Tom Formesky bills himself as the first journalist to leave a major newspaper to make a living as full time blogger. Today he penned a lengthy post about the need for neutral coverage of tech start-ups, admonishing without ever directly naming TechCrunch editor Mike Arrington, who has decided to begin investing in the companies he covers, again.
The way Formesky sees it, this is an issue that effects the greater good of society. “If its rival startup has a financial connection with an editor or reporter, then it doesn’t matter if it has a better product, or a better technology, and that means it might never receive the media coverage it deserves. It might not succeed at all. And that’s a loss. It’s a potentially a large loss for the world, too, if the startup has an important technology that could be widely applied.”
The truth is almost all the blog style coverage of start-ups has been conflicted from the beginning. Arrington was an investor before he was a blogger, stopped for a while, and has now started up again. Business Insider is funded by folks like Kevin Ryan and RRE, who have financial interests across dozens of companies on both coasts. GigaOm raises funds from True Ventures, where blog founder Om Malik is a partner. Betabeat has backing from Jared and Josh Kushner, who invest in start-ups through Thrive Capital.
The situation is further complicated by competitions like TechCrunch Disrupt, which create a feedback loop of hype, funding and coverage.
The truth is that the biggest and most important investors don’t make their decisions based on what they read on blogs. And while a mention on TechCrunch might drive early subscriptions to a service, no amount of coverage will be enough to build a business on top of. Twitter had plenty of doubters at all the top tech blogs when it first launched. And esoteric companies like Palantir are reaching billion dollar valuations without much press.
It’s worth pointing out that Arrington only offered his most recent disclosure after pressure from rival blogger/reporter Kara Swisher. That doesn’t speak well to his personal ethics. Luckily modern readers are well aware that blogs mix opinion with reporting. In the battle between consumer facing services in crowded markets, good coverage can certainly be an edge, but great ideas and execution are what counts in the end.