On The Next Venture

I’ve been thinking about how I was going to write this post for a while now. Of course, I didn’t anticipate that I would be writing at 2 AM local time in London, where I’m currently visiting to speak at FOWA in a couple of days (that talk also just got potentially much more interesting).

Stuff happens. Fortunately, sometimes, so does jetlag. 

Enough with burying the lede: yes, I’m becoming a VC. I couldn’t be happier to announce that I’m joining CrunchFund as a general partner. It’s my honor to join Mike and Pat in that role. And I thank them for the opportunity. 

Before I say anything else, I should also make something clear: as Erick states in his post, while the timing of this announcement may seem a bit odd given the recent drama involving AOL and TechCrunch and well, CrunchFund, this move has been a long time in the making for me.

For the better part of the past year — ever since the AOL acquisition — I’ve been approached about all kinds of jobs. Other writing gigs, startups, and yes, venture jobs. The latter was particularly interesting to me, and I decided to take several meetings with a few different firms over the last year.

I was eyeing the end of this year as a potential date when I may take a step back from writing and engage the VC career. Mike, Heather, and Erick knew about this. But nothing was set in stone.

In the midst of my venture meetings, CrunchFund became a reality. Given that Mike knew my interest in venture, we started talking — again, before the drama started.

Then the shit hit the fan.

But in many ways, that made any decision to leave TechCrunch harder. It was something I had worked hard to build with everyone else over the past few years. I didn’t want to see it weakened any further. None of us did.

With that in mind, I was also able to keep the dialogue open with TechCrunch, and we figured out a way for me to keep doing what it is that I do best — the Apple beat — while also pursuing this new career. I’d also like to thank Erick and Heather for that opportunity. In a way, it’s fitting that this is happening on the eve of a massive Apple event

Starting in a few weeks, my main attention turns to startups in a whole new way. Given what I’ve seen and learned over the past five years writing about these young companies, this next move is going to be exhilarating.

For all the talk of “bubbles” and crazy valuations, I think most overlook something very fundamental: technology continues to permeate all of our lives in ways we couldn’t imagine just yesterday. This will only continue to increase over time. Technology startups are at the forefront of this. What we’ve seen up until now is just a taste of what is to come.

As for CrunchFund itself, I think we’re really going to be able to shake shit up in ways the venture community hasn’t seen before.

I’ve gotten to know Pat over the past several weeks; he’s excellent at this job. He’s also the only one of us with any real VC experience — which we’re gonna need a lot of. He should have broken off on his own long ago, I’m glad he waited.

As for Mike, we’ve obviously worked very well together over the past few years for a reason. We’re different in a lot of ways, but almost all of them complement one another. We destroyed tech blogging and redefined it. That’s the goal here as well.

I posted this quote from John Lilly (now also a VC) a few weeks ago. It fits here:

One of the best pieces of advice I ever got, back when I was 23 and newly out of school, is this: look around and figure out who you want to be on your team. Figure out the people around you that you want to work with for the rest of your life. Figure out the people who are smart & awesome, who share your values, who get things done — and maybe most important, who you like to be with and who you want to help win. And treat them right, always. Look for ways to help, to work together, to learn. Because in 20 years you’ll all be in amazing places doing amazing things.”

I’m 29 years old. I’m turning 30 in a month. I just made one of those 20-year decisions. 

There’s so much more to say. Luckily, I happen to have this blog to say it. Perhaps the name isn’t quite as cute as some, but it will do. I plan to post here regularly. 

CrunchFund and Why We Care

Previously published on Venturebent.com

Over the summer, I wrote a post on Ventureminded.me entitled “The TechCrunch Machine” in which I railed against Arrington, his conflicts of interest, and how the site had lost its way, particularly how it shifted from highlighting up-and-coming startups to focusing on larger tech companies. Arrington has long been criticized for being a Silicon Valley insider writing about startups while simultaneously being an active investor. More recently, MG Siegler’s pseudo-departure from TechCrunch to join Arrington at CrunchFund raised some eyebrows as well. But why?

Chris Dixon tweeted that Michael Moritz was a former journalist and became a successful VC, so perhaps Siegler would follow a similar route. However, there’s a major difference between the guys at CrunchFund and Moritz. The latter stepped away from his journalism career at TIME to pursue a career in venture capital at Sequoia. Arrington, and to a certain extent Siegler, is still very much entrenched in unearthing stories, breaking news, and relying on sources. All of these things are not only critical to being successful at writing about startups, but are also vital to sourcing deals. So why can’t they do both and just disclose when they’re writing about an investment (as Arrington has done and continues to do)? Simply, when someone is talking to Arrington or Siegler, is he/she speaking to the writer or the investor – who knows?

In my opinion, it all comes down to a simple distinction between bloggers and journalists. The guys at CrunchFund want to have their cake and eat it too. They want to be called “journalists” to have that official seal of approval from the media community, but they want to be renegade bloggers in order to continue investing without a conflict of interest cropping up all the time. It just can’t happen. A journalist must be completely impartial. For example, no CNBC employee is allowed to hold stock of any kind – even sports business reporter Darren Rovell (who is also the source of this statement). Why should a tech writer be allowed to invest in companies (whether he writes about his investments or not)? A “blogger,” on the other hand, is unofficial; it’s a person who dabbles in writing online but has some other main profession. No one has a problem with Fred Wilson blogging on a daily basis because no one would ever confuse his style or content with actual journalism, and he’s not breaking news by relying on inside sources. Arrington and Siegler, however, are journalists all the time – whether they want to be or not.

