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Today, on This Week in Startups, Greg Kidd of 3Taps joined the program to unpack his legal battle with Craigslist. Craigslist sued 3Taps earlier this year for copyright violation, and 3Taps recently counter-sued, alleging unfair and anti-competitive business practices.

1:00 Welcome everybody, today we have Greg Kidd of 3Taps on the program.
3:15 Thank you to GoToMeeting for their support of the show! Everyone thank @GoToMeeting and use the promo code ‘START’ for a free, 30-day trial.
5:00 My guest today is Greg Kidd of 3Taps. Welcome to the program. Tell me, what is 3Taps?
7:00 You keep bringing up PadMapper.com, which I heard about a few years ago. Is that data primarily from Craigslist?
9:00 Craigslist isn’t necessarily losing anything because the user will ultimately end up there, correct?
9:45 In a nutshell, what is their argument?
11:45 What user data do you have access to?
12:45 Is your position that Craigslist terms of service are overreaching?
14:30 Explain why statistics and facts cannot be copyrighted.
17:00 Do you think Craigslist is being hypocritical in giving Google access?
20:00 Why is this so important to you, personally?
23:00 Thank you to Stamps.com for supporting the program. Everyone thank @StampsCom!
25:00 Are you being hypocritical saying that Twitter is an example when they’ve been shutting down APIs and developer access?
28:30 Why doesn’t Craigslist blow out the frame on PadMapper?
30:30 What about the use of images?
33:30 Let’s talk about Craigslist’s tactics, like going after individual developers.
35:00 How much would you be willing to pay for the data?
36:00 Why don’t you create a search engine to aggregate all the posts?
36:15 Insight from Tyler: It’s like a valet at a public parking lot.
38:15 Do you know when this would go to trial?
40:00 What have your lawyers told you about your chances?
40:45 Why do you think Craigslist doesn’t want people innovating around their data?
42:15 Do you do any human normalization of the data?
44:00 Are there any constituents who have asked to join your side?
45:00 Tyler: What happens if either side wins?
46:15 How do you make money?
49:00 Tyler: What happens if Greg comes out on top in the ruling? Is Airbnb information indexed by Google?
50:33 Greg, thank you for being on the program. Everyone check out 3taps.com to stay informed on this important issue.
50:45 Thank you to GoToMeeting and Stamps.com for supporting the show. We’ll see you all next time!

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Full Transcript

Narrator: Distribution provided by CloudSigma. The cloud that adapts to you. Visit http://cloudsigma.com/thisweekin/ for a free $200 credit. Today’s episode of “This Week in Startups” is brought by «Stamps.com». Why go to the post office? Use «Stamps.com» instead. For no-risk trial and 110 dollar bonus offer, use the promo code TWIST. And by GoToMeeting. Sign up for GoToMeeting using the promo code START to begin your free trial.

Jason: Hello, everybody. It’s “This Week in Startups.” Today on the program, we have 3Taps, which is a very innovative startup that is collecting information, facts, if you will, from different data sources, including one, which you may have heard of, Craigslist. And they are in a massive important legal battle over who owns the facts on Craigslist and who owns the facts just generally on the Internet.

Tyler: This could be one of the biggest rulings in the Internet-related startups.

Jason: If it goes that far.

Tyler: I mean…

Jason: This is just a cold open.

Tyler: I’m just saying this could be very important.

Jason: Stick with us. It’s very important.

INTRO MUSIC.

Jason: Yes, hello, everybody. Welcome to “This Week in Startups.” It is a very important episode, that Tyler very astutely, but rudely interrupted the cold open. A cold open supposed to be like thirty seconds to get people excited.

Jason: I am just saying.

Jason: And you are just so excited about this issue.

Tyler: I am!

Jason: You are passionate about it.

Tyler: You could say that. I think every startup person, who once figures out what this is about will be.

Jason: Right.

Tyler: This could affect a lot of startups.

Jason: It is an issue that has been around a long time, and it did not get… It flares up. Who owns the facts in the world? And can you own a fact, or can you own a community? And can people access your facts? And whose facts they are really accessing? It affects Twitter. It affects Google. It affects Facebook. It is really at the core of society in a way. Who owns the information in society?

Tyler: Every time you hear the words “Big Data.”

Jason: Yes, of course. It is a big part of it. We are going to have Greg Kidd on the program from 3Taps in a moment, and talk about the whole brouhaha going on and his position. I do not want anybody to rush to any snap judgments, because I do not actually have a fully thought-out opinion on this, and I have some concepts about it, but I want to reserve judgment here from…

Tyler: It could go either way. That is the thing. That is not entirely…

Jason: I think there are reasonable arguments on both sides. I do not necessarily have the answer, so that is why I love hosting the program.

Tyler: I have the answer to this one.

Jason: O.K., Tyler. See, this is the problem. There are people in society, I just tweeted about this today, who just think they have the answer to everything.

Tyler: And that is not you!

Jason: Is that not me?

Tyler: No. You do not have the answer, do you?

Jason: I have the answer most of the time, but I try to keep my mind open.

Tyler: O.K. Usually, I am the open one.

