ClassConnect was given $20,000 by the incubator, but after the 4 month program ended the money was gone and his friends at the company went back to college. Imagine K12 was hosted at AOL’s Palo Alto campus and everyone in the program was given a building badge. Simons kept his badge and it kept working even after the program had ended. Since he couldn’t afford to live anywhere, he decided to live out of AOL’s headquarters.

He did continue to work on ClassConnect while living at AOL’s headquarters. “There were so many people going in and out each day,” he said. “They’d say, ‘Oh, he just works, here, he’s working late every night. Wow, what a hard worker.’”

Eventually Simons noticed that there were security guards making nightly rounds, but there were at least 3 couches that were outside of those patrols that look fairly comfortable. Simons would work until midnight or later and then fall asleep around 2AM on one of the couches. At 7AM or 8AM, he would wake up and get out of bed before everyone else arrived. After waking up, he would go to the gym for a workout and a shower, then go back upstairs and eat cereal for breakfast. Then he would start working all day again. This was his routine.

In the first month, Simons had spent only $30. This was on his occasional trip to McDonald’s or for other types of food when he got sick of eating ramen noodles and cereal. On Thanksgiving, he splurged by going to Boston Market.

In terms of his clothes, Simons had the ones that were on his back, 5-10 t-shirts, a pair of jeans, and a pair of shorts. All of them could fit in one locker plus AOL had their own laundromat.

“Honestly (though), I didn’t think they were going to catch on,” said Simons in an interview with CNET. “I had no indicators that they even cared about that…After the first month, I was like, ‘This has worked so far, but this probably isn’t sustainable,’ so I made sure my friends were OK with” him coming over and staying with them later on.

One of the security guards finally found him sleeping on a couch at 6AM. The security guard started yelling at him and told him that he cannot use the facility as a dorm. The security guard knew that Simons was part of Imagine K12 so no one had called the police. He did lose his badge, but was still able to have access to the incubator.

After moving out of the AOL building, ClassConnect was able to raise $50,000 in seed funding from Ulu Ventures and Paul Sherer. “Tenacity and commitment are key attributes of a great entrepreneur. Eric has these in spades as demonstrated by his willingness to do whatever it takes to get his company off the ground,” said Clint Korver of Ulu Venures.

The plan was scrapped and AOL decided to keep 100% of all of the entities.

Currently there isn’t any serious bidders, but several companies have expressed interest. Last year Michael Arrington and Heather Harde made an unsuccessful bid to buy back TechCrunch with Huffington no longer being part of the management of the website. But Arrington has lost interest in buying the company back and remains fully devoted to the CrunchFund venture capital company he is running:

“I don’t know anything. No one tells me anything. I am not in the least bit interested [in buying back TechCrunch]. I was Team Pando all the way until Sarah Lacy fired me. That does not change my position on TechCrunch.”

AOL said that the Q1 drop was around an advertiser that stopped spending during the quarter. “A lot of it was because we have had a display strategy that was probably off-tune,” said Armstrong during an investor call. “I was not happy with the domestic display.” AOL said that their display ad problem won’t be fixed this quarter, but domestic display will start moving up again in the second half of the year.

- Criterion “exploited” Bebo and was “fraudulent” by “using its operating capital to pay the salaries of Criterion’s staff” including $14,000 per month to Bebo CEO Adam Levin.
- Bebo operated for 20 months and “failed to hold a single board meeting or shareholder meeting.”
- Bebo had also defaulted their San Francisco lease and moved to Criterion’s L.A. headquarters without board approval.

The investors are suing the new Bebo owners for $5 million.

REDMOND, Wash. and MENLO PARK, Calif. — April 23, 2012 — Microsoft Corp. and Facebook announced today a definitive agreement under which Microsoft will assign to Facebook the right to purchase a portion of the patent portfolio it recently agreed to acquire from AOL Inc. Facebook has agreed to purchase this portion for $550 million in cash.