For the sake of transparency, impartiality, and a host of other reasons, Arrington needs to shut down Uncrunched or CrunchFund. Something tells me he’d be more likely to part with the former.

Michael Arrington finally makes a public statement on all the fuss over TechCrunch and CrunchFund:

We’ve proposed two options to Aol.

1. Reaffirmation of the editorial independence promised at the time of acquisition. Given the current circumstances, that means autonomy from Huffington Post, unfettered editorial independence and a blanket right to editorial self determination. To put it simply, TechCrunch would stay with Aol but would be independent of the Huffington Post.

or

2. Sell TechCrunch back to the original shareholders.

If Aol cannot accept either of these options, and no other creative solution can be found, I cannot be a part of TechCrunch going forward.

The future of TechCrunch, put simply

I have been watching the TechCrunch hoohah unfold and the only thing that keeps occurring to me is this:

Within the law, a web publication can do whatever the hell it likes. If it conducts itself in a way its readers do not like they can go somewhere else. If enough readers go elsewhere the publication will go out of business.

Everything else is opinion.

Let’s just say, for the sake of argument that TechCrunch writes skewed, biased articles in favour of companies with investment links and conversely does hatchet jobs on rival products. The only people who will decide the future of TechCrunch are the readers. They will either be OK with that or not. The readers will decide, not the few commentators from the sidelines.

Digg will not remain the same - Kevin Rose (video)

   

In an interview that was almost a time capsule, Digg founder Kevin Rose and TechCrunch founder Michael Arrington took the stage at TechCrunch Disrupt SF exactly one year from the last time they talked onstage, where Rose had recently given up his interim position as Digg CEO and Arrington had just sold our company to AOL.

Just like last time, Rose began the talk referring to the mistakes he made at Digg and it was clear to all that the chemistry between the two founders was still there. 2011 Arrington managed to squeeze out of Rose an admission that the Twitter investor Rose had just sold Twitter stock, just like 2010 Arrington squeezed out an admission that Jay Adelson and Rose turned down an offer of $60 million dollars in cash plus $20 million for Digg.

It was fascinating to watch the two banter on stage a year and an eternity later, as both have since then achieved notoriety as investors. (In fact Arrington gave props to Rose, saying that his investments in Ngmoco, Twitter, Square, Foursquare, Fab.com, Formspring, and Daily Booth made him a “good investor.” No kidding.) Both are on the cusp of moving on to other projects — Rose to his new project “Milk” and Arrington to the Crunchfund.

VIDEO

-techcrunch.com

Content Everywhere, But Not A Drop To Drink

This morning, I woke up and read Nick Bilton’s weekly New York Times’ column. Nick is a friend and one of the best bloggers/writers/journalists out there. But with today’s column, he was way off base. 

Having already said what I wanted to say about the Path situation, I debated if I should weigh in again. Then I read Nick’s column again. There’s a way to say what he wants to say, but he goes about it the complete wrong way. I felt like I had to respond. 

But before I could, my CrunchFund partner Michael Arrington wrote almost exactly what I would have written — but in a more effective way. As a dog owner/lover, Michael thought up a great analogy: “So the belly is shown.”

Nick is trying to make a point about the increasingly lackadaisical mentality surrounding data protection in the digital world. Silicon Valley is his focus, and more specifically, Path. 

The startup, which is a CrunchFund portfolio company, had already “shown the belly”, as Michael puts it, but damnit, Nick had a column to write! He could have, say, looked a little deeper into the matter and found the dozens of other apps — many of which are much larger than Path — doing the same thing. Apps that have been doing it for a long time. That actually would have made his point much stronger. 

But that would have been more work. And work is hard. Path was served up on a platter, the homework already done. And even though Path has already unconditionally apologized and, more importantly, fixed the issue, it was time to dye their white flag red with blood. 

But in attempting to do so, Nick went too far, and made some mistakes. Did he really imply that Path could be used to out dissidents in Egypt and Tunisia? Yep. Did he have a ridiculous fear-monger-ish title? Yep. (“So much data mining”?!) Did he really say that Path was sending the address book data completely unprotected? Yep — a point which he had to issue a correction about. 

Nick completely overlooked the fact that the data was being sent via SSL encryption and instead compared it to sending private letters without envelopes (an analogy he later removed). He seemingly focused in on the fact that the data wasn’t hashed — which is an issue that some say needs to be fixed (and others actually disagree with) — but the HTTPS transmission is important. It’s something which shockingly few startups have used to transmit data in the app era, and the fact that Path did it right off the bat should show their legitimate good intentions for securing the data. Yes, Path was sending the letters without envelopes (hashing), but they were sending them via an armored car (SSL). Not completely secure, but pretty damn secure. 

But again, going that deep into this story would have involved more work. And while I just picked on Nick for 500 words, this brings me to what I really want to talk about. Something which I’ve wanted to talk about for a while. Something which I’m sure I’ll continue to talk about. 

In his story, Nick links to this ridiculous Gawker post on the Path issue from last week. The author of that post, Ryan Tate, rushed to publish what he thought was an awesome GOTCHA! Unfortunately, he also failed to do his homework. Yes, he had an email from Dave Morin saying that Path doesn’t store any contact data. As such, Tate jumped to the conclusion that Morin was lying to him in that email given the recent revelations.

The problem is that at the time Morin wrote the email, it was absolutely true. That’s because Path went through a complete transformation into a different app in the time since the email. Path version 1 did not store that data. Path version 2 did. 

