TechCrunch and CrunchFund: The Conflict-of-Interest Controversy

9/6/11Follow @wroush

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from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed,” Hoffman told Swisher. “As many tech entrepreneurs read it—both within Silicon Valley and globally—and view the information news feed to be their target for announcing themselves to the world, Crunchfund will have access to deal flow to these diverse and early stage companies.”

—In a column published Sunday, New York Times media critic David Carr said he’d talked off the record with companies and venture investors who worry that the TechCrunch-CrunchFund connection will create an atmosphere of fear and exclusion around Silicon Valley. “At best, competitors are up against a fund that has a cozy relationship with the leading technology news site and a list of investors—Sequoia Capital and Greylock Partners, among others—made up of Silicon Valley royalty,” Carr wrote. “Think of it as a less-than-virtuous circle: TechCrunch holds events for start-ups, CrunchFund could get first dibs, and then when TechCrunch wants an update on a particular company they can call their old boss Mike to get the last word.”

—Meanwhile, there was almost comical confusion inside and outside AOL about whether Arrington was still employed there, and whether Armstrong meant what he said about TechCrunch’s exceptionalism. BusinessInsider covered this part of the story thoroughly. Reporting on conversations with various AOL spokespeople, BI first said Arrington was giving up editorial control at TechCrunch (though TechCrunch writer MG Siegler later insisted on his personal blog that Arrington never had much control in the first place). Then Arianna Huffington told BI that Arrington was out altogether at TechCrunch, and AOL said that he was “not employed by AOL.” Then AOL took it back, saying Arrington now worked for AOL Ventures. Arrington told Miller at the Times that he was as confused as everyone else: “I have no idea what AOL’s final position on this will be,” he said. In a final statement, AOL spokesperson Maureen Sullivan seemed to take issue with CrunchFund’s main pitch to investors, telling BI that “AOL is not comfortable with TechCrunch being used as an access point for deal flow.”

—TechCrunch’s own writers were far from silent about the unfolding drama. Paul Carr wrote Friday that Armstrong had been wrong to imply that TechCrunch operates according to a different set of ethics from other technology news publications. “To be absolutely clear about this: the CrunchFund is Mike and Tim’s baby,” Carr (no relation to the Times‘ David Carr) wrote. “It has nothing to do with anyone else at TechCrunch.” Carr argued passionately that whether or not a startup had accepted money from CrunchFund would have no bearing on TechCrunch’s coverage. In an ardent post today, MG Siegler criticized AOL for moving to replace Arrington as TechCrunch’s editor, saying it amounted to “slaughter[ing] the lamb everyone can see to gain puffery amongst the old media peers.”

—Last link: Swisher went on TV for Bloomberg West Saturday and laid a lot of the blame for the mess at Armstrong’s door, saying he’d impugned the good reporters at TechCrunch. “These are some really good writers,” she said, “and this just creates a taint on the whole of tech journalism.”

And that’s where things stand. Of course, there are more important stories going on this week inside and outside Silicon Valley, such as the firing of Carol Bartz at Yahoo, just covered by Siegler in TechCrunch’s own inimitable way. But with the blood, sweat, tears, and dollars of so many entrepreneurs and investors riding on the kind of exposure their companies get in TechCrunch, you can bet that the fracas over CrunchFund won’t quiet down anytime soon.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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