In the initial AOL auction, Microsoft secured the ability to own or assign approximately 925 U.S. patents and patent applications plus a license to AOL’s remaining patent portfolio, which contains approximately 300 additional patents that were not for sale.As a result of today’s agreement, Facebook will obtain ownership of approximately 650 AOL patents and patent applications, plus a license to the AOL patents and applications that Microsoft will purchase and own.

Upon closing of this transaction with Facebook, Microsoft will retain ownership of approximately 275 AOL patents and applications; a license to the approximately 650 AOL patents and applications that will now be owned by Facebook; and a license to approximately 300 patents that AOL did not sell in its auction.

“Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction,” said Brad Smith, executive vice president and general counsel, Microsoft. “As we said earlier this month, we had submitted the winning AOL bid in order to obtain a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

“Today’s agreement with Microsoft represents an important acquisition for Facebook,” said Ted Ullyot, general counsel, Facebook. “This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”The parties are evaluating the accounting treatment for these transactions. These transactions are also subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

AOL said it “expects to utilize approximately $40 million of its existing deferred tax assets, representing approximately 20 percent of its total deferred tax assets, to offset any ordinary income taxes resulting from the license of its remaining patent portfolio.”

Some of the patents are related to mobile and Internet messaging through AOL’s acquisition of ICQ. Below is a memo from AOL:

As we continue to execute on our strategy of building premium brands, services, and advertising into world-class businesses, we also continue to unlock value in our assets that make the company stronger and show meaningful gains for AOL employees and shareholders. Today, I’m excited to share that we achieved another critical milestone in our growth trajectory.

This morning, we announced that we’ve agreed to sell 800 of our patents and their related applications to Microsoft for $1.056 billion in cash. Most importantly, for the future growth trajectory and innovation for our business, we will continue to hold a significant patent portfolio of over 300 patents and patent applications spanning core and strategic technologies, including advertising, search, content generation/management, social networking, mapping, multimedia/streaming and security among others. AOL also received a perpetual license to the patents being sold to Microsoft, which allows us to continue to innovate and drive strategic growth across all areas of our business.

This process of unlocking the value of our patent portfolio, that we began last fall, is a significant example of focusing our time and energy around strengthening our company’s balance sheet and unlocking value for our shareholders. Most importantly, this is another step forward for the comeback of AOL and allows us to remain laser-focused on our strategy and future growth. As always, we know that our growth will be driven by the successful execution against our strategy and we will continue to take aggressive steps to move the company forward.

Huge thanks to the teams that worked tirelessly during this intense process – their world-class effort resulted in a big win for our company. The AOL Board of Directors, Legal, Finance and Tax teams, and our outside advisors were super-stars. We are a partnership company and our team stayed together every step of the way and performed at the top of their game.

Additionally, we worked with a great Microsoft team on this deal – they were organized, professional and smart. When I spoke to Steve Ballmer over the weekend I commended him on his team and how great they were to work with in this process.

We will be holding a global employee call on Wednesday at 11am ET to talk about the news we have announced today in detail, as well as discuss our company goals for Q2, top box priorities and hear updates from our leadership team on progress we are already making in Q2. We’re already seeing strong momentum this quarter on our focus areas. Details for the call will be posted to the Inside, and please bring your questions as we’ll have time for Q&A.

Time to get back to the core business – delighting consumers and customers. We are starting Q2 off with a major win. Let’s keep it going and nail all of our Q2 goals – looking forward to reviewing with all of you on Wednesday on our global call.

Go AOL – TA

Now Huffington no longer has control over TechCrunch, Engadget, Stylist, AOL.com, and AOL Video. This puts Arianna no longer in charge of properties that control 50 million hits a month. Jay Hirsch is now overseeing those properties.

Armstrong was given $5 million in new options. However Armstrong will be given fewer benefits compared to the prior agreement that was entered prior to AOL’s spin-off from Time Warner

Hipster raised $1 million in funding from these investors:
Mitch Kapor
Max Ventilla
David Tisch
Don Dodge
Paige Craig
Lightbank
Google Ventures
Charles River Ventures
Lerer Ventures
Ludlow Ventures
500 Startups
David G. Cohen