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eBay Developer Ethical Faces Financial Crisis
By Ina Steiner
AuctionBytes.com
January 31, 2006
Ethical Technologies founder Scott Samuel said the company is facing financial problems consisting of debt of more than $450,000, not counting the lease. Ethical has moved out of its offices in a cost-cutting move. Samuel blamed the financial crisis on an executive no longer with the firm who was authorized to take care of bills and never did.
Samuel said eBay last week threatened to pull Ethical Technologies' access to the eBay API for failure to pay its bills. He said at the time that the move could cost money for those customers who use the Ethical Extender tool if their listings end. Ethical had marketed its tools to PESA (Professional eBay Sellers Alliance) sellers, who are among eBay's highest volume sellers.
However, Samuel said yesterday, "After speaking with eBay late Monday, a payment plan is in the process of being worked out that will allow Ethical tools to continue to function and provide services to eBay sellers indefinitely."
Ethical's Extender tool is designed to extend the duration of auction listings that have no bids 12 hours before the listing ends. The advantage to a seller is that she pays only one listing fee, but the listing appears on eBay's highly-trafficked "Ending First" pages up to four times in a 7-day period instead of once.
eBay nearly pulled the Extender tool from its site in August saying the tool "violated the spirit of its search manipulation rules," but then reversed itself and continued to allow the tool to be used by sellers (http://www.auctionbytes.com/cab/abn/y05/m09/i26/s01).
Samuel had said over the weekend that if eBay pulled Ethical's access to the API, he had no way to efficiently inform his customers because documents, client lists and company contacts had been stolen, but said he could contact users through the PESA discussion boards and through individual emails. He said the company continues to collect payments from active customers through checks and PayPal payments.
eBay spokesperson Hani Durzy would not comment on Monday afternoon on whether eBay was in discussions with Ethical or not because it "would not be appropriate for us to comment on any discussions we may be having with another party."
Update: Scott Samuel called to clarify his statement about the amount of Ethical's debt. He said a significant portion of the $450,000 has been converted from debt to investment, the rest consists of the API and the office lease. Ethical is currently in negotiations to wipe out the office lease debt. Samuel said he could not go into further details because of legal, but said the company is not $450,000 in the hole.
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Thanks Ray! Interesting article.
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Hmm, expected more of a response from this crowd. I'm so lost on this Ethical business I was hoping for a little conversation.
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also being discussed here
http://www.therossshow.com/showthread.php?t=4319
I think Im allowed to link here ?
if not somebody will delete it
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There's not much to say that hasn't already been said. Any "new" info would have to be provided by those involved, and I'm sure they have reasons (legal) to hold their tongues. At some point the other shoe has to drop.
Nasty business.
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So....let me get this straight.
Most everyone leaves in july/august.
Scott, Mike and Brian and maybe 2 others are left.
Mike Brian, and Scott are the only ones that have any authority to pay bills or get at the money.
September, October, November, December, and January go by.
They never pay the bills, move out of the office, shut it down, and how.....is this news? HOW? The 3 of them.
This is the stupidest "Press Release" that I have ever seen although it really does not surprise me.
The Executive no longer with the firm has to be either Mike, Brian or Scott himself. Lou and I left back in July although we are still on the website.
"He said a significant portion of the $450,000 has been converted from debt to investment, the rest consists of the API and the office lease."
There was never any employee debt. It was always considered and investment. "Keep all your receipts. You will be reimbursed". Then, when we turned them in to show our investment at the point of a Cash Infusion, we were thieves.
"Ethical is currently in negotiations to wipe out the office lease debt."
How about just paying it. You owe it.
"Samuel said he could not go into further details because of legal, but said the company is not $450,000 in the hole."
Legal?
Legal What?
Scott would want you to believe that ebay contacted the news....Poor Scott.
He would also have you believe that all this happened without his knowledge. Are you wasted?
This is an orchestrated Press Release. Nothing more. Hardly Newsworthy.
Biggbill
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May justice prevail.
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Ethical is currently in negotiations to wipe out the office lease debt. Samuel said he could not go into further details because of legal, but said the company is not $450,000 in the hole.
Did anyone else see this and think 'yeah, bankruptcy would do that'?
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My first thought was that he would send the company into bankruptcy, fold it, then be rid of the pesky "excess owners." (cough cough)
My second thought was "converted debt into investment?" How, exactly does one do that? Is he saying that he got somebody to invest in his firm to cover the debt?
And isn't the eBay API free now?
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Indy, the API is not free for Ethical because of some jargin I don't understand, that basically the way Ethical has their system set up they have to pay for it, unless they set it up the new way which is free. The old way that they have to pay for will be null coming soon, so Ethical has to re-write some script or some such.
I interpreted the debt comment as people that the company owed money too took their payment in stock options rather than money. I could be wrong.