The CrunchFund: Actually, Tim, We Don’t All Have “Different” Standards

Yesterday afternoon, Mike Arrington and AOL CEO Tim Armstrong announced the launch of “the CrunchFund”, a venture fund that will — according to the New York Times — “invest in start-ups, including some that [Arrington] and his staff write about”.

Oh boy.

But it gets better. Apparently keen to pour iced water on the burning oil of controversy, Armstrong responded to those who feared that TechCrunch’s journalistic integrity might be affected by a perceived financial relationship between the publication and its subjects.

What he could have said was this:

“Despite the name — which in hindsight was a bone-headed choice — it’s important to understand that ‘the CrunchFund’ is a simply an extension of Mike Arrington’s existing angel investing activities. None of the writers and editors of TechCrunch has any influence over, or stake in, the fund and hopefully it goes without saying that it will have absolutely no impact on the day to day editorial independence of TechCrunch.”

That’s what he could have said. What he actually said was this:

“TechCrunch is a different property and they have different standards… we have a traditional understanding of journalism with the exception of TechCrunch.”

For. Fuck’s. Sake.

What Armstrong doesn’t seem to understand — not because he’s an idiot, but rather because he’s not a journalist – is that in this game perception is everything. For TechCrunch to have the moral standing to call out a company — for ethical violations as with ‘Scamville‘; or just plain dumbfuckery as with Airbnb — it’s vital that our own house is seen to be spotless. An example of what that means: long-time readers may remember that last year we discovered that an intern had promised a company positive coverage in return for a Macbook Air. Not only did we immediately fire the kid (obviously) and delete every post he had ever contributed to TechCrunch, but we also publicly admitted to the scandal and apologised to readers. We take this stuff seriously.

For that reason — and many others — many of us in TechCrunch’s San Francisco HQ (particularly those who have a background in old media) were stunned and angry at Armstrong’s words. And one could only imagine how AOL content boss Arinana Huffington felt about them: her silence in the New York Times piece was deafening.

To be absolutely clear about this: the CrunchFund is Mike and Tim’s baby. It has nothing to do with anyone else at TechCrunch. The first time most staffers heard about the fund, and AOL’s involvement in it, was when it was announced in the Times. Those of us who did have prior knowledge of the fund urged that it be renamed to avoid the appearance of conflict. In fairness to Mike, he took the concerns to heart and — I gather — discussed them at length with other parties in the fund, including Tim Armstrong. Ultimately, though, the name remained unchanged.

It wasn’t until yesterday’s announcement — and Armstrong’s quotes — that it became clear why. Apparently the business side of AOL sees absolutely no ethical problem with a TechCrunch-affiliated fund. TechCrunch, after all, is a well-respected brand in the tech community and, as such, it will attract some pretty amazing deal-flow and, as demonstrated by the list of partners involved, some high profile investors. From AOL’s point of view, calling it anything else would be a waste of a business opportunity. Far from wanting to ring-fence Mike’s investment activities from TechCrunch’s editorial output, Armstrong and others are actively encouraging the conflation of the two.

The investors in the fund know they’re on to a good thing — by investing in the ‘CrunchFund’ they get to at the very least piggyback on TechCrunch’s reputation to get deal-flow. At best, if it turns out we are as ethically flawed as our critics would like to think, those investors will gain influence over how CrunchFund-backed companies are covered on TechCrunch.

On the face of it, it’s all upside for the start-ups too. Worst case scenario they get some high profile money from a fund packed with superstar investors; best case scenario, they’re guaranteed a lifetime of positive coverage on TechCrunch. It’s win-win.

Except of course, that’s bullshit. We’re already hearing off-the-record rumblings from founders who are concerned by the consequences of not allowing the CrunchFund to invest. Will they be black-balled from TechCrunch? Of course the answer to that question is no — absolutely not. Again, TechCrunch writers have no involvement with the fund, and Mike has always been most critical of the companies he’s closest to. But the important thing is that there’s a perception of risk in not taking money from the fund. And there’s a perception that taking investment from the fund will result in positive coverage. The fact that neither is true is not the point.

