Why is VC Jeremy Levine lying for Jimmy Wales?

Owen Thomas · 11/03/08 02:40PM

Money is a commodity. What venture capitalists really bank is their reputation. And Jeremy Levine of Bessemer Venture Partners has just signaled that he's willing to cash in his reputation to protect a piddling $4 million investment. Levine is not amused by our report of how Levine got Wikipedia cofounder Jimmy Wales fired from his job as CEO of Wikia, calling it a lie. The report is accurate, Wikia insiders confirm; Levine's denial is the lie. The only mystery here: Why is Levine willing to dissemble for Wales?The answer is pure self-interest. $4 million is nothing to a 97-year-old venture capital firm like Bessemer. It could easily write off its investment in Wikia, an attempt to capitalize on the anyone-can-edit wiki concept popularized by Wikipedia. But Levine has invested his reputational capital in Wikia. Admitting he made a mistake in backing Wales means Levine would lose face with Bessemer's partners, who will be more likely to question his subsequent investments. (That he has also invested in Yelp and surely does not burnish his record.) Levine would have us be impressed by the fact that Wales "volunteered to forgo his Wikia salary." This would be more impressive if Wales had not long ago forgone any pretense of doing any work to earn that salary. When Levine first invested in Wikia, Wales promised to spend 90 percent of his time on Wikia and 10 percent on Wikipedia. In fact, he spent nowhere near that proportion of time on either, focusing instead on an increasingly lucrative speaking career. I'm inclined to feel sorry for Levine, who was clearly deceived by Wales, but is stuck defending him, lest he admit to the con. We will give Levine this much. In a recent blog post, he wrote, "Valleywag reported some nonsense about Jimmy getting fired because of a bogus expense report. Nothing could be farther from the truth." What is uncontestably true: Levine was enraged when he learned that Wales tried to get Wikia to reimburse him for a $1,300 dinner with a private-equity investor, at which he primarily discuss ways to profit off of Wikipedia, not Wikia. But it is quite possible that Wales's attempted expense-account flim-flam was the least of his sins as CEO of Wikia, and that Levine actually fired him over more serious matters. If so, why doesn't Levine wash his hands of Wales, write off the investment, and tells us what Wales did? Otherwise, he'll find that he's only just begun his career of lying on Wales's behalf.

Why Jimmy Wales got booted from Wikia's top job

Owen Thomas · 10/31/08 04:00PM

Why did Jimmy Wales, the cofounder of Wikipedia, an online compendium which includes the world's most detailed article on flim-flams, step down as CEO of Wikia, the for-profit website host which recently laid off some of its employees? The way Wales likes to tell the story, years later, he realized he was a free-flying entrepreneur, not an earthbound bureaucrat. So he hired Gil Penchina, a former eBay executive, to mind the shop. That's not what really happened. Wales was fired from his job as CEO by the company's investors.The cause? The same kind of expense-account hijinks that landed him in trouble at the Wikimedia Foundation, the nonprofit parent of Wikipedia. In 2006, Wales was courting Marc Bodnick, a cofounder of Silicon Valley private-equity firm Elevation Partners, in an effort to find a way to profit from Wikipedia, despite its nonprofit status and volunteer contributors. Bodnick and an assistant had traveled to St. Petersburg, Fla., where Wikimedia was then based. The talks went nowhere, but Wales, his wife, Bodnick, and Bodnick's assistant had a $1,300 meal at one of the city's finest restaurants. ($600 of the bill was spent on wine.) At that point, the Wikimedia Foundation had confiscated Wales's corporate card, so he paid for the meal himself. But he then sought to have it reimbursed by Wikia. Michael Davis, Wikia's chief operating officer, became enraged and reported the expense to Jeremy Levine, a Wikia board member and partner at Bessemer Venture Partners, which had invested $4 million into the company only a month before. Levine then told Wales he was fired as CEO, and found Penchina, who had already made a fortune at eBay. Wales must hate that: Every time he sees Penchina, he must ask himself, "Why is this guy rich and I'm not?" Penchina, meanwhile, must be asking why Wikia is still paying Wales a salary.

Wikia lays off 10 percent of staff

Owen Thomas · 10/20/08 12:00PM

Bid goodnight to Jimmy Wales's dream of cashing out on Wikipedia, the world's largest collection of infrequently asked questions. The vehicle for his scheme, a derivative for-profit startup called Wikia, is imploding. A tipster tells us that the 43-person company has laid off 30 percent of its staff. (Update: The company now says it has only laid off 10 percent of its employees.) Wikia lets users build their own anyone-can-edit wiki pages. Unlike Wikipedia, Wikia sometimes runs advertising on the wikis; its most popular sites have to do with videogames. So why the layoffs?A source who has seen Wikia's numbers says the company is experiencing "a hemorrhaging of cash circa 1999" — losses, in other words, like the first generation of dotcoms. No surprise there, since it has offices in San Francisco, New York, and Poland, and many of its products, like Wikia Search, are staggeringly unpopular. Wikia raised $14 million in venture capital from Bessemer Venture Partners and, the last of which came in December 2006; without a new infusion, it must surely be running low on cash.

Jimmy Wales and the art of the modern breakup

Owen Thomas · 09/04/08 05:40PM

Another failed relationship, another awkward online parting of ways for Jimmy Wales, the cofounder of Wikipedia. Just a few months ago, he was squiring new-agey PR impresario Andrea Weckerle, a self-described "global nomad," around the world. Now, insiders say, Weckerle has dumped Wales — you can tell, because she no longer follows his Twitter updates. The puzzle here: How does he put so much energy into chasing women when he's supposedly leading the world's largest collection of unfactchecked assertions backed up by hyperlinks, and taking on Google with Wikia, his for-profit offshoot?Oh, right — because he's not doing any of his jobs well. Sue Gardner, the executive director of Wikipedia's nonprofit parent, the Wikimedia Foundation, has made it clear she's running the show there. And Wikia? Its search engine, the project on which Wales has said he's focusing his energies, has 0.000079 percent of the market. The common thread: Wales is incapable of sustained attention on anything, or anyone. He once signaled his coupledom by tweeting thanks to an admirer from "Andrea and I." Weckerle has left a coded retort for Wales with this quote from Roy Disney: "It's not hard to make decisions when you know what your values are." Not as rough a farewell as Rachel Marsden, the conservative Canadian pundit. She auctioned Wales's clothes on eBay after he posted a note on Wikipedia stating that they were no longer an item. Too much trouble, too much effort, for Wales to repeat that kind of drama with Weckerle, we guess. Breaking up on Twitter? Far more suited to Jimmy's attention span. The only question: When are Wales's backers at Wikia — Bessemer Venture Partners and among them — going to lose interest in him, too?

Threadless gets a new CEO, users react: "^5!"

Nicholas Carlson · 05/08/08 05:20PM

Virgin Mobile and EMI veteran Tom Ryan, most recently kept on the entepreneurial dole by Bessemer Venture Partners, will join Chicago-based SkinnyCorp, the parent of online T-shirt company Threadless, as its CEO, founder Jake Nickell writes on the company blog. In response, users commented: "^5!" which, according to Google, means "high five!" in hipster. Silicon Alley Insider reports that Threadless earns annual revenues of $20 million off of just 20 employees. The site keeps costs so low by having the users design the products, typically fanciful T-shirts that look good when worn with Chuck Taylors and posted to Tumblr.