Oddly Together

Someone Should kick Michael Arrington’s Arrogant Ass

A month ago, April, 27, 2011, Michael Arrington posted “An Update To My Investment Policy”, which not surprisingly generated negative reaction from established journalists. I wanted to respond right away, but I’ve been too busy at Betanews, where new editorial responsibilities add to writing.

The issue is a long-standing one of debate regarding TechCrunch’s founder—that he invests in, or has other business dealings with, some of the companies he writes about.

Michael justifies this behavior:

Before TechCrunch I was an occasional angel investor, going back to the mid 1990s…Some people have seen this as a conflict of interest, which it of course is. To counter that I’ve always disclosed investments, and try not to cover these startups myself. Occasionally when news is breaking quickly or for other reasons, I will write about the company, but with the appropriate disclosure.

In 2009 the accusations of conflicts of interest by our competitors became somewhat distracting, and for a couple of years I discontinued investing in startups completely.

That policy has now changed. Over the last several months I have begun investing actively again.

Michael further explains that he can’t write about companies for which investments aren’t public (e.g., there’s some non-disclosure or other legally binding agreement), because he would disclose them first. Otherwise, when able to disclose and write: “I think that this will all be fine. I’ll still be very hard on companies I invest in when they deserve it”.

On the one hand, I laud Michael for disclosing these investments, but that doesn’t remove conflict of interest. What he writes can benefit these companies, even if he’s completely unbiased, or turns a critical eye. Investments’ disclosure is itself conflict of interest. Michael is known to be a successful entrepreneur—TechCrunch is proof of that—and shrewd seer of viable startups. Disclosure of these investments is tacit endorsement, and that can get the startups attention, perhaps needed funding or even eventual acquisition.

A Personal Example
I’ve written plenty of news stories over the years that moved companies’ stock, sometimes unknowingly. For small companies and their investors the results can be rewarding or devastating. One instance still bothers me. In September 1999, Dell briefed me on plans to offer WiFi cards from AiroNet. At the time, no Windows PC manufacturer shipped laptops with built-in WiFi. Dell chose an add-on to the portable’s PC Card slot as its first move into WiFi. The story posted at CNET News on Sept. 15, 1999. I didn’t realize two things, which may have been related: Dell exclusively gave the story to me (without saying so) and AiroNet had gone public a few weeks earlier.

CNET had no comments section on its site back then. Readers communicated by email. I received one from a desperate investor who had shorted AiroNet stock. He pleadingly asked if the Dell deal was true. Turns out that after my story posted, AiroNet shares started rising—up 40 percent over two days. No wonder he was panicked! Sometime later, Cisco bought the WiFi startup.

Suppose, hypothetically, I had been an investor in AiroNet, a new public company. The stock surge likely would have benefitted me, and surely I should have considered the possibility before writing one word. Similarly, any benefit Michael receives from writing about these companies is conflict of interest—plain, pure and simple. If he feels that disclosing investments is being transparent, I challenge him to go further. If there’s really no problem, then he should disclose when he financially benefits from these stories. That would be real measure of conflict of interest, as his critics insist there is.

“Screw Them All” Defense
However, Michael asserts he’s no different from other writers in followup post: “The Tech Press: Screw Them All.” He writes:

We can argue all day about whether or not my policy is a good one. You’ll have your arguments, I’ll have mine. But the really important thing to remember, as a reader, is that there is no objectivity in journalism. The guys that say they’re objective are just pretending. Everyone is conflicted in different ways, and yet the ‘rules of journalism”’don’t require any sort of transparency or disclosure unless it’s a direct financial conflict. I’m going to have to write a longer post about his yet again.

But when you read a tech blogger call a CEO ‘tough and misunderstood,’ should you know that the CEO in question is social friends with that blogger, and leaks confidential information to her? The answer is yes. But you’ll never know. Or when the same CEO is called incompetent by another blogger who was just turned down by said CEO to speak at his conference. Disclosed? No. Conflicted? Yes.

There’s a difference between being friends with a CEO and being an investor in his or her company. I wholeheartedly agree with Michael that conflicts of interest are unavoidable among journalists. But that’s no excuse for engaging them—actively, in this case—nor does the justification address issues of degree. When there are huge amounts of money involved, the difference between investments and accepting a product and reviewing it or having personal political biases simply don’t compare. There simply is no ethical justification for writing about companies in which you invest or have other financial relationships. For the record, I own no stake or stock in any company.