There are few people in the world who I respect more — both personally and professionally — than Mike Arrington. He is a close friend and a very, very good guy. His willingness to over-disclose any personal interests in the companies he covers is a shining example to the rest of the tech blogging community. His willingness to attack companies in which he has a financial stake is both brave and admirable. And yet, thanks to the bone-headed naming of the fund, and Armstrong’s words to the Times, the story is no longer about Mike. The story is about the CrunchFund — and the message that a TechCrunch-branded investment fund sends to those inside and outside of TechCrunch.

Can we really hope that other media outlets will continue to support our campaigns against the wrongdoing of tech companies, or will those campaigns now be so bogged down in ethics disclosures that the message is muted to the point of impotence? Can we possibly expect new editorial hires not to at least check themselves before they write something negative about a CrunchFund company, lest it upset their ultimate AOL paymasters? And is there even a fantasy universe in which our competitors and critics won’t take every opportunity to remind the world of our brand’s direct financial stake in many of the companies we cover?

Indeed, the crowing has already begun, with many of our rivals choosing to zero in on Mike’s personal ethics. For those of us who know and love Mike, this is infuriating. At the very worst, he is guilty of profound tone-deafness over yesterday’s announcement. Had this fund been called “the Arrington Fund” and had Tim kept his mouth shut, we wouldn’t be in this mess. He should have brought Huffington into the discussion sooner, and he should have trusted his own council rather than that of Armstrong and the self-interested, ethically-agnostic Silicon Valley investment community. He should have come into the damn office yesterday and told the whole staff (rather than just some of us) what was happening before they read it in the Times. Am I pissed at him? Sure. But we’ll see if I do any better when I have millions of dollars to invest.

In any case, the milk is spilled. Determined to reassert her authority over the situation, Huffington announced that Mike will no longer have an editorial role at TechCrunch and that Erick Schonfeld has been appointed interim editor while AOL (who, remember, vowed not to interfere with TechCrunch editorial) chooses a permanent replacement for Mike. There then followed a series of ‘complicated’ statements from within HuffPost, each seeking to clarifying and re-clarify Mike’s fluctuating future role.

Yesterday afternoon I tweeted out a knee-jerk response to Armstrong’s New York Times quotes. “FUCK YOU,” I tweeted. “FUCCCKKKK YOOOUU.” Perhaps unsurprisingly, Mike called soon afterwards. He wasn’t angry, and he didn’t demand that I take down the tweet — although he did argue that I was being unfair to Armstrong. Instead he suggested — perhaps seriously, perhaps rhetorically — that I write a longer post explaining my objections. “Feel free to attack me too,” he said. “I just don’t think a tweet is the best way to explain your position. You just seem out-of-control mad.” He was right. I was out-of-control mad, and 140 characters wasn’t sufficient to explain why. (I didn’t speak to Mike before writing this post, although I did send him a copy as a courtesy a few minutes before posting. He is, after all, my editor.)

My position is this: the vast majority of TechCrunch writers are justifiably proud to be called journalists. They have unimpeachable ethical standards and they have no financial stake in the companies they cover. The launch of the CrunchFund won’t change that. Tim Armstrong’s preposterous bullshit won’t change that. However, that doesn’t mean nothing changed yesterday. A lot changed yesterday. The ham-fisted way this announcement has been handled means that Mike Arrington — partly through his own fault — is no longer in charge of what appears on this site. Now, more than ever before, TechCrunch needs a strong editorial figure to rebut our critics, sure-up the wall between our editorial and financial interests and navigate our ship through the murky ethical waters ahead.

Finding that new leader won’t be easy — particularly when the only serious candidate from TechCrunch is about to head out on maternity leave — but there’s no question who should lead the search. Mike Arrington created TechCrunch, Mike Arrington is the reason why many of us joined TechCrunch (and why some of us would take a bullet for TechCrunch) — and Mike Arrington should be the one to choose his ultimate editorial successor. Meantime, Tim, Arianna and everyone else at AOL should remain true to their word and stop interfering in TechCrunch editorial.