Tate was also forced to issue an update with the correction, but tried to explain that he was still right to write his story. Or something. It doesn’t really matter. What matters is that the story generated 35,000 pageviews. Facts be damned! Success!

This is increasingly the world we live in. That’s no secret. But it’s something I thought a lot about when I was deciding whether or not to move on from the tech blogging world as my full-time profession. I could see the writing on the wall. I could see the future, and it did not look good.

Unfortunately, it’s becoming clear to me now that I drastically underestimated how bad the situation actually is. 

Over the past several months that I’ve been removed from the day-to-day of tech blogging professionally, I’ve gained some perspective from the other side of things. As an investor, I’m privy to information that I normally would not know. And more generally, people/startups are willing to share information with me that they never would have when I was a blogger, for obvious reasons. 

At the same time, I’m still diligent about reading just about everything out there written about the tech world in an attempt to stay on top of things. And that’s where the problem comes in.

The sides are not aligned. At all.

Most of what is written about the tech world — both in blog form and old school media form — is bullshit. I won’t try to put some arbitrary label on it like 80%, but it’s a lot. There’s more bullshit than there is 100% pure, legitimate information.

The problem is systemic. Print circulation is dying and pageviews are all that matter in keeping advertisers happy. This means, whether writers like it or not, there’s an underlying drive for both sensationalism and more — more — more.

Read the stories that are published in the tech blogosphere tomorrow. Are most published because the writer put in a lot of work or original thought? No, most are published because more — more — more content leads to more — more — more pageviews. 

Most are stories written with little or no research done. They’re written as quickly as possible. The faster the better. Most are just rehashing information that spread by some other means. But that’s great, it means stories can be written without any burden beyond the writer having to read a little bit and type words fast. Many are written without the writer even having to think.

I’m completely serious in saying that. 

There will be 25 stories about Google TV or something else tomorrow which will all say basically the same thing. Maybe one or two of those stories will have actual insight or information. Maybe none will. If any do, it’s the exception, not the rule.

As one of the most prolific tech bloggers over the period of a few years, I was just as guilty of this as anyone. I had a job to do, and I did it. And to be honest, I saw absolutely nothing wrong with it at the time. And if you did, you just didn’t get it.

But now I have more perspective. I was wrong. I say this not to think I can possibly effect change in the industry — given the underlying motives: pageviews driving advertising, that would be impossible — but simply because it’s the truth. And it’s getting worse.

The problem with the content rush is twofold. First, no one — and I mean no one — can possibly be an expert in all the things they’re attempting to cover. Good writers in the space may know one company inside and out. Great writers may know two. The very best may know enough about three or four companies/topics to be an authoritative writer on them. 

And yet, we often see bloggers writing 7 posts a day about 7 different companies and/or topics. And people read these stories as if they’re definitive posts full of insightful information. Ha. Most of them are bullshit. 

Second, because the emphasis is on speed, even if a writer does know a lot about a company/topic, that takes a backseat. Writing a bland story with a few facts in 5 minutes is valued much higher than writing a good story in an hour. And that’s valued much higher than writing a great story over the period of a few days or god-forbid, weeks.

I hear over and over again things like, “did you read that post on FILL-IN-THE-BLANK-BLOG? — Interesting, huh?” No, it wasn’t interesting, it was bullshit. That author had no fucking idea what they were talking about. They probably wrote it in 20 minutes and never thought about it again. If you asked the author about it now, they probably wouldn’t even remember half of what they wrote. 

Just because a writer’s words appear on a popular site, people seem to think they are sterling bastions of sacred information. They’re not. They’re human beings that may not even know as much about a topic as you do. Whatever they do know, they probably know from reading one or two other posts by another writer who learned about the topic from reading one or two other posts.

Bloggers informing bloggers all the way down.

You cannot be an authority on 20 different topics. You just can’t. But people are trying to convey that they are. And there’s often a perception that they are. And this horribly broken system works from the perspective of the pageview machine.

And don’t think this only applies to blogs. Often things written about our industry in mass media publications are actually worse! 

My favorite examples are when publications like The Wall Street Journal feel the need to focus on some “hot button topic” like privacy and end up writing the most fucktarded fear-mongering bullshit imaginable. 

But. But. But. The Wall Street Journal wrote it. Or The New York Times wrote it. It must be true! That means dick. A human being wrote that story. A human being that likely knew very little about the topic before they started writing — and maybe even less after. 

Two different situations lead to the the same problem. 

1) We have bloggers who sometimes are deeply embedded in the technology community and have quite a bit of insight and understanding about one or two companies/topics. But they have to write 4 or 5 or 6 or more stories a day as quickly as possible to feed the pageview beast. 

2) We have more traditional journalists who are not deeply embedded in the technology community in any way and/or are forced to write for a more mainstream audience and end up writing obscenely bland stories about technology that only a brain-dead geriatric could love. 

Both situations lead to stories that suck and/or are bullshit. 

And yet, very few people call bullshit on the bullshit. Why? A few reasons. 

Some fear angering the content beast. If you do, who knows what nonsense they could lay on your lap next. 

Plus, the river flows both ways. Those running companies need the press to spread word when they want to do some sort of push. 

Press eat that shit up because they’re easy posts that are pre-packaged and require little thought. And the end result are Tweets/comments/Facebook posts about how “awesome” the story is. Dopamine! Backslaps all around! Everyone happy!