Jason: The one thing, you should be open to, is GoToMeeting. GoToMeeting is the solution for hosting online meetings. Mac, PC, iPad, all of these things work beautifully with their free app. Go download them now! And HD faces! It is just buttery, and awesome, and delicious. I love HD faces that is why I use it here on the program today. We are going to be having our guest Greg Kidd over GoToMeeting. It is beautiful, HD, clean! Go to GoToMeeting and get a free thirty-day trial. Use the promo code START. Please use the promo code S-T-A-R-T and these guys have been supporting “This Week in Startups” for two or three years now. And I really appreciate Citrix from making a great product that I used all the time literally. I use it, I do not want to say every day, but I use it multiple times a week and when, sometimes, when I’m really busy as an angel investor, it is multiple times in one day, or during a launch festival, I may use it multiple times. It is at least five to fifteen times a week, I think, for the last three or four years, or more. I have used GoToMeeting from Citrix, and I love it. It always works and my meetings always start on time. Sometimes people try to use some other solutions and they never work. It has never started on time. I love the beauty of a one-click and everybody on every platform is in a private secured network. The GoToMeeting private secure high-speed network makes these meetings go flawlessly. Not some open network. Maybe it is up and running, but it is a free service, there is nobody to call, et cetera. It has a very modest fee. Use GoToMeeting on an unlimited basis. I do. And you can go there. Use the promo code. So I use it a lot, Tyler.

Tyler: You have to.

Jason: Everybody, thank GoToMeeting. Everybody, use GoToMeeting. Everybody, use the promo code “START” when you do sign up. Thank you @gotomeeting. It is awesome.

Today, my guest is Greg Kidd of 3Taps. He found 3Taps in 2009. Previously, he had founded the company Dispatch Management Services in 1991. And a kid, named Jack Dorsey, worked there for a little bit, when he was at NYU. Greg is @gregkidd, like Jason Kidd, who is now playing for the New York Knicks, on Twitter. He is a smart cat. He was a consultant to Twitter back into the 2008 time frame and has been consulted to Square since 2009. In a way of saying, the guy is the real deal and legit. Welcome to the program, Greg Kidd.

Greg: Thank you for having me, Jason.

Jason: It is a pleasure. Just get that microphone right up in there, so we do not miss any of those comments you make. Tell us, what is 3Taps? I have it up here on the screen, but give me the thirty thousand foot view, what are you doing?

Greg: 3Taps is a service that collects exchange postings. Those are the types of things you see on Craigslist for selling a car, finding an apartment, finding a personal ad. It puts all of those from all the different services in a data commons and lets developers, like PadMapper, build applications on top of that data.

Jason: I’ve got it, so you’re going out and, with the proper term will be, scraping or indexing, or are there multiple different ways to collect this information? How is the information collected?

Greg: Well, there are three ways to get it. People could either push it to us with an API or let us pull it with an API. There are technologies that are “push and pull,” or else you can do one of the methods. People call it different things. They call it scraping; they call it crawling, indexing, but all of those relate to finding it on the public Internet and taking a copy of the information or some subset of the information and indexing it, so that is accessible by third parties like PadMapper and other sites, which want to build on top of that data.

Jason: You keep bringing up PadMapper, which I heard about a few years ago. I have some friends. A friend showed it to me a year or two ago, and I was like this is the greatest thing ever. You can actually type in your zip code here.

Tyler: I found my apartment through this.

Jason: O.K. You found your apartment. I just typed 92232, which, of course, is the zip code here, in lovely Culver city. I was looking for something that ran between 800 and 2100 dollars, and I need to have two bedrooms, and boom! Now I started seeing apartments. I can pick a number of beds, full leases, and I can get an email alert, but, of course, this data is primarily from Craigslist, correct?

Greg: Well, in the rental market, there are quite a few different sources, and, in some cities in America, Craigslist is the dominant provider, but, in others, it is more balanced. Craigslist has a healthy dose of apartment ads in most major metropolitan areas in the United States.

Jason: Therefore, PadMapper, for all intents and purposes, has built a beautiful user interface, a gorgeous service that is providing true value to people, but it is using the data, which was originally posted on sites like Craigslist, correct?

Greg: Craigslist, or «Rent.com», or «Apartments.com», or «Backpage.com», and any site, which is putting that information out there in public.

Jason: When you click on the link on PadMapper, you will either go to a permalink page like this one or to the original one, correct?

Greg: Yeah. It depends on the different services, but in the case of Craigslist, it just takes you back to the original Craigslist’s posting in a frame, so that you can view the original content.

Jason: I’ve got it. That is part of the terms of service, as here we go. There is a perfect example, Craigslist ad. Therefore, for the Craigslist, they are not necessarily losing anything, because the person is going to, ultimately, when they click on it, wind up on Craigslist, correct?

Greg: Yeah. I mean, it still is directing traffic back to Craigslist, and again, Craigslist is not paid for clicks. It gets paid for posting the ads, so there is not a direct competition for that revenue or even for those eyeballs.

Tyler: If anything, you could say that you were adding more potential views.

Jason: Potentially. Right. There is that argument there. What I wanted to see is to set the stage for, exactly, how people are using the data. There are other ways people are using this data, I suppose?

Greg: There have been, although a lot of them have been shut down of late with the “cease and desist” orders from Craigslist.

Jason: OK, so Craigslist is taking a hard-line stance on this. What is…, and I know you do not speak for them, obviously, you are the person on the other side here, but, in a nutshell, what is their argument?

Greg: Well, Craigslist, and again, I cannot really speak for them, but they are acting as if they own the data and that the only place they want you to see the data is on their website. Although having said that, they have allowed their site to be crawled by about fourteen or fifteen other search engines, so that data is also discoverable on those public search engines as well.

