150 million in revenues, Craigslist is widely thought to be staggeringly profitable.

Remember this whenever you see Craig Newmark pull his "I'm-just-a-customer-service-rep" act. Remember this when Buckmaster says Craigslist only cares about its customers. Because, like the rest of Silicon Valley, they're all about the money. Unlike the rest of you, they're just better at hiding it.

Focusing a bit too hard on CEO Jim Buckmaster. Focusing like a hypnosis patient gazing into Jim's swinging wristwatch.

Why doesn't Craigslist run banner ads? Ah, because the users didn't ask for them. Why not pull more profit? Money's not important. When Jim explains it, it's all...so...convincing...

Maybe it's something in the lunch Jim and wife-and-publicist Susan Best offer WSJ writer Brian Carney that makes him so beholden to Jim's words:

"Craigslist free classifieds [...] certainly pose challenges to the newspaper industry as far as being able to raise their profitability over time." Many in newspaper publishing would consider that an understatement. But Mr. Buckmaster is sanguine: "The demise of the newspaper has been overstated." Phew. I expel a nervous chuckle of relief.

So much for hard-hitting reporting — "Oh, your enemies' fears are unfounded? Whew, glad to hear it!" Jim, will you please teach us your Jedi mind trick?

Zen and the Art of Classified Advertising [WSJ]

That's all for the Valleywag Hotties, Men's Edition. Next up are the Google Gals. Send your nominations — all ladies of Google are eligible — to tips@valleywag.com.

Jim, crushed by defeat, nearly drops the cat. [Source]

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Jim Buckmaster, Craigslist CEO and Jeff Goldblum lookalike, beat Jonathan Ive, Steve Jobs, and George Zachary.

Ben Trott, dashing Six Apart co-founder, whipped Kevin Rose, Max Levchin, and Jeff Weiner.

There can be only one. Polling ends at 5 PM Pacific.

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Jim Buckmaster (52.2%) stared down George Zachary (47.8%).
Ben Trott (58.4%) gunned down Jeff Weiner (41.6%).

I'm sorry, Zachary fans. And I'm even more sorry to post this e-mail from "Charlie Schmidt":

In that latest picture of George Zachary- "Caught in a rare resting moment" should read something more like - "On his way to breakfast hungover, George has to stop and lean against the wall to prevent from falling over." At least that is my recollection of how that picture was taken.

But hey, he looked great doing it.

So, next up, the final face-off. The grisly semifinals record after the jump.

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Mena Trott and Anil Dash considered heavy Photoshopping for Ben Trott's face-off with Jeff Weiner. "We'll make him have a big package," said Anil. "Like a tripod."
Craig Newmark is campaigning for his CEO Jim Buckmaster. Craigslisters have joined the fray.
That photo you see? Yet another Buckmaster pic. Apparently there's a big stack of sexy Jim photos sitting somewhere.
George Zachary got a new pic in, and friends of his friends are pushing for him on the Junto Boyz blog.

The international Hotties juding panel has been contacted, possible frauds are being investigated, and several contestants will be tested for 'roids. Do your part to fight corruption: vote for Hotties fairly. (Then vote again at work.)

Current face-offs: George Zachary vs. Jim Buckmaster and Jeff Weiner vs. Ben Trott.

For those poor souls waiting for an end to the hotties, sit tight. Valleywag will soon return to its regular, ambiguously oriented coverage.

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In a round of clear winners, one race went turtleneck-and-turtleneck. Craigslist CEO Jim Buckmaster managed to topple the Master of Cool, Steve Jobs, thanks to a fierce campaign by Craigslist customer service rep (and founder) Craig Newmark.

The results:

George Zachary (67.9%) buys more love with his money than George Boutros (31.9%).
Jim Buckmaster (51.3%) de-lists Steve Jobs (48.7%).
Ben Trott (67.5%) blogs circles around Max Levchin (32.5%).
Jeff Weiner (55.4%) rocks the Photoshop to out-bare-chest Sergey Brin (44.6%).

Stat porn after the jump.

Part of: Valleywag Hotties [Valleywag]

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Craig's compared himself to Jason Alexander before:

But that first photo really brings out the Jeff Goldblum in Jim.

Round one's over, and four more men will go home crying. The breakdown:

George Boutros (59.2%) out-wickeds Stratton Sclavos (40.8%).
George Zachary (78.6%) is the boom to Jeff Brody (21.4%)'s bust.
Jim Buckmaster (53.0%) makes Jonathan Ive (47.0%) rant and rave.
Steve Jobs (83.5%) is a sweeter sugar daddy than Larry Ellison (16.5%).

These four will face off later today in round 2 of Valleywag Hotties. Craig Newmark, keep rooting for your man. Faces, bar charts, and brackets after the jump.

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"What would you do if Arthur Sulzberger (New York Times publisher) offered you $1 billion for Craigslist? Tomorrow!"

"Well it hasn't happened as often recently," says Buckmaster. "But we're not interested."

"Jesus," sighs a woman at the back.

Craigslist boss won t stoop for dotcom dollars [London Times]