Others “in the know” of what’s really going on don’t speak up because they also know that ultimately, it doesn’t matter. Stories fade. New ones rise. Everything is forgotten in an instant. Roll with it. If anything, speaking up simply often makes things worse because it validates the original story in a strange way.

And then there are the people simply too busy or who don’t give a shit what the press says. That’s the right mentality in my mind since actions do always trump words. 

But still, most people are human beings that do care when nonsense is being spread. And the nonsense is getting louder.

I offer no solutions because my honest opinion is that nothing will change where we’re headed. Increasingly, there are two realities in the technology space: 1) reality 2) “reality”.

The best writers will fall away because the system will no longer favor what they do. Or they’ll break towards the bullshit and thrive, but we’ll all be worse for it.

The only thing I can offer is the advice to take everything you read in the technology press with a grain of salt. Perhaps several. The likelihood that at least part of it is nonsense is very strong. And stronger by the day.

2/13 Follow Up: Moneyblog

[photo: flickr/chrisdlugosz]

We probably all can agree that the CrunchFund news by itself are boring by now (unless Owen and Jolie chatter about it). Enter Frédéric Filloux, who over the weekend tried to express his thoughts on the underlying issues which actually are interesting to him. Frédéric finds three things interesting in the subject: “the revolving door between journalism and industry; the blogosphere distortion field; the pervasive conflict of interest.” Read his take here.

Now, I acknowledge all these three elements exist. However, where Frédéric goes wrong is 1) his depiction of the enemy line and 2) ignorance of the new kids on the block with a new, bigger power in this game.

To Frédéric this has also become “a quarrel between Ancient and Modern, the former being – obviously – representatives of the old medias, the likes of the Swishers and the (David) Carrs and the latter being the tech blogosphere and is elastic value-system.”

While Kara’s good (I am less familiar with David), I could name at least 10 reporters from “premium publications” straight out of my hip who are as much offenders of the principles Frédéric holds up here as some of the members of “tech blogosphere” he writes about.

The line of division is much simpler: it’s about good journalists and bad journalists. Full stop. And I like to suggest that there are more good journalists in tech blogs these days than they are in premium publications.

Take the example of my domain expertise, mobile. There are a few good journalists in premium publications. Most of them like Tricia Dyuree (WSJ) or Stuart Dredge (Guardian) have a blogging background. Folks like Christopher Lawton (WSJ) who straight come to premium publications are an exception. All of them are usually outgunned by the hords of bloggers with their niche expertise like Greg Sterling from SearchEngineLand. Can you name someone in premium publications who writes well about the intersection of search, local and mobile ? For my mobile industry peer watch I have organised my Google Reader into 18 mobile segments. Premium publication journalists only play a role in 5 out of these 18 segments.

In this new age, in fact, you can go from new on the scene to thought leader for a niche industry in less than 6 months. My friend Kim-Mai Cutler has just done that with their InsideMobileApps Beat on the Inside Network. Her blog is now mandatory daily reading for all leading app publishers.

In this new age, folks like MG Siegler can force issues on large corporations. He can start speculate about a Facebook Phone three days in a row and have an interview with Zuckerberg on day five (All the time while a Facebook Phone actually does exist, but this is different topic). MG can bash AT&T for two weeks and then have a board member call him.

When the New York Times partnered with VentureBeat they told us that we are 6 months ahead of the curve vs their tech coverage. When IDG partnered with VentureBeat for DEMO they did so because they desperately needed some of the TechCrunchy connection to the industry to stay relevant with their events.

Key Silicon Valley folks know exactly how much more they get out of tech blog coverage compared to the lazy ass coverage of premium publications.

When I read them, I see the international media (Spiegel, Guardian, Wyborcza etc) blatantly copy the tech blog coverage of any given day. Most of the times the tech coverage of international premium publications just oscillates whatever tech blogs are giving them.

I doubt, that Frédéric knows that Mashable is way more aggressive than TechCrunch is. Their focus on the hijacking of any daily news is “legendary.”

This is about a power shift in the media industry. The issues played out in the Silicon Valley tech blogs are issues which will be faced by other media segments, soon.

As I said in an earlier comment on that CrunchFund hoopla, "these are the new kids in town and they are winning.

Whatever your position on the issues associated with this CrunchFund thing may be - you need to deal with these kids going forward. Any any ethics debate will not be decided by commentary by their parents. The upcoming kids don’t care what the parents think about them. The associated ethics will be decided by how these news kids behave and which rules they accept.

It’s sort of ridiculous how huge gift card programs are — Americans spend some $100 billion on them each year, and they’re now offered by myriad physical stores and online companies (like Zynga) alike.

One reason why they’re so popular is that they give people who can’t get credit cards — like, say, millions of teenagers — a way to purchase goods online. Thing is, gift cards tend to be pretty restrictive, as they generally can only be used at one chain.

Openbucks, a startup that’s launching at the TechCrunch Disrupt Battlefield, is looking to change this: they’re creating what they’re calling a ‘universal payment network’, that lets you use gift cards to buy goods and services online — in other words, you could use your Subway gift card to rent a movie, or buy some virtual goods.

At the beginning it looked like Arrington simply wanted to go back to investing since that’s how he got into this blogging business in the first place and even more so recently when he put money into a number of startups.

The way AOL is going about the news from today however, is a lot less clear. AOL had committed Arrington for three years as part of the TechCrunch acquisition which means he’s still got about two years to go but if AOL wanted him out of TC, they could be shifting him aside to another arm outside of the Huffington media group.