Jason: The content. They claim that they have absolutely no ownership of the content and have no responsibility of that content as well, correct?

Greg: They accepted that they did not create it. They accept that they are not responsible for it. They even accept that they do not have an exclusive license over. They gave that up, because that was untenable, but it does not stop them pursuing other people for having that same content, regardless of whether they’ve got it from Craigslist, or, like us, got it from somewhere other than Craigslist.

Jason: Right. If you go to the Craigslist “terms of service,” just type “Craigslist terms of service,” really, what Craigslist is objecting to here is… And they say it in a kind of plain English in their terms of service and I have you respond to it. Hold on one second, when I pull up the section 5. Essentially, what they are saying is, they are trying to protect the community. “To maintain the integrity and functionality of Craigslist for its users, access to Craigslist and/or activities related to Craigslist that are harmful to, inconsistent with or disruptive of Craigslist and/or its users’ beneficial use and enjoyment of Craigslist are expressly unauthorized and prohibited. For example, without limitation: The collection of Craigslist users’ information.” You guys do collect information on the users there, don’t you?

Greg: No, we do not.

Jason: So, obviously, you don’t have access to IP and email addresses, but you could take the telephone number if they post it in the post, correct?

Greg: Well, if it is in the posting, we could, but Craigslist generally encourages people not to put that information out there.

Jason: And then, here, this is the sort of key. “Any copying, aggregation, display, distribution, performance or derivative use of Craigslist or any content posted on Craigslist whether done directly or through intermediaries (including but not limited to by means of spiders, robots, crawlers, scrapers, framing, iFrames or RSS feeds) is prohibited.” Then, they say they have limited access to search engines when they obey the “robots.txt”, so…

Tyler: This is an agreement between Craigslist and the user, who posted.

Jason: All users, who use Craigslist, right?

Tyler: Right, but he is not using Craigslist.

Jason: Right. They are upset, I guess, that you are breaking this “terms of service.” Your position is, this is an overreaching “terms of service,” correct?

Greg: That is overreaching, and we did not get the data from them anyway, so they’ve never been quite clear, why the terms of service apply to us. The data, we found, which are Craigslist postings, is available on the public Internet, on public search engines.

Jason: So you can go search Google, pull the cached version of the page, and get the information there, correct?

Greg: That is correct. You can either get the cash version, or you can get a more current version, but they have already put that information out there on a variety of search engines, so the information is discoverable outside of Craigslist itself.

Jason: When I look at Craigslist or when I look at Google, I do a search, like “site: craigslist.org”; it doesn’t actually give me the full listing, unless I go to the cash version, it would not actually give me the exact listing, would it? So there are other search engines that pull it all down, right?

Greg: Google, just like PadMapper, gives you a summary view. The same thing is with PadMapper. We do not have the entire version. We index the important facts and make that addressable. To get to the full view you have to look underneath.

Jason: I’ve got it. Therefore, you can collect some data from the abstract.

Greg: Well, or you can look at the full content and then, pull out. So, for instance, PadMapper focuses on four facts: the location, the price, the number of bedrooms, and the number of bathrooms, all of which were, I am sure, constitute factual information, for which there is no copyright in this country. And public facts are generally, widely acknowledged to be public property and have strong first amendment’s protection.

Jason: Yes, explain that to me and to the audience, facts, in and out of themselves, statistics and facts cannot be copyrighted.

Greg: Correct.

Jason: So if I were to make an almanac of the weather every day of the year, and if I were to take the temperature in my backyard, and I had a collection of this, you could essentially copy those facts, and that might be well within your rights.

Greg: That is correct. And this was decided by the supreme court definitively in unanimous decision regarding, for instance, phone numbers in the case Rural v. Feist (en.wikipedia.org/wiki/Feist_v._Rural). There was a question as to whether you could copy phone numbers. If you didn’t copy them exactly, they would simply be wrong numbers, and so the court threw out the idea that simply the “sweat of the brow,” that somebody went to a lot of work to put them on the list, gave them some copyright-like protection, so that is, basically, a bogus concept. The facts are just facts. They are not creative expressions. They are descriptive information and as such are outside of the bounds of what copyright law was intended to cover.

Tyler: Google uses the same point with Wikipedia when they extract facts and make it surfaceable.

Jason: With DVDpedia, I guess, which was closed-source, but in the case of Wikipedia, which is open source by default.

Tyler: Right, but when you do a search for Britney Spears birthday, they give you the answer now.

Jason: Right, but the fact is that information is offered up. And in fact, the Wikipedia’s foundation, the Wikimedia foundation encourages that use. Here you have Craigslist, which is not encouraging that use and, in fact, saying…

Tyler: Sure.

Jason: I think, in part of Craig’s argument, because I have talked to him about it before, that he does not want the information from the community to be misappropriated to ruin the community. So people are talking about things, let us say in chat rooms, and do not want it to be wildly amplified outside of Craigslist. They feel like this is infringing, of course. That is an argument for the community side of Craigslist, but on the factual side of Craigslist, I guess that argument breaks down, does that not, Greg?

Greg: I cannot think of a wider dissemination than giving it all to Google, so that it could be, basically, googled for by any site or any computer in the world.

Jason: So do you think Craigslist is being hypocritical then in giving access to Google? Because Google is the number one referral traffic on the Internet, and then, getting upset, when, perhaps, the balance of favor, i.e. PadMapper, falls in another direction.

