Insight is a private equity firm that makes some late-stage venture-capital investments; Its average deal size is $35 million. Insight's partners invested $3 million in Photobucket in 2005, when it had 3 employees and no revenues; they collectively made an estimated $60 million when News Corp. bought the company last year.

A few weeks ago, someone pointed me to the Wikipedia page for Photobucket. An anonymous editor had added a paragraph to the entry accusing Photobucket's venture-capital backers of forming a "shell company" and "cherrypicking" the Photobucket investment to keep it out of the hands of Insight's own investors.

This much is true: Insight's partners formed a Delaware corporation called IVP/PB Investment LLC. The vehicle's name appears in Photobucket's Reg. D, a publicly available form filed with the Securities and Exchange Commission. If Insight's partners were trying to hide the deal, they could have done a much better job of it. The name alone suggests that IVP's partners had no concerns about people finding out about their investment.

Venture capitalists, in the classic way that the rich get richer, get pitched business deals all the time, of all sorts — real estate, small businesses, and, yes, startups. Sometimes they invest in companies on which their partners decide to pass, or of which its limited partners disapprove. Tim Draper of Draper Fisher Jurvetson is famous for doing this.

Photobucket was far too small, and far too young, for Insight to invest in, the VCs I've talked to agree. And why would they actively seek to piss off the college endowments and retirement funds on which they rely to raise future pools of cash?

There are questions about this deal — but they have more to do with how much time Horing, Murdock, and other Insight partners spent on Photobucket. Horing told the Wall Street Journal that his firm collectively spent 15 hours on Photobucket — including pitching the startup, unsuccessfully, to Benchmark Capital and Kleiner Perkins for follow-on investment rounds. 15 hours work for $60 million? I'm in the wrong business. But that hardly seems like enough to concern Insight's backers.

The deal has raised someone's ire, though. TechCrunch, PaidContent, the Journal, and, yes, Valleywag, were among the tipster's targets.

Yes, I should have written this one up sooner — but I was fascinated by the question of who wanted to get Insight, and why. I'm still at a loss. Insight has a low profile in the industry; as a late-stage investor, based in New York, it rarely dabbles in Silicon Valley's splashy younger startups. (Its sexiest investment is SkinnyCorp, the Chicago-based parent company of Threadless, a website which sells T-shirts.)

So: A spurned entrepreneur? A rival venture capitalist who lost a deal to Insight? It's useful to keep in mind that venture capitalists can make a lot of money on side deals — deals they heard about in the course of doing their day jobs. 'Twas ever thus. The person who thinks he ratted out Insight, though? He'd like you to believe that some venture capitalists are so venal and so foolish as to torpedo their entire careers over a tiny deal that happened to turn out well. Insight's opponent, whoever he is, underestimated the firm's intelligence — and some reporters' intelligence, too.

(Illustration by the Wall Street Journal)

Today, Webshots was sold to American Greetings for approximately $45 million. This was a tough decision but the right business decision. Selling Webshots allows us to focus our efforts against long term strategic goals, and concentrate on the passion-based categories we believe offer the most promise for CNET Networks.

We are pleased that Webshots can become an important ingredient to American Greetings' business, and we are committed to making this a successful transition over the next several months.

Hi Everybody,

The third quarter marks a turning point for us. After a year on the job, I am confident we are building a company that can succeed in 2008 and beyond. Today, during our Q3 Earnings Call, I will make several major announcements that underscore our progress.

Strategically, we are focused on providing people with brands that make a difference and that help marketers win. Financially, we evaluated our asset mix and are focused on those areas that best fit within our brand portfolio, represent the largest opportunity and where we can be leaders. Operationally, we have a winning team that knows what success is and is committed to achieving it.

Let me provide more detail for you on those announcements.

Sale of Webshots Today, Webshots was sold to American Greetings for approximately $45 million. This was a tough decision but the right business decision. Selling Webshots allows us to focus our efforts against long term strategic goals, and concentrate on the passion-based categories we believe offer the most promise for CNET Networks.

We are pleased that Webshots can become an important ingredient to American Greetings' business, and we are committed to making this a successful transition over the next several months.

