An Obvious Choice for AOL
There’s no way a principal in a venture capital fund for tech companies can play a role in a Web site like TechCrunch that covers them. Wed., September 7, 2011
By Rem Rieder
Rem Rieder (email@example.com) is AJR's editor and senior vice president.
It's so clear-cut, there's really nothing to debate.
If you want to run a venture capital fund that invests in tech companies, you can't oversee a Web site that covers the tech world.
It's a classic conflict of interest, and you don't have to be a journalism ethics expert to figure that out.
But that's what Michael Arrington wants to do.
Last year Arrington sold TechCrunch, the Web site he founded in 2005, to AOL. But he continued in his role at the site. Now he is launching a venture capital fund, CrunchFund, in tandem with AOL.
After some confusing signals last week, it seems clear that Arrington will no longer be a player at TechCrunch. That was at the insistence of Arianna Huffington, who assumed responsibility for AOL's journalistic efforts after AOL acquired The Huffington Post last year.
This development has profoundly upset Arrington and his people. Arrington weighed in with a blog post on TechCrunch on Tuesday in which he called for "editorial independence" for the site (which would presumably allow his continued involvement) or for AOL to sell the company back to its original shareholders. TechCrunch writer MG Siegler posted a piece very sympathetic to Arrington warning that major damage that would ensue if he no longer was part of TechCrunch.
But if AOL wants to be part of the journalism world — and its pricey acquisition of The Huffington Post and its heavy investment in the Patch network of hyperlocal news Web sites makes clear that it does — it really has no other choice but to banish Arrington.
Tim Armstrong, AOL's chief executive, did enormous damage to the company's credibility by allowing Arrington to continue to invest in companies TechCrunch covers, something no one else with the company would have been permitted to do.
To let him remain with the site and the new fund would be a horrific mistake.
TechCrunch is powerful. It can have a serious impact on the fate of startups. How could it possibly be run by someone in the business of funding startups? That would be true for anybody. And this piece by the New York Times' David Carr suggests Arrington has not been the most scrupulous guy in the world when it comes to keeping his conflicting roles separate. So much for the notion that mere disclosure blows up the conflict issue.
Huffington has taken her share of flak for the aggressive aggregation strategy that put The Huffington Post on the map. But she says she is committed to creating original content, to real journalism. She made the right call.###