Greg: It is not really a question of hypocrisy. Once Craigslist puts that out there in public, and it is the same thing for Twitter… In full disclosure, I am a first-round investor in Twitter. Once you put something out in public, you cannot put the toothpaste back in the tube. Anything in public, whether it is Google or someone else, it is public. There are no longer any privacy or confidentiality claims, unless that data was mistakenly put out there, but once you, with intention, put factual information in the public domain, i.e. make it discoverable in public place whether it’s Google search engine or, even, just Craigslist’s serving that up on its own servers, but from an accessible point on a public network, that information is public. The law is pretty clear about this.

Jason: So you feel, if there are any tweets out there, I should be able to make a secondary service about New York Knicks players and the facts in their tweets.

Greg: Tweets can have copyright, but even with copyright, there is a concept of fair use implied license, and so when somebody makes a public tweet, the question is, “Was their expectation that the tweet was going to be shown in a private place?” It is fairly well acknowledged that if you have a public account on Twitter and you tweet, it is going to be seen by people publicly, so you cannot make a claim of privacy about something that you tweeted about publicly.

Tyler: Unless your account set to “private.”

Greg: Right.

Jason: Yeah, if your account was set to “private,” you could make that argument.

Greg: If you make the account set to “private,” you can make that argument. There is no concept of a private account for Craigslist. It is put out there in a very public place. If you put an ad out for a toaster oven in Los Angeles, anyone in the world can see that out. There is no discriminatory restraint on who can see that out.

Jason: And so let me ask you, “Why?” There are millions different businesses you could run. You’ve been very successful, if you are a first round investor in Twitter, given a secondary market for Twitter, you probably don’t ever have to work again, unless you invested less than a hundred dollars in Twitter, which I would find highly unlikely. Why is this so important to Greg Kidd? Why is this worth going to the mat for? Because this is a big undertaking.

Tyler: And this is something that was going on in the past, where there have been other things in the past, like PadMapper, that Craigslist would say to “cease and desist.”

Jason: Google, in fact, with their image search…

Tyler: Right, but those people normally cut out, for lack of a better word, and just shut down.

Jason: Yeah, PadMapper does not have the ability, VCs do not have the ability to fight this. It takes an individual with…

Tyler: Therefore, this is a very unique case, where somebody is actually standing up to it and wants to go to the mat on it.

Jason: Right. So can he answer the question now?

Tyler: I just wanted that people know for the context, that, normally, this is not what happens.

Jason: That is right, Tyler. So, Greg, as I beautifully stated in my question and Tyler recapped…

Tyler: Just for emphasis.

Jason: Why is it so important to Greg Kidd? Why are you spending what will be hundreds of thousands if not millions of dollars in legal bills to fight this?

Greg: I’ve had the pleasure of my life of always being involved in exchange marketplaces that started out with bike messengers, where we aggregated all the bike messenger deliveries in one city from all the customers, all the couriers, and that model spread throughout the world and became the largest on demand dispatch company. And I met some great both bike messengers as well as coders from doing that. I think you mentioned Jack Dorsey, who was one of the folks that hacked into my system, learned along with us. We really enjoy seeing exchange marketplaces worked efficiently. And efficiently to us means best execution. It means willing buyers and willing sellers can always find the best match for whatever they have on offer.

Tyler: Fluidity.

Greg: Liquidity. It is the grand liquidity scheme, and we never like to see discriminatory access. We never like to see anybody, basically, lock out of seeing all the supplies or all the demand. What we took in terms of a lesson from the bike messengers and learning a little bit about 140 characters and paging, that allowed us for Twitter to come up with what, I think you can call the democratization of media that anybody could follow anybody else, who had something to say. Instead of just putting out bike messenger deliveries that was amazing to see what happened, when for those 140 characters, we just let anybody say and anybody follow anything. That has been an amazing journey and then… So if you think of Twitter as the democratization of media, than Square was the democratization of payments. Everybody has many different ways to make a payment, but there are precious few ways to take a payment electronically, and allowing everyone to take that payment means the democratization of payments, like Twitter was a democratization of media.

Jason: O.K.

Greg: 3Taps was actually a Jack Dorsey’s idea as well, and it was just about democratizing exchanges, letting every seeker see every provider. There’s no way to do that, unless you basically make all the supply, all the demand from all different sources available in one pot, so that a new generation of developers, like here PadMapper, the folks at LiveLovely, can build sites that you could never build, if you’re only going for one source at a time.

Jason: All right, when we get back I want to find out how you are making money from this project, and maybe, talk a little bit about how Twitter has, in fact, restricted access to their data. And how that relates? Because, what you are saying sounds great, but we also see on the other side of your Twitter investor and warrant adviser, that they have been locked down access, when we get back from this commercial break.

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So Greg, you are talking a good game here. I like the facts. I agree with you, the facts should be not copyrighted, but then, you start bringing up Twitter as your defense. And Twitter, actually, has been very close of late, shutting down tons of developers. Are you not being a little hypocritical now, saying that Twitter is a great example of openness, and that they spread that way? I tend to think that Twitter is a terrible example right now.

Tyler: I think I know what he is going to say.

Jason: Let him answer the question, Tyler! You keep interrupting!

Tyler: This is good. I have the same question, but…

Jason: Go ahead, Greg! Are you being hypocritical?

Greg: First of all, I am just an investor there, so I certainly do not agree with everything, they are doing.

Jason: Oh, you don’t agree?

Greg: I do not agree with everything.

Jason: What if you were running it, how would you run it? What would your data policy be?

