CSI Silicon Valley: Syllogizing Arringtongate

This is fiction, only it’s not. Well, not exactly.

The chalk outline on dozens of tech sites offering differing versions of the same story tells us that something very important changed last week at AOL, the company that owns Techcrunch, one of the leading tech blogs in Silicon Valley, but what exactly that is remains unclear.

All we know now for sure is that Techcrunch editor Mike Arrington will no longer serve as the site’s top editor (although he still appears, as of this writing, on the site’s masthead as co-editor). All else–will he still write for the site? will his $20 million CrunchFund investment group affect TechCrunch coverage? did he resign, or was he fired? and how does the nature of his departure affect his payout on the still fresh Techcrunch/AOL acquisition deal?–remains a mystery. As far as I can tell, there hasn’t even been an official press statement released from AOL, a common practice for a public company undergoing significant change. In fact the only published statement about the matter I’ve seen on any of the company’s sites is a passionate rant from a self-described “contractor, not a staffer” which goes so far as to actually curse out AOL’s CEO, Tim Armstrong.

So many conflicting messages, quotes and non-comments about this departure have been transmitted that reading about it has become something of a sport in the last few days. To date I’ve read over 20 stories about this from NY Times, Business Insider, San Jose Mercury News, LA Times, Fortune, Bloomberg, Reuters, Wall Street Journal, and the list goes on. Oddly, the Huffington Post, usually the first to blog the hottest stories, has not posted a single story about the change (aggregated feeds from AP and Reuters appear, but no original text). Nevertheless, the rest of the media is all over this story. A fact that would normally spur the target company to action in a bid to clarify any confusion. But that, as of this writing, has not happened.

So after consuming all the cryptic quotes, non-denials, shaky details, and confirmed facts, I set about constructing a chain of events that might explain what looks to many like a chaotic departure, but may in reality simply be a bit of growing pains for a large organization that is still figuring out how it will govern itself.


Here’s my Sherlock impression in the service of tech history:

1. Original AOL plan: Techcrunch acquired by AOL CEO Tim Armstrong with the agreement/intention being that Arrington sticks around for 2-3 years to help the site keep its original DNA strong.

2. AOL acquires The Huffington Post for $315 million, making Arianna Huffington Arrington’s boss, an arrangement many predicted would not work, but the two make a decent show of unity at the Techcrunch Disrupt conference (Although in the first minute of the conversation, Arrington told Huffington, “I’m not good at reporting to people”).

3. Something happens behind the scenes–likely as a result of the new leadership governing Techcrunch–that presents Arrington with an issue that rubs him the wrong way. Huffington stands her ground and rightfully asserts her editor-in-chief powers. One possibility is the issue of disclosure. At the afore-mentioned Disrupt conference, Huffington made reference to a disagreement the two had over the issue of disclosure that required a special meeting. According to Huffington, the solution they agreed upon was to use Techcrunch as “a petri dish for disclosing and discussing multilple conflicts of interest.” She went on to announce that, after Techcrunch’s redesign (which debuted in July), the site would begin to devote new focus to these conflicts of interest in the tech business. But after the redesign, no new “conflict of interest” analysis or coverage seemed to appear. Arrington seemed to agree with Huffington’s directive at the time, but this was back in May, apparently something changed.

4. Arrington, realizing he can’t stomach the newly proposed editorial directive and chain of authority, decides to step away in a way that (he feels) might somehow honor the agreement (i.e. staying involved for 3 more years), but will give him a sense of independence (CrunchFund) and make the changes at Techcrunch that are out of his control, easier to swallow. ‘Not really my house anymore, so I’ve got no beef, I’m working on CrunchFund…’ might have been the answer to anyone asking him questions about the new situation.

5. Armstrong values and respects Arrington’s position and access in Silicon Valley players so he agrees, but insists on AOL being a part of the CrunchFund. Strategically, Armstrong’s idea would be to quiet any complaints from board members/stockholders surrounding the preservation of the value of the recent acquisition of Techcrunch (rumored to be in the $30 million range) and its most valuable writer (Arrington), as the arrangement would still allow him to deliver direct editorial value to AOL for the payout price.

6. In the world of many VCs, CEOs and Arrington, this adjustment seemed like a perfect solution. Except that is wasn’t in the eyes of editor-in-chief Huffington, someone who knows how important it is to retain editorial credibility in an era of transient media powers. So, in a bid to save the value of the property AOL acquired not even a year ago, she gives Armstrong a choice: No CrunchFund, or no Arrington editorship, but never both. Because of a large team of outside investors and VC firms that includes the elite of Silicon Valley, CrunchFund doesn’t depend on Armstrong, so CrunchFund is already a done deal–with or without AOL. Armstrong tells Huffington this, and she decides the only answer is to release Arrington from his role at Techcrunch with the hope that readers and critics will understand that CrunchFund will not, in any way, influence the coverage at Techcrunch. To that end, an announcement is made that a new top editor, possibly from outside the company, will be sourced asap.

And that, my dear Watson (readers), is what looks to have happened here based on the available evidence. Of course, the truth is likely far more colorful, and in fact may be so far afield of what I’ve proposed that it may make this storyline seem dull by comparison. Nevertheless, since several days have passed without the AOL/Huffington Post Media Group team getting its stories aligned, we are all left to piecing together the clues left behind in this media fustercluck.

Hopefully, this hypothesis will tide you over until the entire truth of the matter is revealed.

BONUS TRACK!

How all this sits with AOL Ventures head Jon Brod is unknown. Whatever happens with CrunchFund, distinguishing AOL Ventures just became a bit more difficult. Even though AOL Ventures plans to put a hefty bit of honey into the CrunchFund money pot, it still begs the question of how AOL Ventures will ultimately compete for deals and effectively launch new products in the face of such a direct competing interest. The CrunchFund will also include Arrington’s college friend Patrick Gallagher (also a Partner at VC firm VantagePoint), thus making it even more clear that this new venture is very personal for the former Techcrunch editor.

Another interesting point here involves one of Techcrunch’s chief competitors: GigaOm. GigaOm is run by Om Malik (widely known one of the nicest guys in the Valley, in contrast to the confrontational style of Arrington) who is also part of the VC firm True Ventures. True Ventures co-invests with AOL Ventures. So now Om and Arrington, long-time friendly competitors, will operate almost elbow-to-elbow and may end up cross pollinating investment interests. An unlikely and potentially interesting confluence of events in Silicon Valley.

Finally, as a long-time professional writer/editor who has read so many posts by VCs on their personal blogs passionately rolling up their sleeves and hopping into the middle of important issues of business and media practices, I find the silence from the VC community of bloggers on this news story DEAFENING. Alas, in contrast to the mysteries of AOL management, I don’t think I have to engage in any creative deductive reasoning to figure out why they’re so quiet.

Crickets, I tell you.



*Full Disclosure: In the past I have written for The Huffington Post (for free). Also see my past coverage of Arrington as an investor here.

photos by Techcrunch on flickr

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Date
September 4th, 2011

Author
Adario Strange

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