InfoSpace's ousted CEO pours anger into e-mail

Dec 24, 2002

By Sharon Pian Chan

Seattle Times technology reporter

Before leaving InfoSpace on Saturday, former Chief Executive Naveen Jain sent two e-mail messages to employees that reveal a bitter and contentious departure from the Bellevue Internet and wireless services provider.

In the e-mails obtained by The Seattle Times, Jain said he was "disgusted" after being terminated as CEO and chairman, and he pointedly criticized several board members, including Chief Operating Officer Ed Belsheim, director John Cunningham and new Chief Executive Jim Voelker.

"We're not going to dignify it with a response," said Steve Stratz, spokesman for InfoSpace.

InfoSpace through the years

March 1996: Naveen Jain leaves Microsoft and starts InfoSpace.com in Redmond.
May 1996: InfoSpace launches its first phone directory on the Internet.
December 1998: InfoSpace has its initial public offering.
March 2000: Stock reaches its all-time high closing price of $130.50.
April 2000: Arun Sarin, an AirTouch executive, is appointed chief executive. Jain steps aside to become chief strategist.
June 2000: Jain sells 1.28 million shares of InfoSpace for $66.6 million.
July 2000: InfoSpace acquires Go2Net in a $4 billion merger. Sarin is to remain CEO, Go2Net CEO Russ Horowitz becomes president and chief operating officer, Jain remains chairman.
January 2001: Sarin and Horowitz leave InfoSpace. Jain becomes CEO again.
March 2001: A derivative-shareholder suit is filed against InfoSpace.
June 2001: A class-action shareholder suit is filed against InfoSpace.
July 2002: InfoSpace receives a delisting warning from Nasdaq after its shares remain below $1.
August 2002: Jain announces he is stepping down and the company is searching for a new CEO.
September 2002: The stock has a reverse 10-for-1 split.
December 2002: The board terminates Jain as chairman and CEO; Jim Voelker is named CEO, president and chairman.

In an e-mail Belsheim wrote to employees after Jain's messages were sent, he said, "Naveen's response has been emotional and unfortunate. I hope you will understand."

Jain, founder of InfoSpace, wrote he was unhappy with the stock-option package offered to Voelker and a severance package given to Belsheim, and that the board had chosen an "unqualified" CEO.

"I have done everything to stop this raping of employees and shareholders but I can not (sic) control it anymore and have decided to move on with my life," Jain wrote. "I will continue to fight for our employees and our shareholders as a board member but (sic) company is moving in the wrong direction."

Jain, who said Saturday the company was headed in the "right direction," yesterday called his seemingly reversal in the e-mail "mostly an emotional response. In my heart I believe the company has a solid foundation."

He declined to comment on the e-mail otherwise.

Even before Jain's ouster, the company had been searching for a successor with the help of an executive-recruiting company.

The board, in an apparently acrimonious meeting over the weekend, selected Voelker, a decision Jain opposed.

Voelker assumed his new position yesterday.

In the past few years, Voelker has played mainly an advisory role as a director for many companies, including Monet Mobile Networks in Kirkland; 360 Networks in Vancouver, B.C.; Comdisco and Epoch Internet.

Voelker, 51, first moved to Bellevue in 1994 when he became president of the now-bankrupt XO Communications, a telecommunications-services provider previously named Nextlink.

He was not available yesterday to discuss his new job.

"When he got to the company, it really wasn't a company," said George Tronsrue, Voelker's successor at Nextlink and now CEO at Monet Mobile Networks. Tronsrue has known Voelker since the late 1980s.

"He put the structure in place that grew the company to its first eight or 10 networks and he did a couple of real key acquisitions that established the revenue base of the company and got it out in front of many of his competitors," Tronsrue said.

Before joining Nextlink, which moved from Bellevue to Reston, Va., Voelker served as CEO and chairman at U.S. Signal.

Greg Maffei, CEO at 360 Networks, where Voelker was a director for three years, described him as "having a common-sense approach with a lot of experience" and someone who "delivers the message in a low-key way."

Maffei, former chief financial officer of Microsoft, said Voelker's credibility on Wall Street is "very high."

"Jim is a guy who is viewed as very credible, not just for having built U.S. Signal, but also Nextlink," he said.

Sharon Pian Chan can be reached at 206-464-2958 or schan@seattletimes.com.