Greg: Again, anybody, who is running an API company, and let us just remember, Craigslist has no API at all, can set whatever limits they want, because, if people don’t like the API, they always have the ability to go out in the world, where I live in, and crawl, index, and scrape. So in life, there’s always a trade-off between using someone’s API and gathering the data directly in the form and within the time limits they want, because there’s no guarantee that anybody’s API is ever going to give you what you want. So, for instance, Google doesn’t rely on API. I mean, people can give Google all their APIs they want. Google wants to scrape, because they want to organize the Internet, the data the way, they want to see it.

Tyler: More importantly, they also allow you to tell them, if you do not want them to scrape it.

Jason: Yes, you can say, “Google, no index.”

Tyler: This is a huge point in this case.

Jason: Twitter does not let their tweets to be searched.

Tyler: Right, but Craigslist does.

Jason: Correct.

Tyler: This is a huge point in this.

Jason: Is it, Greg?

Greg: Yes, and we are going to come back to it. The first thing is just on Twitter, on its API. There is a big thing about restricting access versus suing people for the data, so you can make it harder and say, “Hey, you have to scrape,” but there is no allusion to Twitter. Twitter is not going around and suing people for using tweets. They just restrict the access, and so there is the big difference between making it easier or harder to get data in a timely fashion. For instance, Twitter’s first sale was to Google and to Bing, to sell the API. Those companies were indexing anyway, but Google and Bing bought a higher level of service from Twitter. We would love it if Craigslist had something like that as well. Say, “Here’s the price for our API, if you don’t like it, go get it the way everybody else gets it by indexing it on the public Internet.”

Jason: I guess the issue there is, “Do you provide reasonable access?” And, I guess, for Internet companies to not have an API, Craigslist is just looking phenomenally old school in not having an API. And developers are so entitled these days, that they just expected an API, if there is not one, they are going to get that data however they can.

Greg: It is Craigslist’s own decision to have an API or not, but it is a secondary issue to think, that it’s simply, because you don’t have an API and you have factual information, which you put on the Internet, that somehow you have a property right over information, which is factual information, where is fair use of copyrighted information. Let’s just remember three things, which in our case are: Craigslist did not create the data, they do not have an exclusive license to the data, and we didn’t get the data from them anyway. We’re finding it from other sources, which have already indexed that, like Google, like Bing, like other search engines, that are out there.

Jason: And why doesn’t Craigslist blow out the frame, like, technically speaking, they could blow out the frame here on PadMapper? Why don’t they do that?

Greg: They could. There’s an open question as to whether framing is allowable or not, and that’s kind of like their rations versus PadMapper’s rations, and whose rations are better. So framing is an ongoing issue of policy etiquette. It’s just like, I think, that there was a question there about the “robots.txt”. Whether you want your information indexed or not. And so “robots.txt” is obviously not a law, it is a convention. And Craigslist is absolutely happy to have the public search engines to index it, but if somebody’s public search engine gets a little bit too close to being competitive with them, and they get a bit uncomfortable, and they might pull the rug out from under that public search engine, which looks a little too much like a search engine, which might compete with their search engine.

Jason: Have you done any analysis of the market? I know that you are pulling from a lot of different sources, what percentage in an average market of San Francisco, Los Angeles, and New York, let’s take those sort of major cities, what percentage of real estate is Craigslist or jobs is Craigslist?

Greg: I can talk generally in the overall numbers. And these numbers are in the filing. Craigslist is taking in about 1.5 million new postings a day. The number two in the market in our opinion is Backpage, which is taking in about a hundred thousand a day, and eBay Classifieds is doing about twenty thousand a day. The distant fourth and fifth would be, possibly, Oodle and a company, which is mostly overseas, called Olx. They have a smaller market share still. The overall market basis for general classified postings is that it’s a very dominant position for Craigslist.

Jason: What about the images? I see that the images are being syndicated as well on PadMapper, I guess, because you’re using smaller images. It’s sort of the Google images defense: fair-use, small percentage of the original, isn’t it?

Greg: Well, there’s that, but also we don’t actually take the images ourselves, we’re just collecting links to the images, so we are …

Jason: So it’s up to PadMapper or the other person to take on that risk of the images themselves and displaying them.

Greg: Again, they don’t have the images either. They’re just pointing toward the images at the original site. The same thing that Google does.

Jason: Right, but if they embed them on site, in their experience, then they are de facto using them.

Greg: Yes, but I’m not quite sure what you mean by “embed.” Generally, that the question of like Pinterest or what not is whether you have a copy of the original picture versus not having a copy of the original picture.

Jason: That is even worse if you pull the image from their servers, and then, put it into your experience. I’m trying to find an example here of a Craigslist’s posting. It seems like for the other services: ApartmentFinder and the other ones, they do it, but for Craigslist. It has pictures, but they are not shown here for now. There is the notation on PadMapper. I have a feeling, that they’re not showing those images because of concerns.

Tyler: You’re getting that from your experience with blogs, right?

Jason: Yeah.

Tyler: I mean, as if you’d have car manufacturers say, “You can’t point to our photo.”

Jason: I am sure of Greg’s take on image use, and percentage of image, and the source of it. That seems to be another hot potato, which flares up only once in a blue moon. What do you think what’s going on with the images?

