2nd
Further thoughts on Arrington, CrunchFund
Anthony Ha over at Adweek was kind enough to ask me for for comment on yesterday’s news, and here is the resultant story.
I figured I’d paste the fuller thoughts I sent here, for your reading pleasure.
Blanket/overall:
This might sound a bit callous, but a Techcrunch article is not a Techcrunch article is not a Techcrunch article. These days we don’t think so much about an AdWeek piece as we do about an Anthony Ha piece, or an MG Siegler piece. Yes, writers are typically contained by a brand, and an editorial mission, and usually, a set of policies, ethical ones included. But increasingly, those goals and policies are interpreted and manifested at the individual level, and PR is accordingly best executed more intimately, based on 1:1 relationships, at the human rather than the institutional level. Which is all to say that whether people approve or disapprove of Mike’s new fund, I highly doubt that it will impact Rip or Sarah or Jason or John. And it is unlikely to impact our PR approach at the firm, or others’. Whether Mike’s new fund will impact Techcrunch, or other AOL properties, even, isn’t the right question to be asking. The real question is, will it impact Mike himself?
On Mike and PR specifically:
For one, Mike has written only about 2 of the last 20 pieces that Techcrunch has published. And although Mike certainly sets strategy and does a lot of quality control, Techcrunch’s writers are pretty autonomous in practice. So even if his sources dried up, the blog would suffer very little in my estimation. They’ve hired and trained really good people, and they do a darn good job day in and day out. Mike has succeeded in building an organization that is bigger than himself. I think that’s why he feels more comfortable, now, moving onto new projects.
Second, Mike usually works off of sources and scoops — proprietary information flow. He doesn’t wait around for pitches and tips — he’s too busy hitting the phones. So the real question becomes — will the new fund make his sources more or less reluctant to talk? I have to think that it will indeed. Om Malik of GigaOm and True Ventures is probably the closest analogue, and to his credit he’s be very above board, very transparent. But I know for a fact that entrepreneurs and VC’s both are much more careful around Om than they used to be. On the record is still on the record — but off the record and on background? So much more gets talked about than ever gets written. That’s where Mike might suffer. It’s just prudence on the part of sources, and young companies — drawn not off of concerns of journalistic impropriety, but rather the business side of things — recruitment, intellectual property, valuation, product differentiation, roadmap and runway — those are a company’s moat, and it’s edge.
I’ll actually go ahead an predict that Mike will announce a reduction in his role at Techcrunch — I think he’ll still reserve the right to swoop in and post stories here and there — doing the kind of superhero work he’s known for. But you can’t run a $20mm+ superangel fund in your spare time. It’s a serious endeavor, and his LP’s no doubt expect to have his — and Patrick’s — full attention. Mike has always worn many hats but this is an second act, and a new challenge for him. The access and pattern recognition that have come with and because of his editorial work are certainly why people are willing to bet on him. But the two disciplines have very different core competencies and day-to-day demands. I think it’s reasonable to expect that Mike will have to hunker down, and moreover, that he’s looking forward to the same.
On ethics:
The ridiculous headlines out there right now like “Arrington, AOL Launch $20M CrunchFund to Fund Firms TechCrunch Covers” are just that. It’s hyperbole — I guarantee you their investment thesis isn’t “firms Techcrunch covers”. The navelgazing media community is quick to highlight Tim Armstrong’s admittedly ill-advised quote about Arrington being somehow different, above the law. He’s not, and they’re not, and I fully expect Mike and Heather and Techcrunch to handle this in the right ways when a formal announcement is made. They’re maybe guilty of not being good at doing their own PR, and getting defensive when they should known darn well that ethics would be a lightening rod. But they’re playing a higher stakes game now — and with that comes greater responsibility. Mike knows this, as does AOL.
I don’t expect the new fund to take Board seats — that would surprise me, and raise bigger ethical concerns. I’d also expect that the new fund announce investment soon after making them. These days plenty of deals are hidden via 4(2) filings for example. There’s nothing wrong with that per se, but this is a special case — I’d want to know who the fund has invested in before I agree to an interview with Mike, and I’d want to know that the publicly available information was reliable.
But overall, look — IDG has a venture arm. Hearst has a venture arm. Om is a Venture Partner at True. Think about Leher Ventures, think about Yahoo even, which has a massive editorial operation. Google now puts out Think Quarterly. Forbes invested in True/Slant well before it bought it, and wrote about the company along the way. There’s a way to make it kosher, and there’s a way to stay classy. The proof is in the pudding of course, but my point is this — it’s not like some big act of treason has occurred. If nothing fishy happens, then nothing fishy happens. I think Mike should be held innocent until proven guilty, just like everyone else.
If the new fund invests in one of our clients, or one of our existing clients takes money from the new fund, I will say this — we’ll have to be extra careful about behaving correctly, maybe even overcompensating early on, even if just to signal to everyone else that we intend to continue to execute fairly, and that no one is getting any special treatment. This is the flip side of how Techcrunch has had to be extra clear about disclosures since Mike started investing again. If we represent one of the fund’s portfolio companies, we’ll want and need to preserve industry-wide credibility, and a level playing field. As advantageous as it is to have Techcrunch on your side, you’d never want to be seen to be in their pocket, either — nor would I imagine Mike would want or allow as much, regardless.
