Last year, Tim Armstrong joined Mike Arrington on stage at TechCrunch Disrupt to sign the deal that made TechCrunch part of AOL (NYSE: AOL). You could feel the glow even at a distance. This year’s event kicks off with news of a different sort: Arrington and AOL have parted ways when it comes to TechCrunch. (Statement below.)
He’ll be at Disrupt as planned but he no longer has any financial interest, responsibility or say over the site and company he founded. He does leave with a lovely parting prize: AOL’s $10 million investment in his new $20 million VC fund. Will it still be called CrunchFund? That’s up to Arrington to say, I’m told.
In what seems like just the right move to reassure the TechCrunch staff (if they want to be) and outsiders, Erick Schonfeld has been promoted to editor. It’s possible a lot of the sturm und drang of the past week could have been avoided if that had been clear from the beginning.
In fact, most of what’s gone on the past week could have been avoided. Armstrong wanted Arrington so badly for AOL — as did Arianna Huffington when she came on as editor-in-chief in the Huffington Post acquisition — that they found a spot on the slippery slope where they all could live. That was the idea of Arrington as an individual investor, an angel picking his spots based on the startup with Armstrong and Huffington treating him as an exception.
As hard a sell as that was to some, Arrington as active fundraiser taking money from VCs TechCrunch covers turned a slippery slope into one covered in grease, particularly when it became known that at least some of the VCs saw the investment as a knowledge and possible deal conduit to TechCrunch. (If you think journalists are miffed, you should hear one of the investors I know talk a blue streak about the VCs who got involved.)
This has been posed by some as a great ethical debate or some kind of effort by mainstream journalists to point fingers at bloggers. It’s not a great debate. It’s as picayune as they come — and TechCrunch is as mainstream as it gets in many respects, despite the rebel-without-a-pause attitude, which I enjoy as much as the next person most of the time.
As I followed reports of Disrupt from my train to NYC, Arrington got a lot more clear today about some veiled comments he made last week when the NYT‘s David Carr took him to task. The New York Times Co. (NYSE: NYT) is also an investor, including in startups and in True Ventures, where GigaOm’s Om Malik is a venture partner. GigaOm is a contributor to the New York Times.
True Ventures is an investor in the CrunchFund, and so on. It’s not the NYT’s first conflict and it won’t be the last. Usually, the NYT mentions direct conflicts in stories rather than a blanket disclaimer/disclosure but that’s not always the case. The company’s been an investor in the Red Sox and Fenway Park for years (an investment its been selling off for financial reasons), a well-known conflict. Om’s situation is more problematic in this context although he, too, has been upfront.
As careless as I think Armstrong got last week when he tried to carve out an even bigger exception for Arrington, he was careful on that stage last year not to grant full dispensation when Arrington asked: “Can I still say whatever I like?” “We’ll try to be as hands-off as possible,” Armstrong replied. Sure enough, last week — and it seems now — the TechCrunch staff had the kind of editorial independence oh which dreams (and nightmares) are made, saying, tweeting and writing anything they wanted on AOL’s dime without so much as a gentle nudge. Some of that is likely to continue in the post-Arrington era as TechCrunch asserts itself within AOL.
Here’s the carefully worded statement from AOL communications chief Maureen Sullivan:
“The TechCrunch acquisition has been a success for AOL and for our shareholders, and we are very excited about its future. Michael Arrington, the founder of TechCrunch has decided to move on from TechCrunch and AOL to his newly formed venture fund. Michael is a world-class entrepreneur and we look forward to supporting his new endeavor through our investment in his venture fund. Erick Schonfeld has been named the editor of TechCrunch. TechCrunch will be expanding its editorial leadership in the coming months.”
Coda: One mission accomplished — plenty of attention on Disrupt — Arrington was on center stage as expected after the announcement. And, to be expected, he got one of his points across in true Arrington fashion, sporting a t-shirt with the caption “unpaid blogger.”
Correction: True Ventures is not an investor in the CrunchFund. I regret the error.