Greg: I mean, if you go to any other major car sites, and, when GM compares its pickup truck to Ford, or its pickup truck to Chrysler, they’re not going around to Chrysler asking for permission to show a picture of their truck versus the other truck versus the other truck. It’s the same thing with comparison sites. Comparison sites on the Internet are not based on asking for permission. Let’s not just talk about the pictures. Let’s just talk about prices and schedules. There would be no ORBITZ, there would be no Kayak, if there was no company like ITA Software, which is like the 3Taps for the travel industry, collecting all those schedules, those prices, that seat availability, and making it available, so that a site like ORBITZ or Kayak could work. You couldn’t make real-time comparisons about supply and demand, and prices, if somebody didn’t crunch the numbers in advance. You can’t go straight to these sites on the fly and have a user experience that works. And so in other industries it is a long-standing practice of comparing prices, supply and demand. My background at the federal reserve tells me, that’s how markets work. The concept, that it is intellectual property, when it’s really just transparency of price, supply, and demand, and that’s how markets work, is a real stretch. It’s something that could, if it continues to go this way, it could, basically, break the Internet, where you have to have permission to compare prices, and compare supply and demand between different sources of goods and services.

Jason: Let’s talk about Craigslist tactics. They’re going after the individual developers. It’s scary for people like PadMapper. They went after Mashery. You can’t provide your service to Mashery anymore. They’re going to scorch the earth on you. Talk about their tactics a little bit.

Greg: Well, I think that would be their tactics. They are not talking, they’re just suing. What more do you like me to say about that? That’s their side of the story, so I can’t speak for them.

Jason: And how far are you willing to take this?

Greg: Well, we filed the case. We’ll take it as far as we can take it. We like to have a court of law to speak on these issues. What are the facts? What is fair-use? What’s implied license for this data? I’m not in the business of being a suitor, suing people. We just like Craigslist to stop suing people and just compete in the marketplace. Now they’ve got a dominant position in “on-boarding” these postings. Nobody is contesting that for any of the vendors that we’re working with, and we’re certainly not contesting that. We just think that the business of “on-boarding” the postings and charging for it is entirely different from the search and downstream interaction. I mean, Google is not in the business of content creation. They are in the business of search. And 3Taps like to be in the same business as ITA Software. We’re in the business of providing data, so that people can make side-by-side comparisons of goods and services that are on the public Internet.

Jason: If Craigslist came to you today and said, “We’re fine with this. You just have to pay us a hundred thousand dollars a month,” would you pay a million dollars a year for access to the data?

Greg: Well, again, there are two methods of access. You cannot have a Brooklyn bridge approach and say, “You’ve got to pay me for the Brooklyn bridge.” I’m like, “Dude, you don’t own the Brooklyn bridge,” and so they don’t have yet and have not established, that they have created these postings, they don’t have an exclusive license, and they’ve already given them out in the public domain, so they can ask for a price on the API, and if that’s a reasonable price, we will surely pay it, but if it’s like an unreasonable price, if they charge like to the Moon, there’s another way to get the data. That is perfectly acceptable, which is the same way the Google and other search engines get it. We’re just one more search engine. The fact is we search exchange postings; Google searches web pages, and Twitter searches tweets. It’s just different ways of searching for different things.

Jason: Why don’t you create a search engine then, to show that, nor have you considered this to make the point so vividly, like, here is a search of all the posts, we’re just a search engine?

Greg: That was what we did. That’s what we’ve been sued for. That’s what Craiggers was. That’s what Craigslist’s suit was over.

Jason: Oh, that was your service Craiggers?

Tyler: Do you know what it’s like, Jason?

Jason: Hold on. What it’s like?

Tyler: It’s like a valet service at a public parking lot.

SONG: Insights from Tyler!

Jason: It’s like a valet at a public parking lot. And I think what you mean by this is, it’s the public parking lot, but if you want to, you can pay a little extra to have the valet using.

Tyler: Right.

Jason: And so if you want that extra level of service, you can.

Tyler: And he is saying, “If the price is reasonable, I would pay the valet.”

Jason: Right, so the valet is a hundred dollars, and park is free.

Tyler: I’m within my rights to park my car if I “freaking” want to.

Jason: Right. It’s as if you go to a hotel and pull out.

Tyler: Right.

Jason: They say like, “We’ll valet if you like it.” – “Do you have a public parking?” – “Well…” and then, you finally get from them that they do have a free parking.

Jason: It’s interesting!

Tyler: Would you agree with us, Greg?

Greg: Yes, I would. I mean, that’s a perfectly accurate description. They don’t have to do this. It’s just a question of whether they’d like to or not, and nobody has to buy the IPA. It’s the same thing, whether it’s Twitter, or Yelp, or anybody, that has user-generated content, and how much and how easily they want to make it available to the outside world. They just can’t confuse whether being the company that “on-boards” gives them some sort of right, as if they created it, and as if it’s some sort of Mozart or rocket fuel kind of intellectual property, when it’s really just the offers by people to sell and buy things. That’s not what copyright law was created for, if you go back, and you look at the original law or the constitution, it was not to create a property right out of something like classified ads.

Jason: You are counter-suing them, I guess, in federal court for the Northern District of California in San Francisco. When do you think this would go to a trial?

Greg: Well, it’s a long way from a trial, so there’s a bunch of processes, what I understand. Again, to be clear here, we are not interested in litigation. We were sued. We have to, basically, answer. We answered the intellectual property claims and stated that they were baseless, and we went on to state, that if you’re going to make baseless intellectual property claims, that is going to be part of an anti-competition claim to ask them to lay off and stop suing people. The next step is, they get a chance to ask the judge to dismiss this, if they think it’s all just a bunch of hokum, but if that does not happen, and we do not believe that would happen, then the parties can settle at any time, and we’re happy to sit down and just talk. We are not in the business of litigating. You go through discovery, find out whether the things that we’ve asserted in our papers are true as they stated.

