Blog Lords

Michael Arrington’s Venture Capital Fund: The Defenders, the Detractors, and the Just Plain Baffled

arringtonfinger Michael Arringtons Venture Capital Fund: The Defenders, the Detractors, and the Just Plain Baffled

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The shifting narratives of Michael Arrington’s decision to launch a VC fund were so tangled Friday, we were forced to go all Rashomon just to try to sort it out. But while the rest of us ditched our RSS readers for sandier pastures, the situation, by numerous accounts went “nuclear.” Grab your radiation masks while we attempt to dive into the mushroom cloud. Shit’s about to get toxic.

THE DETRACTORS

Ground zero for this latest wave of controversy can be traced back to David Carr’s piece in the Sunday issue of The New York Times, wherein he referred to Mr. Arrington’s decision as “almost comically over the line,” seemingly “naughty” and an unusual conflict of interest with “tens of millions of dollars in play.” Arianna Huffington, whose silence on the issue has been “deafening,” by her own employee’s estimation, finally weighed in on the situation, telling Mr. Carr:

“Michael has stepped down,” to become a venture capitalist, she said, “and is no longer on the editorial payroll effective immediately.” She added that he could continue to write — Mr. Arrington is a prolific, forceful voice on technology matters — but as an unpaid blogger.  . . “David, honestly, don’t be silly,” she said. “It is very, very clear that they are distinct entities and Michael will have no influence on coverage.”

But Mr. Carr remained unconvinced, pointing out that Mr. Arrington’s brand of “digital megalomania” allowed him to kick “a hole in the glass” between writing about business and playing in the market. Unfortunately the piece contained a number of errors that detractors lept on, but Mr. Carr also highlighted a list of ethical gray areas, past and present, around editors who invest, such as:

-Positive coverage (with a disclosure) given to startups–including Supyo, Milk and LikeALittle–weeks and months after Mr. Arrington invested in them

-Dealflow access:

“Think of it as a less-than-virtuous circle: TechCrunch holds events for start-ups, CrunchFund could get first dibs, and then when TechCrunch wants an update on a particular company they can call their old boss Mike to get the last word.”

-The possible impact on TechCrunch’s audience:

“If insiders can trade on the news they publish, readers may become an adjunct to a business that is less about public information than private gain.”

-And this disturbing anecdote:

“A chief executive of a small start-up told me that at an event on May 26 hosted by Ron Conway, a powerful venture capitalist, that Mr. Arrington announced that those who provided TechCrunch with scoops, the coin of the realm, could expect good treatment on lesser stories. Those who did not, he said, would be ignored.”

DEFENDERS

If anyone ever doubted the tech world’s clubby-ness, the reaction to Mr. Carr’s piece should set them straight. In fact, when business writer Paul Wallbank posted, “Love how the Silicon Valley insiders are coming out to support @arrington,” @Arrington (naturally) retweeted it. He also threatened his own nuclear holocaust, tweeting: “The saddest part about the NYT drama is that I hold the nuclear card. They know it, and they know I won’t use it. Unless I do.” Your guess at what the bomb contains (Did the Times try to buy TechCrunch? Are there tech investments Times writers aren’t disclosing?) is as good as ours.

But reaction in tech circles seemed unanimous. Union Square Ventures’ Fred Wilson called the article  “a hatchet job on Mike Arrington.” Spark Capital’s Bijan Sabet dismissed the criticism and tweeted out his Arrington approval: “Don’t understand the @arrington bashing about his new fund. As far as I know he makes disclosures just like my friend @om. I’m good w/that.”

Meanwhile, TechCrunch employees like MG Siegler and Paul Carr tripped over themselves with glee at pointing out what they saw as the Times’ own failure to disclose. Paul Carr even went as far as to taking a swing at Henry Blodget, Pete Cashmore, and Kara Swisher, tweeting, “Maybe if TC is killed, ill go work for the banned by wall st guy, the seo whore guy or the married to a google exec lady.” Ouch.

But their rabid defense of TechCrunch and Mr. Arrington didn’t end there. Mr. Siegeler and Paul Carr both took to TechCrunch to explain what the lamestream media was missing. Namely that TechCrunch operates differently than the rest of us. It’s an ironic position considering that Paul Carr’s previous post about the controversy took issue with this statement from AOL CEO Tim Armstrong:

““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.”

Oh Friday, Paul Carr’s response to that comment was ““For. Fuck’s. Sake.” But now, it seems that he and Mr. Siegeler are eager to explain TechCrunch’s exceptionalism to the uninitiated. As Mr. Carr volunteers:

“But here’s the thing that David Carr doesn’t understand, that Arianna Huffington doesn’t understand; that no-one except those who have actually worked at TechCrunch can possibly understand: TechCrunch is not a publication with a single voice. TechCrunch is a collection of writers, brought together by Mike Arrington to write about the technology industry as they see it. Mike’s brilliance as editor has been to give writers everything they need to do their jobs — an office, a platform, a salary and the confidence that he has their back if everything goes to shit — without ever once demanding they share his opinions or his biases. If you wonder why I, and other writers at TechCrunch have so much loyalty for Mike; that’s why.