Here’s a summary by Dan Primack at Fortune:

It told the NYT that Arrington would still have a (reduced) role with the site, and continue reporting directly to Arianna Huffington. Then AOL said he would report to AOL Ventures. Today it says that he is no longer employed by the company, but can continue contributing to TechCrunch as an unpaid blogger. In other words, AOL is acting like AOL typically acts: Scattershot.

It’s been less than 24 hours so the flurry of news is still coming in and even news out of AOL itself isn’t clear. Nobody seems to have a straight story to tell.

Meanwhile, not a peep from TechCrunch but a monster rant from Kara Swisher.

[update] Paul Carr has his say on the matter. Yes, AOL screwed up in announcing the CrunchFund.

Transparency is No Substitute for Integrity

Summary: Disclosure of conflicts of interest isn’t enough, in fact in may make matter worse. But conflicts of interest may also be inevitable. Integrity is what matters, but that’s hard to measure.

Disclosure: I work for SiliconAngle, a TechCrunch competitor.

I love transparency. I think it’s an important for governments, and institutions like the press, to be as transparent as reasonably possible. I also agree with Jay Rosen that if the “view from nowhere” - the faux-objectivity of the mainstream press - were replaced by “this is where I’m coming from” we’d all be better off. Everyone has biases, and it’s better to get those out of the way than to pretend they don’t exist.

But transparency isn’t a cure-all.

In the debate over Michael Arrington’s “Crunch” branded venture capital fund, many suggest that Arrington if discloses to his potential conflicts of interest, and therefore his biases, that will be good enough. In fact, that might be better than pretending to be objective. But is this the case?

A Little Background

Long story short: Michael Arrington founded the popular tech blog TechCrunch. Other people also write for it, full time. Last year AOL bought TechCrunch. A few months ago Arrington announced he would start making some investments in the same sorts of tech startups that TechCrunch covers. And last week the CrunchFund was announced - a venture capital fund run by Arrington and backed by AOL among others. Arrianna Huffington, who has managed content at AOL since the Huffington Post was acquired, balked at the idea of Arrington staying on as co-editor and contributor at TechCrunch while also running a VC fund. Arrington has apparently been fired, but I’d advise checking Google News and Techmeme for updates, as that may no longer be the case.

Not many people, at least in the articles I’ve seen, point out that another prominent tech blog, Om Malik, also balances tech investing with journalism. Malik is a partner at True Ventures and GigaOM. GigaOM is also funded by True Ventures. Whenever GigaOM covers a True Venture backed company, or a competitor of a True Venture backed company, the article will carry a disclosure along these lines: “Company X is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.”

There’s at least one big difference between True Ventures and CrunchFund, however. The CrunchFund is seeded by several other VCs - it’s practically a who’s who of Silicon Valley funders: Sequoia Capital, Redpoint Ventures, Kleiner Perkins, Greylock Partners, Austin Ventures, Accel Partners, Benchmark Capital, Andreessen Horowitz, Kevin Rose, Yuri Milner and Ron Conway.

That means that Arrington could have more complicated conflicts of interest - he won’t just be investing in companies, he’ll be receiving capital from other VCs which have their own sets of investments.

The Trouble with Disclosure

As Arrington pointed out a while back there are many different types of conflict of interest. For example, Kara Swisher of AllThingsD is married to a Google executive, a fact she is consistent about disclosing. But is this more of a conflict of interest than investing in companies?

And as TechCrunch writer MG Siegler writes in the comments of that post, it isn’t always feasible to disclose everything:

How many tweets by investors making conflicted statements are ever disclosed? Very few, if any. Should they be? Why is that any different than a blog post? Because it’s shorter? That doesn’t really make a lot of sense.

Granted, it would be pretty impossible to regularly do this with Twitter’s 140 character limit, but maybe a follow up tweet should be used? Annotations? But if we start doing that, how far does this have to go?

Does Disclosure Make Things Worse?

At least one study has found that disclosing conflicts of interest leads to worse behavior and worse decisions. That’s only one study, but it should call into question the assumption that transparency, even if it could be achieved, is a cure all. But, given that at the very least almost every professional journalism outfit at the very least has sponsors, no one is free of conflicts, even if all the writers are single, have no friends and no investments.

A Matter of Integrity

One reason I think few people bring up Malik with regards to Arrington’s situation is that, in general, people trust Malik more. I can’t think of any examples of Malik abusing his position at GigaOM to advantage a company he has invested in. Malik has a history as a journalist for Forbes before starting GigaOM. I really don’t know what his reputation from that period is, but I’m guessing he had a good reputation to get where he is today.

So why don’t people feel the same way about Arrington? I can think of one particularly uncomfortable post from Arrington: his post about Flickr and Hunch founder Caterina Fake. Arrington told her he was planning a story about her next startup, and instead of replying to Arrington’s e-mail, she went direct on her own blog. In essence, scooping him on her own story. Arrington lashed out.

Gizmodo’s Mat Honan writes:

Explicitly, it’s clear what he’s saying: If you, Mr. or Ms. Startup founder, don’t play ball with us, we will fuck you over. But the implicit stuff is more insidious to me.

Arrington is acting as if he’s above the mudslinging by not revealing details. But the problem with that stance is that had he not brought up the “sordid situation,” how would anyone have even known there was mud to be slung? Thanks to his word choice (“sordid”) it comes across as old-school slut shaming. Merely by revealing that there is some unspecified scandal, he’s already doing damage to her reputation, even while acting as if he is taking the moral high ground.

And in the act of saying he won’t write about the details, he slyly is letting Fake know that he could. I would take that as an implied threat.