New Head of the Combined Entertainment and Lifestyle Business Unit I am pleased to announce Stephen Colvin as EVP of our new Entertainment & Lifestyle business. A 20-year media veteran, Stephen joins us from Dennis Publishing, where he built Maxim, Blender, Stuff and The Week magazines. He has a track record as a dynamic leader and brand builder. Stephen will be based in our NYC office which allows us to expand our presence in a city that is the hub of the media world. Stephen will be spending a lot of time in San Francisco.

The merger of CHOW and Urban Baby into the Entertainment & Lifestyle business unit simplifies our business, and allows us to leverage infrastructure, tools and best practices across this larger group. Over the next few days and weeks there will be individual and team meetings within Entertainment and Lifestyle to discuss the transition process.

Stephen will be in San Francisco next week, and he is looking forward to meeting the team.

Partnership Marketing and Sales Jack Haire joined us several months ago to evaluate and evolve our sales structure and go-to-market strategy. As a result of his assessment, Jack will be taking on the newly formed role of Chief Client Officer. In his new position, Jack will oversee the Partnership Sales team, chair the revenue council and have responsibility and final decision making for sales best practices, infrastructure and policies.

This new sales construct provides the flexibility to tap our best people across the company and align them against our best opportunities for revenue growth. The team will include dedicated centralized resources as well as part time allocation of resources from each BU. More announcements regarding this new team structure will be made in the coming weeks.

Channel Moves into the CNET BU The joining of Channel and CNET brings together two category leaders. Together, they cover the spectrum of bringing information and services to manufacturers, distributors, retailers and consumers. The two businesses will benefit from a holistic view of tech consumption with the channel and to the consumer.

Steve Parrot will report to Joe Gillespie and continue to manage Channel as a stand alone business within the CNET BU.

Credit Facility Last week we announced that we secured a $250 million credit facility. A credit facility is a set of loans that allow us to borrow money in order to enhance our ability to grow. Together, with the proceeds from our sale of Webshots, we have the financial resources available to create value for our shareholders.

Q3 Earnings We reported that revenues for the third quarter were $99.5 million up 7% compared to the same period in 2006. Excluding all exited businesses, including Webshots, from both 2007 and 2006, total revenue increased 11% during the quarter. In addition, CNET networks' global Internet properties reached and average of 141 unique monthly users consuming over 91 million pages per day.

At the beginning of the year, I laid out three initiatives and key areas of focus as part of our long term growth strategy:

First, realize the potential and opportunity of existing brands. Second, identify new opportunities for growth. And third, continue to strive to do what we do better.

Today's announcements directly support our ability to achieve these initiatives and build a vibrant and valuable company that seizes the long term opportunity and creates value for users, employees, marketers and shareholders.

As we exit the third quarter, we have made real progress on our transformation to a new CNET Networks. A bold company that is entrepreneurial and aggressive. CNET Networks is not the site-of-the-day. CNET Networks is the media company of the future.

Best, NA

__________________________ Neil Ashe CNET Networks, Inc. 415-xxx-xxxx

"Top search queries" are terms people search on, ranked by popularity; "top search query clicks" ranks the terms by the frequency with which people click on them:

Top search queries Average top position
1. photobucket 9
2. facebook 10
3. webcam sex 6
4. linked in 9
5. fake steve jobs 5
6. skyblog 7
7. lick it 5
8. red envelope 9
9. photbucket 4
10. lucky magazine 4
11. rotten com 8
12. soft porn 3
13. valleywag 1
14. ebaums 9
15. daily candy 6
16. embarrassing 3
17. mark zuckerberg 8
18. hot asians 8
19. thomas editor 8
20. "lick it" 4
Download this table

Top search query clicks Average top position
1. valleywag 1
2. anne wojcicki 3
3. nude beach 65
4. valley wag 2
5. fake steve jobs 5
6. rotten com 9
7. naked beach 11
8. soft porn 3
9. tony brummel 3
10. photobucket 9
11. aim icon 10
12. webcam sex 6
13. kevin rose 5
14. toogle 4
15. great wall of china 42
16. facebook sued 5
17. mark zuckerberg sued 3
18. megan mccarthy 4
19. sarah gore 4
20. facebook ipo

One, the recent deal between Fotolog and Google, which brought it a $75 million revenue guarantee, according to Silicon Alley Insider. Revenue matters, even if it comes in the form of an ambitious guarantee from a deep-pocketed player.

