Blog Lords

Breaking Down the Curious Case of Michael Arrington’s Venture Capital Fund, Rashomon-Style

tim armstrong and michael arrington Breaking Down the Curious Case of Michael Arringtons Venture Capital Fund, Rashomon Style

We're really gone and done it now!

Woo boy. If our head wasn’t spinning, this might actually be funny. It’s been less than 24 hours since Fortune or the New York Times reported (to keep things lively, there’s even some debate around who broke the news) that Michael Arrington would be launching a $20 million venture capital and almost every player involved has offered conflicting stories about how they expect this to unfold, including, earlier this afternoon, one of TechCrunch’s own bloggers.

Will Mr. Arrington still be able to write about startups now that he has an financial inventive to help them succeed? Is blogging even journalism? Was it a good idea to name your VC fund after your news outlets about startups? Depends on who you ask!

AOLHUFFPOINGTON SPOKESPEOPLE

The first official word on what Mr. Arrington’s new role would be came last night from Mario Ruiz, a spokesperson for the Huffington Post Media Group who told various outlets that Mr. Arrington would no longer have an editorial role at TechCrunch, but that he would still contribute as an unpaid blogger. (Apparently AOL is willing to give him a mouthpiece to potentially promote his investments, but they’ve drawn the line at paying him for it. Good to know.) “He will continue to write, but his editorial role is over,” Mr. Ruiz told the New York Times.

AOL spokeswoman and SVP Maureen Sullivan, who reports directly to AOL CEO Tim Armstrong, offered a very different perspective, which might be why Fortune’s Dan Primack wondered if Mr. Ruiz might “currently be in a time out.” Ms. Sullivan told the Times today:

“Michael’s role has changed. He now works within AOL Ventures. He’s becoming a professional investor. He is no longer involved in editorial.” It didn’t change overnight,” Ms. Sullivan added. “It’s just very important to be really clear about the exact specifics.”

Sadly, however, the specifics are still in flux. Ms. Sullivan told AllThingsD’s Peter Kafka that Mr. Arrington’s relationship with TechCrunch is “still to be determined, and it’s important to make sure that Arianna [Huffington] is super comfortable with that relationship … I think that everyone is going to be very careful that there isn’t influence on coverage.”  Later she called Mr. Kafka back to offer more clarity, such as it were, saying, “Michael is now a professional investor working for AOL. He will have no editorial control.”

By Business Insider’s account, Ms. Sullivan also said that AOL is not comfortable with the notion that CrunchFund would use TechCrunch as an way to access deal flow.

CRUNCHFUND INVESTORS

Mr. Kafka wonders if, perhaps, investors who plunked down money in a fund named after the blog were hoping to hear something different regarding deal flow:

“Hear that, CrunchFund investors? The guy you are handing $20 million to won’t be able to influence the way TechCrunch interacts with your companies, your investments and your potential investments. Is that what you signed on for?

According to Reid Hoffman of Greylock, one of CrunchFund’s investors, in fact, he signed up for something quite different, telling Kara Swisher:

“Techcrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, Crunchfund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylockinvests in.”

Fortune’s Dan Primack also smells bullshit, tweeting, “AOL is full of crap. Using TC as access point for dealflow was always part of crunchfund biz prop, which aol knew about for a while.” Mr. Primack also pointed out, via Twitter, “Worth noting that Crunchfund was already scouting for deals before all this broke yesterday, in partnership of sorts w/ AOL Ventures.”

MICHAEL ARRINGTON

Mr. Arrington didn’t tow the company line when he went back into investing this April (forcing AOL to issue him an exemption to the employee code of conduct) and he’s not towing it again. The noted, um, let’s say iconoclast, told the Times that his new title will be TechCrunch’s founding editor and writer, contradicting both claims that he won’t have an editorial role and that he’s now operating under AOL Ventures. Then he added this little gem:

“I am TechCrunch and TechCrunch is me. There’s no way around it.”

TIM ARMSTRONG

Mr. Armstrong, CEO of AOL, also offered a different take on things that his own people. Yesterday, he told the Times that TechCrunch would hire a new managing editor, but that Mr. Arrington would (a) still be involved with the blog and (b) that he would report to Arianna Huffington, whose current title is editor-in-chief and president  of The Huffington Post Media Group. EIC certainly sounds editorial to us, but Mr. Armstrong seemed to indicate that TechCrunch’s exceptionalism gave them yet another pass, telling the Times’ Claire Cain Miller yesterday,

TechCrunch is a different property and they have different standards. We have a traditional understanding of journalism with the exception of TechCrunch, which is different but is transparent about it.”

Mr. Armstrong also made a distinction between AOL Ventures and CrunchFund, claiming that they would operate separately. As for this incredibly muddy ethical ground, Mr. Armstrong said Ms. Huffington was fine with it, adding that together she and Mr. Arrington had worked on standards (no doubt exceptional ones) for the site.

ARIANNA HUFFINGTON

You’re still with us? Oh, good. Here’s where it gets comical.Ms. Huffington, currently traveling in Brazil, still found the time to throw another wrench in things. She told David Carr that Mr. Arrington is “no longer on AOL’s editorial payroll and would have no editorial role,” says the Times. Perhaps that’s why Mr. Arrington, who may or may not still be working under her, said he wait to hear more before offering a statement:

“I have no idea what AOL’s final position on this will be,” he said. “I look forward to hearing it. I’ll respond once Arianna has made her last statement.”

TECHCRUNCH BLOGGER PAUL CARR

That leaves TechCrunch employees who will neither benefit from the CrunchFund possible windfall, but nonetheless have to deal with the ethical black mark on their coverage. Mr. Carr’s response to Mr. Armstrong’s notion that TechCrunch operates outside traditional journalistic standards? “For. Fuck’s. Sake.”

“Apparently the business side of AOL sees absolutely no ethical problem with a TechCrunch-affiliated fund. TechCrunch, after all, is a well-respected brand in the tech community and, as such, it will attract some pretty amazing deal-flow and, as demonstrated by the list of partners involved, some high profile investors. From AOL’s point of view, calling it anything else would be a waste of a business opportunity. Far from wanting to ring-fence Mike’s investment activities from TechCrunch’s editorial output, Armstrong and others are actively encouraging the conflation of the two.”

The ending to this meandering tale? TBD.

Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com