CrunchFund ?

The Uncrunching of Techcrunch.  It's been one of the most entertaining saga's on the web recently, in a reality TV kind of way.   But in the process, a discourse has emerged that seems to say "nothing matters except Influence".  I don't buy that.

Techcrunch = awesome creation, unique voice, machine for releasing breaking stories.  Great entrepreneurial achievement.  No question.  Fun, too.

M.O. = don't get into a brawl with an entrepreneur who is not afraid of taking the fight back to you.  Arrington method = be agressive, wash your linen in public, go for full disclosure all the time.  Set the tone as follows: "everyone is in it for #themoney #theglory #thewhateverrocksyourboat, we are the only ones being honest about our biases".

Want to take the fight back to Arrington ?  Think twice.  It's like trying to fight Eminem in the closing duel of 8 mile: "Once I have made endless fun of myself and shot my "image", I emerge strong and I can take anyone on.  Nothing can touch me".  Guess what, it works.  I would not take on Arrington in a pub brawl, or at poker for that matter.  I would break before he does.

Now let's take it to the next level: a blogging VC is the same as a VC blogger.  Easy.  See, everyone is doing it.  Guilty as charged.

Except that, no, it does not quite work that way.  Look carefully at VC's who blog: the M.O. is to talk about the business of funding innovation, the companies that they back, the ecosystem issues that they face.  What they are (normally) not in the business of doing is: breaking stories, leveraging confidential information, publishing the unpublished.

Believe me, it's tempting.  But would it be right for me to turn the unique insights I just received on, say, Apple's HTML 5 strategy into a blog post ?  I don't think so.

Fred Wilson is not Techcrunch.  Yes, he is careful about his messaging and he promotes his companies (elegantly as it turns out).  He is clearly smarter than me since he elegantly avoided giving a clear opinion on this whole mess.  Sure, he will occasionally leverage (generic) insights gained from startups to express a new investment thesis.  But he's NOT in the business of breaking stories.  Neither is Brad Feld, or Mark Suster.

As VC's we operate almost solely on confidential information. It's at the heart of what we do.  I am not sure how you can be a VC and at the same time be in a business that trades on breaking news.  I don't understand how you can split your brain in two that way.

Crunchfund starts from a great vantage point.  Arrington is a machine for contacts, insights, networking and an accomplished entrepreneur.  In my mind, all the debates about whether Techcrunch had editorial independence missed the point.  Of course it has !  It was built on disclosing EVERYTHING including its own issues, complete with gory details.  That's what makes it so hard to beat for anyone who refuses to play the same game of judo.

However, I don't understand how you can say with a straight face that you are going to run a fund and publish on Techcrunch.  Every startup you meet comes with unique and confidential insights about themselves and the market they operate in, often the results of years of work.  It's just not part of my job description to go leverage that information in a journalistic endeavour.

Not everything is equivalent.  Conflicts exist, and they need to be managed (carefully). I must be hitting old age.  I just don't get it.


UPDATE and counterpoint from the ever excellent Scott Rafer

Sorry, Fred. I'm pretty sure that I'm a year or two older than you are, but you may want to hit those Omega 3s or whatever harder. Just because FredW, Albert, JohnB, Bijan, Bryce, you, and a few others set a particular style for VC Blogging 1.0, that doesn't mean the craft won't evolve. @arrington has unusual resources and he's going to use them. If pitching him (though Lumatic is too late stage for them at this point), I'd expect him to ask if parts were bloggable. I'd go in knowing which was which and expecting to be pretty darn liberal in the calculus. Helping him with his audience would help me with my business and be part of his funding process.

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12 Responses to CrunchFund ?

  1. Jberrebi says:

    Fully agree with your post Fred… and that’s why I’m almost never blogging anymore about our industry.

    Most of the info I’m getting are clearly confidential and can hurt business partners or our startups.

    It’s clearly a new era in the media age…

    I’ve seen a post on Techcrunch last week relating to a company. They didn’t disclosed in the post that the CEO of the company is a Techcrunch shareholder…

    PS: I will continue reading everything Techcrunch, Uncrunched etc… but will just need to be a lot more careful…

  2. Melody von Rock says:

    I’d take on Arrington in a pub brawl. I’m Australian.

  3. Mike Butcher says:

    So what you’re saying Fred is that because a VC might have confidential insight into Apple’s next HTML5 move (for instance) they can’t genuinely write about Apple on TechCrunch?

