Epinions was founded in 1999, during the
dot-com bubble, by Nirav Tolia (who left Yahoo and $10M of unvested shares),
Naval Ravikant (formerly of @Home where he left $4M in options),
Ramanathan Guha (from Netscape by way of AOL where he left ~$4M in stock options), Mike Speiser (formerly of McKinsey), and Dion Lim (formerly of
Morgan Stanley) with $8 million in seed financing from venture capitalists
Benchmark Capital and
August Capital. By January 2003, it had 5.8 million users, but all of the founders, other than Tolia, had left, and the company had just started to make a profit in 2002. In the words of Tolia: "We felt we couldn't finish what we started because we had a little problem. We needed a viable business model." In 2003, the company
Dealtime acquired Epinions for an undisclosed amount of stock, and Tolia became the COO of the new company, Shopping.com. In January 2005, the four co-founders who had left and other Epinions employee-stockholders filed a lawsuit against Tolia and the two VC firms that provided seed funding. The suit claimed that the defendants "failed to share with them 'material facts concerning Epinions' financial affairs,' including news of a deal with Google that the company knew would increase its 2003 profit by 1,400 percent". In June 2005, eBay and Shopping.com announced that
eBay would acquire Shopping.com for $634M and the transaction was completed in August of that year. The company started relatively early in the history of
crowdsourcing online content, before it was clear which
business models would be successful. Competitors found that consumers were willing to provide product reviews for free, and that, especially with a large volume, these were of adequate quality. This undercut Epinion's costs and resulted in years of financial decline. Over time, unpaid crowdsourced reviews became common on e-commerce sites, especially marketplaces like
eBay and
Amazon.com. These sites earn revenue from the reviews indirectly, when consumers buy items from the marketplace after using the reviews to reduce uncertainty about the quality or appropriateness of products or the trustworthiness of sellers. Epinions also faced competition from niche sites like
Yelp and
TripAdvisor, and people sharing opinions for free on
social media sites that did not exist when the company started. On February 25, 2014, the company announced that as of March 25, 2014, all Epinions community features and member login would be removed and/or disabled from the Epinions website. The staff at Epinions made it clear that the community members would no longer be able to delete or edit their content submissions and that their submissions would remain on Epinions and the eBay networks without future compensation. No new product reviews appeared on the site after March 2014; the site was shut down and redirected to shopping.com in May 2018. ==Mechanisms==