Jason: You think that this, what they’re doing, is frivolous, don’t you? The legal action, they’re taking, is without merit.

Greg: I think it’s completely without merit, and the copyright law in this country, if you go back and look at the intent, is absolutely clear. The concept of suing people for something, that you don’t have exclusive control over, is like a Brooklyn bridge offense. It’s definitely frivolous and sham litigation.

Jason: What if they lose this? If it is, in fact, they are just using the legal system to bully people, then with their considerable resources… I wonder if they would be responsible for some sort of claim against them. What have your lawyers told you?

Greg: You can read the claim yourself, but that’s exactly how anti-competition law works, if they’re doing anticompetitive things, that they are basically making a bogus claim to control competition in a way, that is not based on anything that is viable in their intellectual property claims, it is a part of an anti-competition claim. That’s not the purpose here. The purpose here is just to let people like PadMapper innovate. Keep this out of the courts.

Jason: Why do you think Craigslist doesn’t want people innovating around, specifically, their data? Obviously, they did not mind you innovating around other people’s data. They’re not anti-innovation that way. They just don’t want people innovating around the resource and the community they have built. Why don’t they want that? They scared that they are going to lose their business eventually. Is that the fear?

Greg: Again, I can’t speak for Craigslist, I mean, you can look at what Craig Newmark said on Quora, on which he said, he had no problem with people building on top of Craigslist data, they just didn’t like a load on their servers, and so we obviously put no load on their server, if anything, we reduce the load on their server, because we’re not getting the data from them. But there could be a difference of opinion between the founders or lack of communication. It’s really hard to know. I can tell you that in my history working with other firms, Craigslist does very well, what they do, and it is always a risky business trying to keep up with the Jones, and so there’s a lot of different innovation out there. Not every innovation works. And they may like things just the way they are, but liking things just the way they are and suing people, who are going to be trying to innovate and do things with this data, that’s in the public domain, is… If you look at what Airbnb did in their one segment, where they added all sorts of services, that were not available through Craigslist, and you can imagine that happening for the job segment, the apartments, goods for sale, services, There’s a tremendous amount of economic activity that sitting under the thumb of a Craigslist’s format for exchanges, that really has not changed in ten years.

Jason: Do you do any data normalization? Or, I should say human normalization of the data, so if you’re going through it, making sure that when they put 2500, they’re not talking about square feet, they talk about dollars, and they left out dollar symbol. Is somebody vanilla checking the facts or a Mechanical Turk is checking them, and scanning them to do that polish?

Greg: We do all sorts of normalization, but we can’t and we don’t have the time or the resources to do any of that Mechanical-Turking, but what we do, is the normalization between sources, because we’re not just working with Craigslist, we’ve got to normalize between the different segments and what not. And we need to normalize geographically as well, because Craigslist has a very crude way of organizing information geographically. Probably, one of the biggest benefits, that we bring, is not just the ability to search across different exchange sites, but through this database, that we create indexes, so you can search for things across every location as well.

Jason: This is going to be… I get the sense that you’re not backing down, and this is going to be a lot of resources, but you’re using Skadden Arps, which is the largest law firm in the world, so you are taking this very seriously, correct?

Greg: We can spend all our time just being on defense, but Craigslist just keeps suing folks, unless we actually bump it up from being on defense all the time, and, actually, draw a line in the sand and say, “You’ve got to stop suing people.” To do that, which is an anti-competition claim and our understanding is, Skadden Arps and Allen J. Ruby, they’re the best in the business, and so…

Jason: When I saw, that Allen J. Ruby and Skadden Arps were involved, I just thought this was not a kid fighting against Craigslist. I mean, this is serious business now. Skadden Arps versus Perkins Coie! Those are serious law firms in litigation. And do you have any other constituents, because this is not the first time Craigslist has been in a beef with people, or the other constituents, who want to join in sort of supporting your side, maybe, helping with the legal bills?

Greg: The last thing I am looking to do is to, basically, have a big gang up and just get more people in some that looks like a big messy class-action suit. There’s a bunch of other folks that understand the issues here and I’ll be upfront. I make my own angel investments. I’ve made a couple of, maybe, a score of investments. Other firms, other VCs, other angels in the community, they are affected by the outcome of this. What’s important here is that the issues get clearly articulated. It’s not a question of like trying to “out-guerrilla the guerrilla.” It is not going to happen. They are the gorilla. We’re the little guy. We get a couple more little guys, but it isn’t to be an even fight on the resources. It has to be a real fight on the intellectual property and anti-competition issues, which are mentioned in the file.

Tyler: What happens if each side wins going forward?

Jason: What do you think it means for the Internet?

Tyler: Right.

Jason: Well, I don’t think Craigslist can win. I think what they can do is they can bully people to stop. I don’t think if it goes to the mat Craigslist wins, so it requires somebody with a deep enough pocket to fight it all the way. And I think Craigslist now has lost…

Tyler: Assuming, Craigslist does win.

Jason: Craigslist can’t win.

Tyler: Assuming, they do.

Jason: Do they win the lawsuit?

Tyler: Yes. What would happen? What would that mean for users?

