Crunch theater: blogger’s VC fund creates media spectacle

September 2, 2011

The tech blogosphere was on fire on Friday with a flood of constantly-updated news reports and a barrage of tweets dissecting every angle of the story.

A new iPhone? Details of the long-awaited Facebook IPO?

Not quite. The object of fascination was the preceding day’s news that high-profile tech blogger Michael Arrington has launched a $20 million venture capital fund.

The move instantly triggered a debate about the inherent conflict of an influential blog editor investing in many of the start-ups that would presumably be covered by TechCrunch — a must-read in the tech crowd.

But things only got more confusing as Arrington’s role at TechCrunch and parent company AOL appeared to undergo a series of metamorphoses as each hour passed.

AOL, which acquired TechCrunch in September 2010 and is also an investor in Arrington’s new CrunchFund venture fund, initially said Arrington would become “founding editor” and that AOL would look for a new managing editor.

But a flurry of subsequent reports on the Business Insider blog had Arrington moved to an unpaid contributor role, a non-employee of AOL and finally an employee of the AOL Ventures division.

Arrington himself told The New York Times he had “no idea” what AOL’s final position is concerning his role.

Meanwhile, one writer at TechCrunch weighed in with a nearly 1,600-word piece calling the name of Arrington’s new CrunchFund “boneheaded,” as it would create the perception that it is affiliated with TechCrunch and call into question the blog’s journalistic integrity:

“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?” wrote Paul Carr.

Good questions, all. As are the questions about what an Arrington exit from TechCrunch means for AOL shareholders, who expected Arrington’s star power for three years as part of the TechCrunch acquisition. And for the CrunchFund’s limited partners, who may have invested in the fund mainly because of the early access to promising start-ups and the deal flow that comes from Arrington’s influential position at TechCrunch.

The various threads to the story have generated enough press coverage to keep anyone who cares enough busy reading throughout the Labor Day weekend.

Perhaps the only thing that’s certain is that the whole mess is likely to bring more attention to TechCrunch’s Disrupt conference scheduled just over a week from now in San Francisco, and in which Arrington typically plays a key role interviewing big-name executives on-stage.

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