Would it be so hard for Michael to establish a hands-off policy about the companies for which he has financial relationship? What? Are there no other competent writers at TechCrunch, who could report about these companies instead? That Michael has to justify his relationships as disclosure demonstrates there is significant conflict of interest—that he must be concerned that TechCrunch reporting might jeopardize them.

When the AOL Well runs Dry
Surely Michael must already be thinking about the future and his end of days at TechCrunch. In late September 2010, AOL acquired TechCrunch. His site looked like the crown jewel for AOL’s new media empire, but then, in February 2011, AOL bought Huffington Post and put the queen of aggregation in charge of the media company’s editorial content. I don’t see how there’s room for two such large personalities at AOL, and they do have conflicting agendas. While I may gripe about Michael’s personal ethics, I praise what he has created in TechCrunch. Unlike Huffington Post, which lifeblood is aggregation, TechCrunch is nearly all about original reporting—using an effective technique sometimes called “Process Journalism.”

[Edtor’s note: Due to some unfathomable glitch at Tumblr, the post from the paragraph above onward simply vanished and could not be recovered even in browser history. It’s actually the portion of this commentary written first. What follows is a poor reproduction; it’s shorter, and the original impact is gone. I was in the zone when writing and completely lost momentum afterwards.]

TechCrunch not only excels at original reporting, it produces many scoops. By comparison, Huffington Post is a mashup of aggregated, freely-written and occasional original content. Ariana Huffington puts panache, style and hype behind the presentation. Huffington Post may be the Internet’s most successful gossip rag.

One might call Huffington Post and TechCrunch as two sides of a coin. I see them as antithesis to one another. Based on position, style and knack for navigating AOL’s political hierarchy, my money is on Ariana surviving before Michael. Besides, he is known for being gruff and pushy, qualities that won’t hold up long with AOL management. In the war of strong-willed personalities, Ariana is more likely winner. It’s not a question of if Michael leaves TechCrunch but when.

Change, What Change?
So Michael’s start-up company investments and other business dealings are crucial for what comes next, and surely he knows that. From that perspective, there is huge conflict of interest, because of his incentive to protect his on-the-side business dealings. If that’s not the case, then I again challenge him to prohibit himself from writing about these companies or having editorial oversight over the content. See, his argument cuts both ways. If there’s no problem with these business dealings, no benefit from his writing about them, then there should be no problem with someone else writing about them, too.

But there’s no incentive for him to change anything. Journalists can argue all they want about ethics or conflicts of interest, but in the end one thing matters to Michael: TechCrunch is a business. It’s his baby, which he wants to continue succeeding. Post-merger, his job also is to continue making money for the new AOL taskmasters. From a business perspective, this conflict-of-interest stuff doesn’t matter. If it did, TechCrunch would have lost masses of readers or advertisers in the month since his disclosure post, and there is no indication of that. TechCrunch posts interesting and timely content—plenty of scoops and original stories—and the readers are part of the storytelling process by way of comments. It’s not surprising, from that vantage point, Michael can take a “screw them all” attitude to his critics.

Still, someone should kick Michael Arrington’s arrogant ass. His disclosure policy is justification for the most egregious conflict of interest. No journalist should directly profit from his or her reporting.

Tech startups are suddenly hot properties again, and Michael wants some of the action. LinkedIn’s IPO, Twitter’s TweetDeck acquisition and Microsoft’s pending Skype purchase are signs of a new tech bubble forming—and these are all deals that occurred after Michael’s April disclosure post. He just sold TechCrunch to AOL, he has strong ties to venture capitalists and writes about them and startups. Michael knows exactly what the venture capital investment opportunities are shaping up to be as the new bubble expands.

Way I see it, Michael wants to have his cake and eat it, too. Fine, then open and run a TechCrunch public relations agency, Mr. Arrington. But don’t pretend that eating and sleeping where you crap is healthy living.

Photo Credit: Robert Scoble

Do you have a journalism ethics story that you’d like told? Please email Joe Wilcox: oddlytogether at gmail dot com.

What the Hell is Sarah Lacy Thinking?