Jason: I mean, at that point, I think, you’d have people as Google and other people would get somewhat concerned about this issue and will be appealed and that kind of thing. Craigslist’s previous claims were all based on server load. This is why this is getting so interesting, because Greg has found an incredible hack. Is it correct, Greg?

Greg: I wouldn’t call it a hack. It’s just the way the Internet works. The concept of everybody going around and scraping each other’s computer and putting all those loads on is the ridiculous concept. All data commons are all based on the concept to do it once, to do it well, and give it to everybody on an open and equal basis.

Jason: How do you make money? How do you charge for the data?

Greg: Well, we’re not looking to charge for the data now, but down the road, the way like ITA makes money. They charge a licensing fee. I think it is two million dollars a pop for users of that data. I’m not looking to charge two million dollars a pop, but people are happy to pay for that. The basic model is like with any clearinghouses. You have to recover your cost and put up a normal economic profit margin on top, so people, that use twenty percent of the data, probably, are going to pick up twenty percent of the cost plus a profit margin.

Jason: Does Google now have an argument against you, since you are taking the data from the Google’s search engine? Are they going to sue you and say you’re putting on too heavy load on their servers?

Greg: Look, I just mentioned Google, because everybody knows Google. There are tons of places to get the data. Individuals can download software and do their own little mini scraping for the software, for the data, to the data commons as well. You can crowd-source this data. There’s a hundred different ways to get this data. I just mentioned Google, because everybody just knows what that is. Technology has gotten to that point, where the concept of the public domain is, it’s public, and it’s in the domain, so it’s going to be out there. It’s just a question of who’s good at putting jack and Humpty Dumpty back together once it’s in the public domain.

Jason: Greg Kidd from 3Taps. Thank you for being on the program. It was a really interesting discussion. I really appreciate your honesty. And I am friends with Craig, I think it’s this time now…

Tyler: Let’s get him on the program.

Jason: Well, he won’t talk about. It’s a legal issue. They have a very corky position and I think it is a combination of being threatened and feeling like protecting the community. There is the genuine vine to that, but I think that, now with so many people, with such a good case against him, and it’s not hitting the server load, I think he’s got to put a white flag out, and make peace with people like Greg, and say, “There’s an API and here’s how to do it properly. You can do it your way. You can use the valet; you can use the public parking. Here are different options.” I think it’s time, that Craig is going to back down. That’s what, I think, is going to happen.

Greg: And we love Craigslist. We think those guys… And they can come out of this like heroes. This is not like a death fight for us. I think that they will do very well in this new world. There is no reason for them not to.

Tyler: You are not trying to affect their business model.

Jason: They’re not, but the people, who are building competitive services, that are more technically adept, are trying to kill Craigslist, so the freeing of this data means that people can make better decisions, make better products, that will eventually tip over and kill Craigslist.

Tyler: What happens if Greg comes out on top in the ruling?

Jason: I think it’s a real blow to Craigslist. I think that Craigslist could start losing…

Tyler: But not just Craigslist.

Jason: I think Craigslist specifically, because they are the 800-pound gorilla. They can lose ten-twenty percent of their listings every year for ten years and, then, go away, because, look at Airbnb, which created a better service. And indeed, other job boards have created better services.

Tyler: This is a great question for Greg. Is Airbnb information indexed by Google?

Jason: Sure. Definitely. They want more traffic to it. This is the thing about the technology industry. People are closed, when they have a monopoly. They’re the protectionists, when they have the monopoly. So if Google has a monopoly on search results, they are very protective about the algorithm. They would not tell you the algorithm, but then, when they go to Android, and say, “Oh, everything is so open!” Now the Android phones are getting a big market share, now they started to say, “Android, maybe is not that open. You have to have the certain rule. They have to do the certain flavor.” It’s not exactly open, right? So people change their position based on the market share. People tend to be a little hypocritical about it, especially in the Valley.

Tyler: You can say the same thing about Twitter.

Jason: I mean, clearly, Twitter was built on the backs of a lot of these developers and Greg, who himself was an investor, said, that he would probably run it differently. And I think a lot of people feel that way, who were early supporters, so Twitter… Obviously, I’m a big supporter of Twitter in front of these guys, so I feel sorry.

Tyler: And Facebook, and Craigslist

Jason: I’m not a friend of Facebook. I’m a friend of some people in Facebook. I’m a friend of some people in Craigslist. O.K. Listen, Greg, good luck with that. Everybody, check out «3Taps.com» and stay informed of this very important issue. Follow Greg @gregkidd on Twitter. It was a fascinated discussion. We are going to be monitoring Greg. And thank you for being so honest, and open, and coming on the program.

Greg: Thanks for having me.

Jason: Thank you, GoToMeeting, and thank you, to our friends at «Stamps.com». Use the promo code TWIST. When you go to GoToMeeting, use the promo code START. In addition, if you have other ideas for great guests to be on the program, don’t email me, please, just go harass them on Twitter or Facebook. That’s the way to do it. We tried to get Kim Dotcom on the program.

Tyler: He’s a new model.

Jason: Yeah, he’s a new model. Bring me Kim Dotcom. That’s my number one to get, not Elon Musk, not Mark Pincus, not Bill Gates. I want Kim Dotcom on this program. That’s whom I want. Bring me the head of Kim Dotcom. I love that guy. He’s insane.

Tyler: That will be good.

Jason: That’s another guy, with whom we would talk about legal issues. All right, see you next time on “This Week on Startups.” Bye, bye.

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