He’s also recently threatened the New York Times.

So yes, Arrington has crossed the line at least a couple times. However, I haven’t seen any evidence of pay for play, or of him black listing companies or anything like that. For the most part I think he gets a lot more flak than he’s earned. And had Arrington not been fired, I don’t think the CrunchFund would have changed much. Arrington’s integrity, or lack thereof, is independent of these potential conflicts.

Update: Former TechCrunch writer Duncan Riley writes that Arrington does indeed maintain a blacklist and play favorites on TechCrunch:

At TechCrunch, Arrington lets you believe you are picking your own posts (and sometimes you do.) But there are other things that don’t quite fit the model. At TechCrunch, it’s made very clear who you are allowed to write about, and not write about. For example, companies that appeared at rival conferences to TechCrunch 50 (now TechCrunch Disrupt) were off limits. I was often given suggestions by Arrington to write about companies based on his friendships, or people who were friendly to him (and at times sponsors.)

Siegler repeats the classic Arrington line that sometimes we criticize our “friends,” but that’s all part of the show. It is, and always has been the veil of legitimacy TechCrunch has traded on. But I know that at my time at TechCrunch, biting friends was only ever ordered, and only when what they were doing was so blatantly bad it needed calling out. I think any time TechCrunch has written a negative post about Loic Le Meur is a classic example. Kevin Rose was never a TechCrunch friend as I saw it, so it’s a touch weird at Siegler brings him up. Robert Scoble is the classic example: Arrington and Scoble were the best of frenimies: one day we’d be backing him, and the next day we’d be putting in the boot. But the orders as to which way we wrote about Scoble always came from the top.

The reality is, as it always has been, is that TechCrunch has traded off favors and back scratching. TechCrunch has always barred or banned people, startups or sites it doesn’t like (for example, we could steal a story from Mashable but NEVER attribute it.) Siegler can scream editorial independence from the rooftop, and maybe he won’t write about a company he really doesn’t like (I hope that I never did) but likewise I’d bet money that he’s written about many a company that Arrington has recommended to him.

Furthermore, it’s entirely possible for writers without any pre-existing conflicts of interest to abuse their positions or otherwise behave unethically.

What Is To Be Done?

Unfortunately, “integrity” is a hard thing to enforce on the Internet. Companies can fire writers and editors, but those individuals can always start new blogs if they can’t find established venues. If this whole this whole thing had happened while TechCrunch was still independent, there would have been no one to fire Arrington. There’s nothing stopping, say, Pete Cashmore from starting a “MashFund” at this point.

I’d like to think that the market would punish deeply unethical writers, but in these days of tabloidification I’m not sure.

One thing I can say is that it’s more important than ever now to call out unethical journalism. Naming and shaming is the best strategy we have right now.

Original Article

[Invest] Shaker, le café virtuel, lève 15M$.

Michael Arrington nous informe, via son tout nouveau blog, que Shaker vient d’effectuer une levée de fond de 15 millions de Dollars.

Shaker, c’est un café virtuel. Partant du principe qu’il est de plus en plus difficile de rencontrer de nouvelles personnes sur Internet, le service se connecte à votre Facebook et vous fait rencontrer de nouvelles personnes. Le site est encore en beta privée.

L’investissement a été mené par Menlo Ventures. CrunchFund, qui avait déjà investi dans Shaker, est encore de la partie. Parmi les autres investisseurs on retrouve également Innovation Endeavors, le fond d’Eric Schmidt. Arrington avait déjà mis des billes dans la société Israélienne. 

Transparency is No Substitute for Integrity

Summary: Disclosure of conflicts of interest isn’t enough, in fact in may make matter worse. But conflicts of interest may also be inevitable. Integrity is what matters, but that’s hard to measure.

Disclosure: I work for SiliconAngle, a TechCrunch competitor.

I love transparency. I think it’s an important for governments, and institutions like the press, to be as transparent as reasonably possible. I also agree with Jay Rosen that if the “view from nowhere” - the faux-objectivity of the mainstream press - were replaced by “this is where I’m coming from” we’d all be better off. Everyone has biases, and it’s better to get those out of the way than to pretend they don’t exist.

But transparency isn’t a cure-all.

In the debate over Michael Arrington’s “Crunch” branded venture capital fund, many suggest that Arrington if discloses to his potential conflicts of interest, and therefore his biases, that will be good enough. In fact, that might be better than pretending to be objective. But is this the case?

A Little Background

Long story short: Michael Arrington founded the popular tech blog TechCrunch. Other people also write for it, full time. Last year AOL bought TechCrunch. A few months ago Arrington announced he would start making some investments in the same sorts of tech startups that TechCrunch covers. And last week the CrunchFund was announced - a venture capital fund run by Arrington and backed by AOL among others. Arrianna Huffington, who has managed content at AOL since the Huffington Post was acquired, balked at the idea of Arrington staying on as co-editor and contributor at TechCrunch while also running a VC fund. Arrington has apparently been fired, but I’d advise checking Google News and Techmeme for updates, as that may no longer be the case.

Not many people, at least in the articles I’ve seen, point out that another prominent tech blog, Om Malik, also balances tech investing with journalism. Malik is a partner at True Ventures and GigaOM. GigaOM is also funded by True Ventures. Whenever GigaOM covers a True Venture backed company, or a competitor of a True Venture backed company, the article will carry a disclosure along these lines: “Company X is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.”