That’s also the reason that, even had Mike stayed as editor-in-chief, I can’t imagine a world in which he would exert pressure on any TechCrunch writer to take a particular line on a story. Nor can I conceive of a universe in which he would punish — so much as grumble at — a contributor who wrote something that embarrassed him.”

Despite Mr. Carr’s assertion about TechCrunch’s unfathomable uniqueness, Fortune‘s Dan Primack thinks the ladies doth protest too much, tweeting, “When I ran peHUB we also didn’t pre-edit staffer blog posts. and no one pre-edits my fortune.com stuff. not as unusual as @parislemon thinks.”

Meanwhile, on both his personal blog and TechCrunch, Mr. Siegler was laughing off the controversy:

“The notion that Mike, or anyone else, investing in a company would dictate some sort of giant conflicted agenda is laughable. Literally. If Mike tried to get me to write some unreasonable post about a company he had invested in, I would laugh at him. But he would never do that. Ask Loic Le Meur. Ask Kevin Rose. Ask Shervin Pishevar. Ask Airbnb. Ask countless others. He didn’t get to where he is by being an idiot. He has gotten to where he is by being honest with his readers. Even if everyone doesn’t always agree with him, he has been honest. And he’s brought forth information that no one else has, even when it’s probably not in his best interest to do so.”

Speaking of Mr. Rose, did we mention that he too tweeted out his defense of Arrington?: “Reading the NYTimes article on @arrington, i don’t think they really know him, he’ll call your BS whether he’s invested in you or not.” 140 characters probably doesn’t give enough room to disclose that Mr. Rose is both an investor in CrunchFund and co-founded Milk, a startup that counts Mr. Arrington as an angel investor.

Mr. Siegler, apparently unafraid of painting Mr. Arrington as a thug, makes a telling comparison in defense of the idea that he should retain his editorial role at TechCrunch:

“That’s why the notion of Mike switching titles is silly and hollow. If you’ve seen Martin Scorsese’s film Casino, it reminds me of casino boss Sam “Ace” Rothstein (Robert De Niro) switching roles every few weeks to keep the gaming board off his ass.”

In fact, Mr. Siegeler seems to think that cutting off Mr. Arrington’s editorial connections is a farce, alluding to EVEN BIGGER conflicts of interest, which we guess will remain unnamed for now:

“AOL seems to think that by cutting off the biggest conflicts — ones so big that they’d obviously have to be disclosed — that they’ll be a bastion of integrity in the editorial landscape. What a bunch of horse shit. The conflicts we need to worry about are the ones not disclosed. They’re far more prevalent and they do actually deceive readers because they’re far more subtle. But that’s an impossible task. AOL can’t fix that — no one can. So instead they’ll slaughter the lamb everyone can see to gain puffery amongst the old media peers who also live to die another day.”

THE BAFFLED

Well, Betabeat, for one. What are they spiking the kool-aid with over there? And if so, can Zaarly deliver us some? It’s too rainy to leave our desks.

Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com
Tags: Blog Lords

Comments

  1. Anonymous says:

    Let me guess:  No one can speak for Tech Crunch.  But now that you’ve written it, some cloak-and-dagger person will come out and “clear things up”.  Deja vu all over again.

    1. Mike Arrington has plenty of friends at TechCrunch who are standing behind him now. But that doesn’t change the fact that he made a threat on Twitter. That’s unacceptable behavior and it’s grounds for immediate dismissal in nearly every place I’ve ever worked.

  2. “The saddest part about the NYT drama is that I hold the nuclear card. They know it, and they know I won’t use it. Unless I do.” If I were a founder, I’d stay the Hell away from an investor with this attitude. Arrington is a bad-news first-rate class-A number-one jerk. If I were Tim Armstrong, I’d fire Arrington outright and pull the Aol money out of CrunchFund ASAP.

    1. Carri Bugbee says:

      So true. Why would any high-profile investors want to be involved in a fund that will, no doubt, be fraught with drama? I think there are plenty of other ways to dole out money with a lot less hassle.

  3. Johnfurrier says:

    Who from Silicon Valley is coming to Mike’s defense… then sort the ones with interest in deal flow then list the names.. As a Silicon Valley insider many are not defending him and don’t align with him at all

    1. TechCrunch writers are defending him as a blogger and as a friend. I’m not sure who else is defending him in other contexts.