Two, Photobucket, as a storage site mostly used as a widget on sites like News Corp. sister site MySpace, commands little attention from its users. As Fotolog CEO John Borthwick points out, Fotolog, by encouraging users to visit the site and chat with friends there, gets them to visit the site nearly four times longer than Photobucket's users. Advertisers are increasingly looking for engagement, not just raw numbers, when evaluating social-networking sites as a marketing medium. And by that measure, Fotolog's rumored buyer may have underpaid — or Rupert Murdoch, in snapping up Photobucket to bolster MySpace, may have overpaid.

Borthwick also runs Betaworks, a technology-company incubator, where his startups include Daylife, Tumblr, Outside.in, and Iminlikewithyou.com. Tumblr, especially, seems to be gaining traction as a new blogging platform, and would make for a logical project to focus on.

But first, of course, he has to wrap up Fotolog's affairs. The deal has been signed, we hear, but not yet announced, and Valleywag hasn't yet learned the name of the acquirer. Our tipster says it's not, surprisingly, Grupo Clarin, an Argentinean media company with which Fotolog has a partnership. The sale price is rich, at four or five times the $20 million to $25 million sum Yahoo is believed to have paid for Flickr a couple of years ago.

Fotolog, however, is more social network than photo-storage site. Unlike Flickr, or the News Corp.-owned Photobucket, whose photos mostly appear elsewhere — mostly on sister site MySpace — Fotolog users view photos on the site itself, and then discuss them and chat with friends they meet on the site. With most of its users in Europe and Latin America, Fotolog's probably better off owned by someone close to its user base.

The sale, assuming all goes as our source has heard, will be a handsome payoff for venture capital backers 3i and BV Capital, as well as Fotolog's angel investors, who put a total of $12 million into the company.

Yahoo vs. Google
Tension: 2

The two search giants are obviously direct competitors in most of their businesses: search, mobile, mapping, and online ads. But the competition only trickles down so far down the ranks. Most of the dozen or so Yahoo employees I know (from several departments) have good friends at Google (and — duh — vice versa).

Employees do bristle when anyone would: a friend in Yahoo Mobile hates seeing me pull up Google Maps; and everyone likes to point out their company's advantages or the other's flaws. (Both Yahoos and Googlers prefer to talk about Google.) But with such huge companies, most cross-company friends know that they have more in common than in contrast. (Valleywag publisher Nick Denton even thinks Google VP Susan Wojcicki was married to a GM of Yahoo Music.)

Microsoft vs. Apple
Tension: 2

The rivalry between these two has obviously had longer to fester than the feud of a couple of dot-coms. It's more personal, too: No one thinks of Larry and Sergey from Google tag-teaming Yahoo's founders (wossname and the other guy), but Bill and Steve have their own cartoon deathmatch. The two companies' employees, skewing older than the young socialites at dot-coms, are less likely to bump elbows.

While Google and Yahoo have similar cultures that compete in nearly every division of their business, Microsoft and Apple have quite divergent cultures based on different approaches to computing. The Apple designers and developers I know have well-though-out criticisms of Microsoft products; the Microsoft employees point to their dominance. It's actually a bit like the Mac vs. PC ads, except PC is as smug as Mac and he doesn't wear a jacket.

Journalists vs. bloggers
Tension: 3

For the most part, this rivalry is overblown. Bloggers know they need journalists or they'll have nothing to link to. Journalists need bloggers to get traffic online and cover the stories too small for professionals. Of course, there are those utter cocks like anti-blogging blogger Andrew Keen and Old-Media-hating videoblogger Andrew Baron. But they're easily taken down a peg — by bloggers, of course.

Also overblown is "Journalists vs. Craigslist," as the news business has far more to worry about than the loss of classified-ad revenue (which, let's admit it, was doomed once the Internet reached the average home). Journalists mostly see Craigslist as a fun company to write about (over and over again).

Sun Microsystems vs. Hewlett-Packard
Tension: 5
Crazy hatred. Sun got rankled that competitor HP managed to sponsor Sun's conference, but they got back by buying statues of HP's founders.

