CrunchFund and Why We Care

Previously published on Venturebent.com

Over the summer, I wrote a post on Ventureminded.me entitled “The TechCrunch Machine” in which I railed against Arrington, his conflicts of interest, and how the site had lost its way, particularly how it shifted from highlighting up-and-coming startups to focusing on larger tech companies. Arrington has long been criticized for being a Silicon Valley insider writing about startups while simultaneously being an active investor. More recently, MG Siegler’s pseudo-departure from TechCrunch to join Arrington at CrunchFund raised some eyebrows as well. But why?

Chris Dixon tweeted that Michael Moritz was a former journalist and became a successful VC, so perhaps Siegler would follow a similar route. However, there’s a major difference between the guys at CrunchFund and Moritz. The latter stepped away from his journalism career at TIME to pursue a career in venture capital at Sequoia. Arrington, and to a certain extent Siegler, is still very much entrenched in unearthing stories, breaking news, and relying on sources. All of these things are not only critical to being successful at writing about startups, but are also vital to sourcing deals. So why can’t they do both and just disclose when they’re writing about an investment (as Arrington has done and continues to do)? Simply, when someone is talking to Arrington or Siegler, is he/she speaking to the writer or the investor – who knows?

In my opinion, it all comes down to a simple distinction between bloggers and journalists. The guys at CrunchFund want to have their cake and eat it too. They want to be called “journalists” to have that official seal of approval from the media community, but they want to be renegade bloggers in order to continue investing without a conflict of interest cropping up all the time. It just can’t happen. A journalist must be completely impartial. For example, no CNBC employee is allowed to hold stock of any kind – even sports business reporter Darren Rovell (who is also the source of this statement). Why should a tech writer be allowed to invest in companies (whether he writes about his investments or not)? A “blogger,” on the other hand, is unofficial; it’s a person who dabbles in writing online but has some other main profession. No one has a problem with Fred Wilson blogging on a daily basis because no one would ever confuse his style or content with actual journalism, and he’s not breaking news by relying on inside sources. Arrington and Siegler, however, are journalists all the time – whether they want to be or not.

For the sake of transparency, impartiality, and a host of other reasons, Arrington needs to shut down Uncrunched or CrunchFund. Something tells me he’d be more likely to part with the former.