"Everything was "long-term" with Naveen. I can't tell you how many times i heard that from him," Lucky told Inc.
As Hoffer was starting at InfoSpace, according to his deposition in Plunkett's case, Jain told him he was going to hire Plunkett -- but on a temporary basis. Hoffer recalled in that deposition that Jain had told him that hiring Plunkett "wasn't going to dilute anybody's equity in the company, because he had no intention of keeping Mr. Plunkett around." Hoffer was concerned and asked, "Naveen, what's going to keep you from doing exactly the same thing to me?" Jain's reply, according to Hoffer: "Don't worry, young man, friends don't screw friends."
According to Plunkett, Jain told him a different tale. Plunkett says that Jain told him that he had gotten Hoffer to join InfoSpace by offering him 20% of the company. "I almost fell off my chair," Plunkett recalled in his deposition, telling Jain that that was too much of the company to give up to one person. Jain then replied, as Plunkett recalled it: "Don't worry....he has no paper; he has no proof. We're not going to give him that. He's already quit his job; he's broke....I think he's got a baby, I think he just bought a house....We'll get him down."
Plunkett said Jain turned on Plunkett and fired him the day after that conversation. Jain allegedly fired Hoffer about two months after that.
Jain, meanwhile, had made yet another key hire, Mark Kaleem, whom he brought in as his vice-president of strategic business development in early June 1996. Kaleem claims that Jain offered him options to buy 500,000 shares of InfoSpace. But when Kaleem sought to exercise his options, Jain rejoined, according to Kaleem's deposition testimony, "Oh, Mark, you don't need to exercise. You can exercise it anytime...why are you worried about that?"
Kaleem said that he told Jain he had a heart condition and he wanted to take some of the stock and put it into trust accounts for his children. Kaleem then prepared an option agreement and asked Jain to sign it. In his deposition, Kaleem recalled Jain's response: "He was livid. He refused to sign it."
By September 1997, Jain had fired Kaleem. In his deposition, Kaleem said that when he asked why he was being terminated, Jain told him: "We have to move, move along. We can't afford to have -- coordinate offices." According to Kaleem, he was working out of a one-room office in Campbell, Calif., with a monthly rent of $250.
Kaleem then asked Jain about his stock options.
Kaleem claims that Jain responded, "You don't understand. You have nothing."
Charisma Redux
If there is one truism about charismatic leaders, it's that there is always another -- veiled -- side to them. There's a well of energy and will that fuels the enthusiasm they offer for public consumption.
Perhaps what is most noteworthy -- and breathtaking -- about charismatic leaders is their sheer brazenness. In another complaint filed against Jain and InfoSpace, yet another plaintiff, John Richards, alleges that Jain persuaded Richards to sell his company, Yellow Pages on the Internet LLC, to InfoSpace. In return, Richards alleges, Jain assured him that he would receive more stock options than anyone else in the company.
And yet, in his lawsuit, Richards claims that at the time of his hiring as a vice-president, at least six other InfoSpace employees had higher option grants, as did two hires brought in after Richards's arrival at InfoSpace.
Bill Lucky, whose company has also sued InfoSpace and Jain, says that he ran into that sort of doublespeak as well. "Everything was 'long-term' with Naveen. I can't tell you how many times I heard that from him," Lucky told Inc. in an interview.
As a vice-president for international sales at Switchboard, the first company to market a free national directory of U.S. residential information on the Internet, Lucky had extensive contacts with the largest Internet companies in Canada. Lucky claims he approached Jain and proposed a joint venture (50%-50%) between a new company he was starting, Infofind, and Jain's. It would ultimately be called InfoSpaceCanada.
Lucky claims, however, that within weeks Jain wanted to alter the split to 51%-49%. Lucky had already left his job at Switchboard. He says he relented, but only with Jain's assurances. "He kept on saying that the only types of relationships he makes are long-term and that we would go for years and years," Lucky recalls of Jain. Soon after, according to Lucky, Jain wanted to amend the deal further by entering into a "marketing- and-sales agreement," whereby Infofind would receive 30% of all revenues. Again Jain allegedly soothed Lucky's qualms with repeated talk about their "long-term" relationship. Lucky then set about signing up major accounts, such as AOL Canada, Bell Canada, and MSN Canada, that would take "private label" content from InfoSpace.
The "long term," as it turned out, was nine months. Lucky claims that was how long it was before Jain terminated the marketing-and-sales agreement. He also alleges that Jain hired Lucky's sole employee and had begun dealing directly -- behind Lucky's back -- with the contacts Lucky himself had cultivated. Contending that he came away with nothing from the "long-term" relationship, Lucky decided to sue.
Litigation
Although Jain declined to comment on the lawsuits, some light can be shed on his position in these cases by reading the depositions he gave in several of them. When pressed on the equity issue, Jain asserted more than once that option agreements between him and key personnel implied a "cliff" vesting feature, whereby no options vest during the first year of employment. "No single [share] gets vested until they have been an employee of the company for one year," Jain stated in one deposition.
In addition to claiming that the options were not vested until a full year of employment had passed, Jain also dismissed the contributions the plaintiffs claimed to have made to his company, asserting that many of the plaintiffs did not bring any special contacts that he, himself, didn't already -- or couldn't -- cultivate. "I had, in fact, not only contact but personal relationships with most of the CEOs of the portals at that time," said Jain in a deposition. When asked, for example, if one plaintiff, Robert Hoffer, generated any business for InfoSpace, Jain replied: "Nothing of significance."