Flickr vs. Zooomr vs. Photobucket vs. Smugmug vs....
Tension: 4

Hell yeah, there's tension! The founders of these photo sharing services like to make a big deal about their willingness to appear at a party together. In this photo by Zooomr CEO Thomas Hawk, Photobucket marketer MJ Kim, Flickr co-founder Stewart Butterfield, and Zooomr founder Kris Tate demonstrate their love:

And how much do they love each other? I can't repeat all the gossip these three have told me about the others, but Stewart and his Flickr cohorts are engaged in an extended game of teasing with Kris and his one employee at Zooomr. When Kris spent a week upgrading Zooomr, Flickr sent him pizzas; at a Flickr photo auction, Kris bought one of the photos for his wall; and of course there's Zooomr's CEO drunkenly defending his company on Flickr's message boards.

Photobucket has apparently stayed out of this, preferring to squabble with MySpace, who occasionally blocked Photobucket from its site before finally buying the company. SmugMug fights not the other photo sharing sites but the press and bloggers who ignore it.

Gawker Media vs. Weblogs, Inc.
Tension: 3

Okay, these two blog networks (Valleywag is part of Gawker Media, and in fact Gawker's founder and owner Nick Denton edits the site) do have personal rivalries. After all, early Gawker employee Peter Rojas left the company's blog Gizmodo to found one of Weblogs's original sites, Engadget. The latter has long since been the more popular of the two gadget sites. Since then, Weblogs and Gawker have sparred over a half-dozen of their competitive properties, even after AOL bought Weblogs.

Personal rivalries (come on, you're still reading this one? Go reread the Google vs. Yahoo section) include:

• Nick Denton vs. Jason Calacanis: The two founders (Calacanis is now out of Weblogs) are "frenemies" who go out for lunch, then malign one another's business and personal decisions. Denton thinks Calacanis is cheesy but smart; Calacanis thinks Denton is too stand-offish (he is) but cunning. Calacanis sometimes jabs at Denton on his personal blog, while Denton takes it to the mattresses.
• Engadget staff vs. Gizmodo staff: Engadget wasn't too happy when new Gizmodo editor Brian Lam stole their photos. Both teams take digs at each other in their blogs; Denton's not above dropping a wry observation himself.
• Gawker staff vs. Jason Calacanis: He's just so fun to tease!
• Me vs. Jason Calacanis: We fight too.
• Gawker employees vs. Nick Denton: More hatred. In fact, Denton will comment on this post remarking how embarrassingly self-gratifying it is to include a section on Gawker, but while he will sincerely mean this, he will also secretly enjoy getting to write it.

Compuserve vs. Prodigy
Tension: 5

Just seeing if you were paying attention.

Nick Douglas writes for Valleywag, Prezzish, and Look Shiny. Wanna fight?

In 2005, Erikka Arone and her husband decided to relocate Flock from Seattle to the valley because of its ecosystem of talent and the possibility for "serendipitous" moments, like the day members of the photo- and video-sharing service Photobucket happened upon Flock when they "cycled by on their blades and knocked on the window." The encounter led to a deal. [Tech stars make trek to Silicon Valley, in Inside Bay Area]

"If you look at virtually any Web 2.0 application, whether its YouTube, whether it's Flicker [sic], whether it's Photobucket or any of the next-generation Web applications, almost all of them are really driven off the back of MySpace," Chernin said at the conference. "There's no reason why we can't build a parallel business."

Oh, a smackdown and a threat! Here's what to expect:

• A blogger uproar. Check.
• A few articles in tech news (check), followed by some mainstream mentions.
• Editorials connecting this statement to News Corp's recent purchase of 51% of ringtone company Jamba. These editorials will say things like "2+2=MySpace will try to put more content on more phones." Well duh — that's why they made a deal with the Helio phone network.

News Corp. May Launch YouTube Rival [MultiChannel]

I witnissed a very emotional moment at the Palo Alto Country Club last night for Churchill Club's Start Up Success where Alex Welch (Photobucket CEO) admitted, "I just wish I was still in Denver coding." He was about to cry (sort of). And [Jotspot founder] Joe Kraus attributed all his success to a book an ex-girlfriend gave him in college.

No word on which book, though it probably wasn't How to Succeed in Business Without Really Trying.