There’s at least one big difference between True Ventures and CrunchFund, however. The CrunchFund is seeded by several other VCs - it’s practically a who’s who of Silicon Valley funders: Sequoia Capital, Redpoint Ventures, Kleiner Perkins, Greylock Partners, Austin Ventures, Accel Partners, Benchmark Capital, Andreessen Horowitz, Kevin Rose, Yuri Milner and Ron Conway.

That means that Arrington could have more complicated conflicts of interest - he won’t just be investing in companies, he’ll be receiving capital from other VCs which have their own sets of investments.

The Trouble with Disclosure

As Arrington pointed out a while back there are many different types of conflict of interest. For example, Kara Swisher of AllThingsD is married to a Google executive, a fact she is consistent about disclosing. But is this more of a conflict of interest than investing in companies?

And as TechCrunch writer MG Siegler writes in the comments of that post, it isn’t always feasible to disclose everything:

How many tweets by investors making conflicted statements are ever disclosed? Very few, if any. Should they be? Why is that any different than a blog post? Because it’s shorter? That doesn’t really make a lot of sense.

Granted, it would be pretty impossible to regularly do this with Twitter’s 140 character limit, but maybe a follow up tweet should be used? Annotations? But if we start doing that, how far does this have to go?

Does Disclosure Make Things Worse?

At least one study has found that disclosing conflicts of interest leads to worse behavior and worse decisions. That’s only one study, but it should call into question the assumption that transparency, even if it could be achieved, is a cure all. But, given that at the very least almost every professional journalism outfit at the very least has sponsors, no one is free of conflicts, even if all the writers are single, have no friends and no investments.

A Matter of Integrity

One reason I think few people bring up Malik with regards to Arrington’s situation is that, in general, people trust Malik more. I can’t think of any examples of Malik abusing his position at GigaOM to advantage a company he has invested in. Malik has a history as a journalist for Forbes before starting GigaOM. I really don’t know what his reputation from that period is, but I’m guessing he had a good reputation to get where he is today.

So why don’t people feel the same way about Arrington? I can think of one particularly uncomfortable post from Arrington: his post about Flickr and Hunch founder Caterina Fake. Arrington told her he was planning a story about her next startup, and instead of replying to Arrington’s e-mail, she went direct on her own blog. In essence, scooping him on her own story. Arrington lashed out.

Gizmodo’s Mat Honan writes:

Explicitly, it’s clear what he’s saying: If you, Mr. or Ms. Startup founder, don’t play ball with us, we will fuck you over. But the implicit stuff is more insidious to me.

Arrington is acting as if he’s above the mudslinging by not revealing details. But the problem with that stance is that had he not brought up the “sordid situation,” how would anyone have even known there was mud to be slung? Thanks to his word choice (“sordid”) it comes across as old-school slut shaming. Merely by revealing that there is some unspecified scandal, he’s already doing damage to her reputation, even while acting as if he is taking the moral high ground.

And in the act of saying he won’t write about the details, he slyly is letting Fake know that he could. I would take that as an implied threat.

He’s also recently threatened the New York Times.

So yes, Arrington has crossed the line at least a couple times. However, I haven’t seen any evidence of pay for play, or of him black listing companies or anything like that. For the most part I think he gets a lot more flak than he’s earned. And had Arrington not been fired, I don’t think the CrunchFund would have changed much. Arrington’s integrity, or lack thereof, is independent of these potential conflicts.

Update: Former TechCrunch writer Duncan Riley writes that Arrington does indeed maintain a blacklist and play favorites on TechCrunch:

At TechCrunch, Arrington lets you believe you are picking your own posts (and sometimes you do.) But there are other things that don’t quite fit the model. At TechCrunch, it’s made very clear who you are allowed to write about, and not write about. For example, companies that appeared at rival conferences to TechCrunch 50 (now TechCrunch Disrupt) were off limits. I was often given suggestions by Arrington to write about companies based on his friendships, or people who were friendly to him (and at times sponsors.)

Siegler repeats the classic Arrington line that sometimes we criticize our “friends,” but that’s all part of the show. It is, and always has been the veil of legitimacy TechCrunch has traded on. But I know that at my time at TechCrunch, biting friends was only ever ordered, and only when what they were doing was so blatantly bad it needed calling out. I think any time TechCrunch has written a negative post about Loic Le Meur is a classic example. Kevin Rose was never a TechCrunch friend as I saw it, so it’s a touch weird at Siegler brings him up. Robert Scoble is the classic example: Arrington and Scoble were the best of frenimies: one day we’d be backing him, and the next day we’d be putting in the boot. But the orders as to which way we wrote about Scoble always came from the top.

The reality is, as it always has been, is that TechCrunch has traded off favors and back scratching. TechCrunch has always barred or banned people, startups or sites it doesn’t like (for example, we could steal a story from Mashable but NEVER attribute it.) Siegler can scream editorial independence from the rooftop, and maybe he won’t write about a company he really doesn’t like (I hope that I never did) but likewise I’d bet money that he’s written about many a company that Arrington has recommended to him.

Furthermore, it’s entirely possible for writers without any pre-existing conflicts of interest to abuse their positions or otherwise behave unethically.

What Is To Be Done?

Unfortunately, “integrity” is a hard thing to enforce on the Internet. Companies can fire writers and editors, but those individuals can always start new blogs if they can’t find established venues. If this whole this whole thing had happened while TechCrunch was still independent, there would have been no one to fire Arrington. There’s nothing stopping, say, Pete Cashmore from starting a “MashFund” at this point.

I’d like to think that the market would punish deeply unethical writers, but in these days of tabloidification I’m not sure.

