Academic

I'm late to the eBay party, but  have a few thoughts on this fascinating case.  When the opinion came out Gordon made the link to Dodge v. Ford, and  I think he's right on. Gordon does a nice job summarizing the complicated facts, but for my purposes all you need to know is that founders Jim and Craig took some money from eBay in exchange for a minority investment in craigslist.  The relationship was fraught from the beginning, with fault on both sides:  eBay made use of craigslist's nonpublic information; Jim and Craig ultimates used their majority position to dilute eBay and eliminate its board seat. 

I have a few thoughts on how my theory of nonprofits relates to the case.  Chancellor Chandler rightly invokes the Unocal analysis, and accordingly discusses craigslist's argument that its actions were taken to defend its corporate culture, a permissible goal when adopting a takeover defense under Paramount Communications, Inc. v. Time, Inc. 

Chandler calls craigslists's invocation of "corporate culture" a "fiction," used "almost talismanically" to fit within the Time precedent.  However, he concludes from his observations at trial that "Jim and Craig did prove that they personally believe craigslist should not be about the business of stockholder wealth maximization, now or in the future."  He goes on to observe that the for-profit Delaware corporation, the form of organization eBay chose, is "not an appropriate vehicle for purely philanthropic ends, at least not when there are other stockholders interested in realizing a return on their investment."

What eBay says to me is that form matters.  My thesis is that the nonprofit form gives meaning.  It does something a for-profit form cannot do by creating a special flavor of social identity.  eBay reminds us of the converse, of the central meaning of "Inc.": "acting to promote the value of the corporation for the benefit of its stockholders."  You can't create a for-profit corporation, and you especially can't take money from an outside investor, and then openly claim that your corporate culture isn't interested in making money at all.

I quibble with Chancellor Chandler's characteristically well-reasoned and well-written opinion (which weaves in references to cultural sources ranging from David-and-Goliath to '80s movie Wargames) in only one regard: I don't think that eBay's claim about corporate culture was a fiction.  Jim and Craig really believed that craigslist's culture wasn't about making money.  The problem wasn't that there wasn't an authentic corporate culture, but that the community-focused culture wasn't "corporate", or more precisely, wasn't  "for-profit corporate" enough.