Engaged but unbiased? the CrunchFund controversy
Quickly about what’s going on: TechCruch -acquired last year by AOL for apprx. $30M -is one of the most read blogs on technology and venture capital in the world. Michael Arrington started the blog in 2005 to cover tech startups, throw parties in his house for founders and VCs and build influence.
Now he raised $20M for a fund he’ll manage. Half the money came from AOL, the other half from top tier VCs (Sequoia Capital, Kleiner Perkins Caufield & Byers and Greylock Partners, all regularly covered by TechCrunch of course).
The move triggered tons of criticism obviously because of looming conflict of interest scenarios.
Arrington’s points:
- he’s not a journalist
- full transparency: they’ll note in the coverage if they are investors; things he has always done as an angel investor
- you don’t need to be an investor to be biased
Before I move on, a quick reaction to these points, noting that a lot of things have changed in the past week since I wrote this post, including Arrington being removed from his post at TechCrunch:
He is not a journalist. I think TechCrunc, like most blogging platforms never intended to challenge journalists, or investments analysts for that matter. BUT they are in the business of technology and startups, part of the scene. They are in the information business, which no longer belongs exclusively to the journalistic domain; and I think everybody’s clear about this, including their readers and advertisers.
Another important point: the Silicon Valley is tight knit community: everybody’s involved, so being a classical journalist who covers this ecosystem (reporting the facts objectively) must be incredibly difficult, if not impossible! And this pretty much takes care of the 3rd point Arrington made: I completely agree.
Regarding transparency: I regularly read blogs from (other) VCs, too who communicate their personal opinion on companies including the ones they invested in, always disclosing that they have a vested interest: I know: this is not supposed to be their business…but is this really true? Just because there’s no advertisement on their blog, it means it’s not their business (to influence)?
And now I am going to say something that is even more controversial:
I can’t help noticing analogies between my business and TechCrunch:
I believe that a consultant is much more credible if he’s engaged (financially, too) and if he goes beyond mere fact based reporting/analysis. I value executive search consultants for example who sit on boards of companies and/or are investors themselves (managing conflict of interest scenarios transparently, of course).
Talking about the Silicon Valley, a good example to mention is Ramsey and Beirne (now Kindred Partners, after David Beirne was brought on board by Benchmark Capital in the late 90’s) that accepted equity in the companies they searched for. But I believe that this can be taken to an even higher level, like search guys making angel investments or acquiring companies, etc. In fact the best value maybe realized by people in the leadership business exactly in such scenarios.
I think nothing of consultants (search, strategy whatever) who follow the “learn & repeat formula” everybody else is following from the time they are 23 until they retire: there’s absolutely no perspective they can add to any situation.
And now the philosophical part:
I am convinced that you can’t be fully engaged without being completely detached!
AND
If you try to be detached without being engaged, it means you’re dealing with abstractions you don’t understand – no matter how successfully you managed to position yourself as an “authority”, you’re not authentic, to put it mildly.
Image source: http://seocollege.org/news/?paged=2