There’s a proposition on the California November ballot to legalize marijuana. Sarah Lacy must be smoking some already. Her TechCrunch post “Now that the Recession Officially Ended….Whatever Happened to that Other Shoe?” is so out of touch with reality—what else could it be? That:

• Sarah is so much the rich bitch living inside the Silicon Valley bubble she is clueless about the real America?
• To pay for this month’s pedicure, she needs to write something outrageous to drive up TechCrunch pageviews?
• She’s so poor a journalist—really none at all—she cobbles together unsourced data and uses it in the narrowest of contexts?
• Fox’s “Fringe” isn’t just TV it’s reality, and the Sarah writing this clueless post lives in an alternate universe where there is no economic crisis?

Or perhaps there’s another explanation—and it’s not pot smoking: Sarah isn’t clueless or out of touch at all. She’s smart, sassy, aggressive, relentless and knows her audience. Her post is all about how the economic downturn really didn’t turn down Silicon Valley investing, like it did during the dot-com crash and subsequent 2000-2001 recession. She writes:

From where I sit, it never felt much like a recession at all. Revenues tightened up and people didn’t get raises, but I don’t know any friends who lost apartments, few who lost jobs and few companies that went under, just because of the crash…This thing we just went through? From the Valley standpoint it was an excuse to trim fat and put some decisions off.

Sarah then presents—count `em—”six indicators for startup ‘health’.” She doesn’t adequately source those indicators, by the way.

TechCrunch critics argue that Michael Arrington and Co. is a house built on conflict of interest/questionable journalism ethics—that Michael sleeps with the people he reports about, so to speak; investments and other sultry relationships with venture capitalists and startups mire the reporting. I dunno. But Michael admitted to something in May 2007 post “Silicon Valley Could Use A Downturn Right About Now.” Hilarious, Michael pines for a downturn Sarah says never came. He confesses:

Entrepreneurs are no longer talking to us just to get our opinion and hope for a blog post and a little discussion. These guys need press to stand out from the scores of startups just like them. Saying no to them isn’t really an option. They show up at our front door with a bottle of wine or flowers. They instruct their PR firms to do anything necessary to get a story. More than once I’ve had a CEO break down and cry on the phone when we said we weren’t covering them. And more than once, I folded and wrote about them after those conversations.

Kara Swisher appropriately responded: “Message to Michael: Just Say, Well, No.”

Assuming Sarah isn’t dimwitted, that she actually knows what she is writing and whom it’s for, the “Other Shoe” post says much about TechCrunch’s audience, regardless whether those conflict-of-intersest accusations are true or not. That for all the blog’s larger readership, the target audience is no larger than Silicon Valley investors and the tech startups they fund. Why else should Sarah write such an alarming analysis for them—that contends they’re doing just fine?

For those startups ravaged by the economic tsunami hitting everywhere else—the one Sarah doesn’t see—she writes:

Stop whining. If you couldn’t raise money your company probably wasn’t working, which doesn’t mean it was bad, it just means you were a startup trying to do something risky that didn’t work. If no startups go under—in good times and bad times—entrepreneurs and investors likely aren’t taking enough risk. If you lost your job–and you work in tech—you likely either worked for a public company that had more systemic problems (cc: Yahoo, eBay) or the recession was an excuse to get rid of you. Either way, you likely have been rehired somewhere since. The verdict is in: It wasn’t just like 1999. It wasn’t bubble 2.0 and it certainly wasn’t dot-com crash 2.0.

For the record, I know plenty of people who lost their jobs during the recession and still can’t find work. They were productive but removed because of high salaries. Companies often replaced them with someone younger, less experienced and cheaper. Or, worse, they were brought back as freelancers or contractors to do the same or similar jobs for less pay and no benefits. Sarah Lacy is relatively young (not yet 35) and reasonably attractive. It will be interesting to see how she feels about the journalism job market in 15 years.

I worry that the New York Times is right: “For the Unemployed Over 50, Fears of Never Working Again.” I’m now in that 50 bracket and trying to do my own thing after failing to find gainful reemployment elsewhere. But I’m not whining. The whiner here is Sarah Lacy, who either knows her audience well or, even after nearly 35 years of living, knows nothing at all.

Photo Credit: LunaWeb

[Editor’s Note: This post was moved from joewilcox.com to Oddly Together on May 20, 2011.]

Do you have a bad writing story that you’d like told? Please email Joe Wilcox: oddlytogether at gmail dot com.

