[dailyrorschach]

Well now the story is updated. Quoted below:

UPDATE: Just got off the phone with Hamadeh, who is standing by his original report. He says O'Shaughnessy is misleading his own employees, and that classifying the round as "equity" is a technicality given all of the debt-like provisions PrivCo continues to believe were attached. He also says that PrivCo spoke with a LivingSocial spokesman prior to publishing, and sent him a draft of the report with a request for any needed corrections. When nothing came back four hours later, PrivCo published. As you might imagine, now I've got a new call into LivingSocial.

[tptacek]

This is exactly what I would do if I was an evil publication: make a prediction as to the trendlines of a business, write up a report full of false evidence, send a draft to the target and then declare it was the target's responsibility, not mine, to ensure that my report was correct.

What's different after this followup is that now CNN/Fortune is suspect too, because repeating this verbatim is unethical.

[dailyrorschach]

I don't have a firm opinion on the matter yet. I was initially suspicious of the initial report as I had never heard of them (PrivCo). However, I do work in advertising/PR and if someone submitted a claim like this to a spokesperson within four hours, we would at least say there are considerable and factual errors with your report, etc. This of course may have happened.

My interest in following this story is personal as I live in DC and have many friends still employed at the company.

I'd disagree that CNN is being unethical here, their story/angle is about the process and getting to the bottom of the PrivCo report.

[tptacek]

FOUR HOURS. That's how much time they claim to have given LivingSocial before running the report. Horsewhip these clowns off the stage now.

It's actually even worse if underlying trend they're "reporting" on is true, because they've poisoned the well.

[dailyrorschach]

PrivCo looks even worse now with this additional update to CNN's story:

"I don't think the real story here is the details of the financing," Hamadeh [PrivCo CEO] said. "It's what's going to happen to the little guys, all of the merchants who are really the company's unsecured creditors, if LivingSocial goes bankrupt... You'll see that we were right in six or nine months."

[damoncali]

I think that's exactly right - this wouldn't be a story if PrivCo wasn't mostly right about the big picture. The big picture is one of impending doom at LS, and yes, if that comes to bear, the little guys will get nothing.

Sure, they come off as slimy (and maybe they are - I have no idea). But the details matter less than the overall story here.

[tptacek]

That's what PrivCo would say to defend what's happened. Like you, they'd be careful to couch the defense in terms of ideas that are hard to falsify. Of course, they got to this point in the conversation by reporting a series of material falsehoods; their initial specificity is what scored them a seat at the table. But let's ignore that they have no credibility anymore and instead entertain our own biases about what's happened.

It is especially easy to pull this off when the topic is a company we don't like.

[milkshakes]

> What's different after this followup is that now CNN/Fortune is suspect too, because repeating this verbatim is unethical.

You trusted them before?

[tptacek]

More than I trust TechCrunch, less than I trust Reuters.