Here's the simple story synopsis for you: Arrington and AOL launch a venture fund. People raise questions about the ethics of writing about the companies that you invest in and how that may shape the editorial direction of Techcrunch. Controversy ensues. Corporate management attempts to make changes to correct "explosive" issue, and may also inadvertently put out the fire that makes the engine go. Meanwhile, we watch and read.
Start-ups, Investment, and The Dung Pits of Glyve
There's an interesting related post from MG Siegler on his personal blog, It’s Not A Mirror, It’s A Crystal Ball. In it, he attempts to explain how Techcrunch operates and why it's different from traditional media. Here are a couple of good excerpts:
And it works because instead of a reliance on top-down management and editing, the emphasis is on hiring the right people.And this one...
The point of all of this is that most of the articles written this past week about TechCrunch have absolutely no idea how TechCrunch works. People think it’s run like The New York Times, but in reality, it’s run much more like a fast-paced blog written by a bunch of individual writers.What he is highlighting here is a culture that works a lot like a start-up. Instead of depending on top-down direction for guidance, the operating model is built on strong individuals who understand the requirements and contribute to the overall organization independently without extensive process controls, turn-by-turn directions, or extensive efforts at finding consensus.
Start-up culture is different than the culture in established businesses. When Techcrunch was assimilated by its larger corporate owners, I think we all knew that there would be a day when the parent business culture would be imposed on them -- even the folks at Techcrunch (posts about the issue tend to live under the banner of 'editorial independence'). We've all been looking for indicators. This may be the moment when the winds change and that impending corporate storm blows through.
At the heart of this controversy is the idea of Arrington's venture fund, investing in these start-ups and how that might influence coverage on Techcrunch. When most people envision the world of start-ups, they think about the dot.com era of big money IPOs, the wild Hollywood-like party scenes from The Social Network, or the $50 billion dollar valuation for Facebook. What they don't see are the millions of ideas never brought to market, the hundreds of thousands of ideas that were pitched but couldn't find resources, the people sitting in coffee shops up and down the Peninsula looking for work. They don't see all of the businesses in Techcrunch's Deadpool, the ideas that never reached their exit strategy.
These days, it is the rare start-up that goes public. And while a case can be made that when the clowns on CNBC talk about some business and it's stock, that herds of non-researching investment lemmings follow them blindly in whatever direction they point, most of us can't invest in the start-ups that are covered on Techcrunch, good or bad. You can't buy stock in AirBNB. You can't buy stock in Quora. Square may be a cool app and a cool company, but you can't buy stock. You can't even buy stock in Facebook or Twitter... yet.
A lot of the traditional rules surrounding investment and media coverage are supposed to be designed to protect us from some clown at CNBC or the Wall Street Journal pimping some news or a stock, watching the market react, then profiting from that move -- buying at an artificial low or selling at an artificial high. Forget about PR and shaped messaging for a minute, all of us that work with marketing and media know that there are publications and outlets that operate on a quid pro quo basis for coverage and the degree of trustworthiness that you weight their content. As someone who has followed Techcrunch for a number of years, it doesn't read like a pay-for-play pub. In fact, one of the things that has always made Techcrunch such a great news source is the way that it doesn't follow all of the rules of traditional journalism, publishing numerous stories that percolate more from insider circles than from press releases, then updating with additional content as the story develops.
Some might question whether financial interests might shape the coverage and that might ultimately affect the success or failure of the start-up and it's corresponding financial performance. To them I would say, look back through the archives of Techcrunch. Over the past couple of years, there have been several companies that seemed to receive positive coverage and failed nonetheless. While positive PR coverage can be an emotional shot of helium for an organization, ultimately these companies live and die on their concept and their execution.
Perhaps the most annoying aspect of this whole story is wrapped in the meta-story. I've never met Michael Arrington and I don't know him personally, but from all that I've seen written, I feel like I have a sense of some of his underlying motivations. For many of us that have been involved in start-ups, there is an excitement and an energy that you don't get when you live in the traditional corporate world. It's kind of like playing live rock and roll. These days, when Mick Jagger and Keith Richards take the Rolling Stones on tour, it's not about the money. I'm sure that it's a nice chunk of change, but you can't underestimate the addictive properties of the fans, the music, and being the center of attention. Inventions, new technologies and new ideas can have those same addictive properties. Here in Silicon Valley and the Bay Area, it's these things that fuel the culture.
So imagine wandering through the crowds of potential start-ups, of brilliant ideas and enthusiasm to change the world. It's there in that pool of talent where entrepreneurs and paradigm shifts are born or reborn. In that world, where ideas muck about, you can see some amazing ideas come and go. Some need little more than a life raft, a springboard to launch, a pittance to achieve orbit. Perhaps you simply need to call up your old friend Mick, make a few amends, and schedule a tour -- grab another taste of the fire.
Now it's been announced that Michael Arrington had decided to "move on" from Techcrunch. And, I suspect, that along with Arrington's departure, we're also seeing a milestone in the erosion of an editorial perspective that shaped Techcrunch and made it what it is -- or was. No, it won't be the absence of Michael Arrington that killed Techcrunch; rather, it will be the top-down corporate management that crushes the start-up culture aspects from the organization.