TechCrunch and Woot play to AP’s Weakness

Some people—heck, some organizations—have no sense of humor. Humorless perhaps best describes Associated Press, which apparently didn’t get Woot’s joke about owing money for a blog excerpt. TechCrunch’s MG Siegler put AP in its place today, that’s assuming there isn’t yet a nasty takedown-notice response coming.

Some quick background: About two years ago, AP decided that no one should excerpt its content without paying for it. The policy defies decades of journalist practices and fair-use laws. I could understand AP going after blocks of text, but no, it’s the little excerpts, too. Excerpt up to 50 words and AP expects you to pay $17.50; 100 bucks for 251 words or more. The approach is controversial, as it should be.

Now for the story: On June 30, 2010, Woot announced its acquisition to Amazon. AP reported the news in an eight-paragraph story. Overnight, in one of the best creative-marketing blog posts I’ve ever seen, Woot called out AP for doing to others what it won’t have done to itself. AP excerpted from Woot’s acquisition-announcement blog post. From today’s Woot post:

Why, isn’t that the very thing you’ve previously told nu-media bloggers they’re not supposed to do? So, The AP, here we are. Just to be fair about this, we’ve used your very own pricing scheme to calculate how much you owe us. By looking through the link above, and comparing your post with our original letter, we’ve figured you owe us roughly $17.50 for the content you borrowed from our blog post, which, by the way, we worked very very hard to create. But, hey. We’re all friends here. And invoicing is such a hassle in today’s paperless society, are we right? How about this: instead of cutting us a check for the web content you liberated from our site, all you’ll need to do is show us your email receipt from today’s two pack of Sennheiser MX400 In-Ear Headphones, and we’ll call it even.

What a simply brilliant response! As a long-time journalist and someone who blogs under an Attribution-NonCommercial-ShareAlike Creative Commons license, I’m delighted by Woot’s tongue-and-cheek approach. But the story doesn’t end there. MG Siegler posted: “Woot To The AP: Nice Story About Our Sale—You Now Owe Us $17.50.” In follow-up post “AP Not Amused By The Woot Story, Tries To Play The Oil Spill Card,” MG delightfully explains what happened next. Briefly: Paul Colford, AP’s director of Media Relations, asserted that Woot’s CEO had been interviewed for the story. All true, except the story quoted three words — ”I’m really excited” — from the interview in the last paragraph. The larger excerpt came from Woot CEO Matt Rutledge’s blog post.

You can read MG’s post for all the nitty-gritty details, and they’re good reading. But I must blockquote how he finally handled AP; it’s simply astonishing, and nastily spotlights AP’s pay-to-excerpt policy. He writes:

I’m a little confused by this whole thing. So is Rutledge. I think the AP is too. But I’m going to go with what I can only assume is their policy now. Since I technically ‘interviewed’ Colford for this post, I’m going to copy an AP story below. I’ll go with an oil spill one since he was so quick to point those out. And sure, I only got a few words out of Colford, but since that doesn’t seem to matter, I’m just going to paste an entire AP story below. I like this new policy.

Sure enough, amended to MG’s blog post is an 882-word AP story.

Photo Credit: Rochelle

Do you have a news media or copyrights story that you’d like told? Please email Joe Wilcox: oddlytogether at gmail dot com.

Michael Arrington, Talk Dirty to Me

There’s something dirty feeling about watching Michael Arrington’s interview of Microsoft CEO Steve Ballmer. I don’t mean that as criticism of Michael; plenty of other folks have done that all too well. It’s this new media thing, where you sleep with the people you write about. You do business with them and for them.

Who am I to criticize? The new media thing is working out rather well for TechCrunch, which makes oodles of money, commands huge traffic and pageview numbers and mingles with Silicon Valley’s dealers and stealers.

The pull is enough for Steve to sit down with Michael for a  video interview. The CEO isn’t talking to the New York Times or Wall Street Journalhere, but to TechCrunch.

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Process Journalism and Original Reporting

On July 17, I posted, “The Michael Arrington Matter,” where I came down hard on the TechCrunch cofounder for publishing stolen, internal Twitter documents. I wouldn’t have done it. But in fairness, TechCrunch is successful—and for a reason. TechCrunch publishes lots of original content, as much in the comments as the stories. Readers participate in the process.

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