Can Silicon Valley's best-known startup blog stay at the top as its founder gets into the venture capital business?
On Thursday, news broke on The New York Times and Fortune websites that TechCrunch founder and editor Michael Arrington has started a $20 million venture capital fund called the CrunchFund. AOL, which acquired the tech blog last year, invested $10 million in the fund, and several of the Valley's best known firms (Sequoia Capital, Kleiner Perkins Caufield & Byers, and Greylock Partners) also contributed.
AOL spokesman Mario Ruiz confirmed that Arrington, who will be one of the fund's managers, "will no longer have editorial control or decision making" at TechCrunch, and that the site is looking for a new managing editor. However, Arrington will still write for TechCrunch.
The news wasn't a huge surprise. Arrington was an angel investor during TechCrunch's early days, a practice that he resumed in recent months. Jason Calacanis, who previously partnered with TechCrunch on the TechCrunch50 conference (they now run competing events), said on Twitter last month that he "just heard" that Arrington was starting the CrunchFund.
The fund also fits with speculation that Arrington wanted to leave TechCrunch or at least become less involved—departing founders are a common problem when startups get acquired, and in the site's early days, Arrington and TechCrunch were basically synonymous. (When announcing that he'd acquired the site, AOL CEO Tim Armstrong said it was under the condition that Arrington stay for at last three years.)
Even less surprising was the fact that a number of journalists took to Twitter and their blogs to grumble about the news. AllThingsDigital's Kara Swisher tweeted, "Hopelessly troubled AOL's new biz plan is apparently taking egregious conflicts of interests to a new level." Over at gadget blog Gizmodo (which competes with AOL-owned Engadget), Mat Honan wrote that AOL's involvement is "pretty shocking."
For his part, Arrington gave The Times his standard defense—that he's "not a journalist," and that "friendships and marriage are far more potent than financial conflicts."
The other question is whether the fund will have any effect on TechCrunch's dominance of startup news. The site has built its reputation on big scoops. Will entrepreneurs, investors, publicists, and other sources clam up if they see TechCrunch as a potential competitor?
Josh Jones-Dilworth, who runs the startup public relations firm Jones-Dilworth, predicted via email that there will be a change. For one thing, he said that if the CrunchFund invests in a Jones-Dilworth client, he'll feel obligated to be "extra careful" to make sure other publications feel like they're being treated fairly. He also compared Arrington's situation to Om Malik, who has to balance his duties as founder and senior writer at tech blog GigaOm with his duties as a partner at True Ventures. (Malik did not respond to Adweek's request for comment.)
"To [Malik's] credit he's been very above board, very transparent," Jones-Dilworth said. "But I know for a fact that entrepreneurs and VCs 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. "
Even if that happens, Jones-Dilworth said he doesn't expect it to have a big impact on TechCrunch as a whole. After all, many of TechCrunch's writers have built their own reputations and have their own sources.
"The blog would suffer very little, in my estimation," he said. "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."
Arrington has thumbed his nose at the Valley's public relations establishment in the past, most famously by declaring that he was unwilling to follow the common (if exasperating) tech media practice of embargoing stories until a certain time. Yet there has been no obvious decline in TechCrunch's ability to score major stories. But Vanessa Camones, the founder of a PR firm called theMIX agency, recently wrote a column saying that thanks to Arrington's heavy-handed tactics, she was advising her clients to steer clear of TechCrunch.
"The people that work in tech have probably already decided that TechCrunch cannot be trusted to cover their business," Camones said Thursday. Over time, she added, she expects TechCrunch's reputation to diminish so that there's a more "level playing field" with competing sites.
MG Siegler, one of TechCrunch's best-known writers, seemed exasperated with all the hand-wringing.
"Tech blogosphere: feel free to keep complaining about something no one really cares about," he posted on Twitter. "But pause to check TC tomorrow for a big scoop."