One thing I can say is that it’s more important than ever now to call out unethical journalism. Naming and shaming is the best strategy we have right now.

Original Article

This Startup Costs Me Thousands Of Dollars...

image

…simply because they didn’t exist yet.

Codecademy.

About 6 years ago, I decided I was going to go back to school to learn how to code. I had very casually dabbled with some simple stuff ranging from HTML to C++, but decided I needed a more formal setting to truly learn. I was wrong.

It’s not that I didn’t learn anything going back to school — I did. But I was wrong that I needed to learn in a formal school setting. As any programmer will tell you, you’ll learn a lot more by doing things on the fly. 

In the years since I used my web development skills to become a writer (naturally), I’ve met a ton of devs who are self-taught using books or the web. All of them swear by that method, and there is no question that if you have some strong prerequisites (logic, math, etc), you can do this and be successful. But for 99.9% of people, that’s never going to happen. That’s why people like me pay thousands of dollars to go back to school. 

And that’s why the world needs something like Codecademy. It makes this type of learning accessible to just about anyone. It’s also a hell of a lot cheaper (free) than going back to school. And, to be honest, it’s just a much better way to learn. It’s not just about the taking the teaching and moving it online, it’s about making the learning process compelling. 

The lessons right now are just a sliver of what they will be, they’ll get more robust over time for more advanced users. But the key really may be those 99.9%. Fred Wilson explains this well:

Another great reason to “get technical” is so that you can work better with technical people. If you understand at least some of what they are doing, if you can look at their work product (the code) and understand what it is doing, if you can pick up a ticket and contribute when time is tight, then you will be seen as part of the team. And that is critical.

I also can’t tell you how key being able to at least understand some of the technical concepts thanks to my (limited) coding background was for me as a writer in this industry. And it extends beyond the tech industry as well. Tech is becoming a vital part of every industry. Schools should be teaching “intro to programming” courses alongside math as a requirement.

Or they should just recommend Codecademy.

All of this is why CrunchFund invested in Codecademy alongside Union Square and others. Mike shared some of his own thoughts from a slightly different perspective, but with the same basic hypothesis. This is a powerful, game-changing way to learn. 

I would have killed for this 6 years ago. 

If you follow tech, start-ups, angel/VC investing, or Silicon Valley (a “typical” SV guy is hilariously depicted above circa early 1980’s) you might have caught wind that Michael Arrington of TechCrunch recently started a micro-VC $20M fund called the CrunchFund and will be investing.  While he is also blogging and writing about tech start-ups, although he doesn’t claim to be a “journalist”.

I really liked this piece from the Wall Street Journal’s Kara Swisher, not necessarily for the portrayals of Arrington, Silicon Valley, and the angel/VC community along Sand Hill Road… but more for her points around truth in journalism, objectivity and ethics.  Yes - journalism and reporting is a business, and yes - the web and technology (such as Tumblr) has made it relatively easy these days for individuals to publish content and have a platform for their thoughts.  

But it’s hard to truly believe Arrington when he claims he holds himself to “higher standards of transparency and disclosure” than a “normal” journalist.  Most of us don’t have a blogging platform that attracts ~3.6M monthly visitors.   Many early stage tech start-ups would kill to have 10% of that monthly traffic.  Most early stage tech start-ups will see their site traffic increase when a nice piece is written about them on TechCrunch.

If for a moment, we are to believe Arrington’s claim about holding high standards of transparency and disclosure, I guess even in this case that doesn’t translate or equate to being ethical.  In journalism, I believe being ethical equates to telling the objective truth, if that is feasible (Robert Pirsig might disagree), and if not - telling as close to the objective truth without bias as possible.   And maybe I’m obtuse, but I just have difficulty believing that will be possible for TechCrunch given the association with Arrington, even if he’s not the day to day managing editor… indeed, the closing paragraph of this recent TechCrunch post about CrunchFund really does sum up this point: most, if not all of the people who work at TechCrunch are there because of Michael Arrington!      

Finally, it comes off as bombastic the VC who reasons in the article (off the record) that he participated as an LP because “everyone else was doing it”.  I guess his mother never told him the line about “don’t jump off the bridge just because everyone else is doing it”.  Was it easier (and who knows, potentially smart) for VCs to signup as LPs in Arrington’s CrunchFund than decline to participate?  Perhaps.  But as they say: following can be easy - it’s harder to lead and think for yourself.

-cch

Kinnek Raises $10M

Kinnek, a marketplace for small businesses to find suppliers and manage purchasing, has raised a $10 million Series A round of financing led by Matrix Partners, with participation from previous investors including Sierra Ventures, Version One Ventures, Naval Ravikant, CrunchFund, Richard Chen, TriplePoint Ventures, and Benjamin Ling.

My Prediction for CrunchFund Invested Start-ups

http://www.atshaker.com/ - LAME, WILL FAIL.

http://www.bitcasa.com/ - LAME, ALREADY USE DROPBOX.

http://www.prismskylabs.com/ - INTERESTING.

http://nsfwcorp.tumblr.com/ - FAIL (especial because of Paul Carr).

http://www.zaarly.com/ - FAIL.

https://everyme.com/ - INTERESTING.

http://www.gogobot.com/ - INTERESTING.

https://www.inspirato.com/ - I’M NOT RICH ENOUGH, FAIL (Airbnb for rich people?).

http://www.youmail.com/ - INTERESTING (needs better web design).

http://www.clipboard.com/ - FAIL (Evernote alternative?).

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