  4. FredDestin says:

    @MikeB : Oh sure I think MG Siegler could validly be an Apple columnist on TC, as a guest writer, provided he undertakes to protect the companies that he meets. Even then it’s a bit of a balancing act. He may learn about a company helping users jailbreak games out of the App Store, what then ? Or he may meet one of Apple’s SVP of Engineering telling him he’s leaving his job cz he hates the new boss. What then ? You’d really have to take a strict line on protecting the companies. On this Monday, I learned about (1) two v. senior execs leaving HP (2) how Microsoft may be fumbling on Metro by not embracing HTML5 standards fully (3) some very well regarded JS coders starting a new company and leaving their current jobs (4) an entrenched battle of succession at a top tier VC firm. Sometimes it’s not just that you release a story, I can also be that you leverage deep insights about a market that an entrepreneur has given you and release that information into the wild, possibly to the detriment of the startup you just met. Like most judgement calls, it’s messy. I just don’t see that you can be fully engaged in the powerhouse that is Techcrunch and be running a fund at the same time. It has massive benefits, but it just does not feel right.

  5. The biggest problem in business today is lack of ethics.

    People will tell you with a straight face that the purpose of business is solely to make money. No. That is the purpose of crime. You rob banks solely to make money. The purpose of business is to make products. Money is like blood, carrying oxygen to the muscles so you can swing a hammer and bend steel and make products. Good ethics are extremely advantageous when making products, because you can imbue the product with good ethics and your customers will appreciate it, even if only on a subconscious level. But ethics are a huge drag if all you want is money. They really get in the way of criminality.

    So far in the 21st century, some people consider conflicts of interest, fair taxation, privacy, and the Geneva Conventions to be quaint, along with a lot of other stuff that might possibly get in the way of expressing their id. A lot of people say “everything has changed, because … [insert BS.]” I’m not convinced. I think the more things change, the more they stay the same. Bad karma is bad karma.

    So I don’t look at the technology at all, just the ethics. Tells you everything you need to know.

  6. gregorylent says:

    financing human progress does NOT demand secrecy, DOES require insight and influence. VC is mostly about home runs in lowest-common denominatore businesses and is not doing much at all for human beings on earth.

  7. Rafer says:

    Sorry, Fred. I’m pretty sure that I’m a year or two older than you are, but you may want to hit those Omega 3s or whatever harder.

    Just because FredW, Albert, JohnB, Bijan, Bryce, you, and a few others set a particular style for VC Blogging 1.0, that doesn’t mean the craft won’t evolve. @arrington has unusual resources and he’s going to use them. If pitching him (though Lumatic is too late stage for them at this point), I’d expect him to ask if parts were bloggable. I’d go in knowing which was which and expecting to be pretty darn liberal in the calculus. Helping him with his audience would help me with my business and be part of his funding process.

  8. I totally agree with you Fred. I’m not a big fan of “no conflict no interest”. In addition, there is a second issue. Don’t know if confirmed but I understand the first startup to get financed is a company started by Paul Carr, a co-writer in Techcrunch. Maybe this startup will be fabulous, I’ve no idea, but a few days after the Techcrunch crunch and even things going at light speed in SV… Not sure your own Limited Partners would love if your investment thesis was based on friendship.

    Old school, new school, I bet it looks odd to anyone not being in that business directly.

    BTW, highly interested to know what Apple HTML5 plans are!

  9. Tomforemski says:

    Great points about the differences in writing as an independent reporter and as a VC… BTW, Arrington’s disclosure that he was investing in startups was due to him being outed by Kara Swisher — it was not because of his honesty.

  10. FredDestin says:

    @tom Thanks tom for dropping by. Noted, but I always give people the benefit of the doubt.

  11. maria dramalioti-taylor says:

    Dear Fred, move on. Cheer loudly for Mr Arrington and move on. Techcrunch helped to dismantle the information arbitrage that served the VCs so well for so many years; and it is now used by its founder– much like Linux was used by Red Hat- to his advantage. Good for him, even better for fwd thinking VCs: you have been handed with the best argument ever for pushing fwd the next generation VCs (were I more liberated linguistically, I would have quoted Dave McClure’s colourful language to describe the current generation of VCs). Arguing against the Crunchfund, especially on the basis of the tired old cliché of “conflicts of interest”, smells of desperation which is, to say the least, surprising for someone like you who has been an advocate of the open-source VC. Let’s cheer for him and look for new arbitraging opportunities. I look forward to reading your next blog.

  12. You said it best Fred: A VC who blogs is not the same as a blogger who is now suddenly a VC. Arrington at least has a legal background and has been around the block and back a few times. But the same is not true of his new partner. I was 40 when I became a VC. I spent 11 years operating startups before. I can’t imagine doing this with less experience. They do have some sick connections and will probably get similarly sick deal flow as a result. But the reality is that it takes a lot of hard work to build a great company. And sometimes you need more than a fat rolodex to get it done.