An open letter to Mike Arrington: Please stop investing in startups

Does anyone know if he has stock in Facebook? Or MG? I've watched them post about every single increase in Facebook valuation from $20 billion to $80 billion.<p>"Facebook now at $20 bn..." "Facebook now at $25 bn..." ......... "Facebook now at $75 bn..." "Facebook now at $80 bn..."<p>I don't think I'm exaggerating when I say they made a post every time Facebook's valuation jumped 5 bn. I thought it was pretty excessive and dubious. I was wondering if it wasn't actually their posts which lead to the next $5 bn increment every other week.<p>It gave investors the idea that Facebook's valuation will keep rising. It created a loop. I think $80 bn valuation (or $70 as it is now) is way too inflated for the kind of revenues Facebook is making, and I think some of the investors are realizing this and are starting to cash out now before all the others figure it out.

TechCrunch has always been Arrington's blog above all else. He uses it to help his friends and defeat his enemies. Ask Jason Calacanis what it's like when he's your friend (lots of easy coverage) and what it's like when he's your enemy (LAUNCH conf boycott).<p>Any additional bias he may have because of investments won't be detectable in the mass of existing ones he already exhibits.

TechCrunch had never been an impartial reporter of startup or tech news. Their coverage of startups even before Mike Arrington started investing is based on how connected the startup is with VCs/angels. The users don't necessarily see all startups in that space covered equally. For TC, it works well since it guarantees access to other news stories before anyone else.

TechCrunch is not some 'outstanding' reporting venue with a long history of righteousness.<p>This is the internet, this is capitalism.<p>Start your own 'Techcrunch' if you want fairness, no one is stopping you.

I've never really expected—nor do I know anyone who expects—a lack of bias from Arrington. People have been accusing him of playing favorites for a long time.<p>I would be less upset—though it's not like I'm upset about this anyway—if he hadn't sold to AOL, because this lessens his incentive to nurture TechCrunch. If I were him, I'd be staring at the countdown clock that keeps me in my golden handcuffs. One of the things I learned about starting a company is to know when to disengage emotionally. And I'm guessing Arrington's is <i>way</i> disengaged.<p>And if he's disengaged, it probably doesn't matter whether he invests in companies or not. If he doesn't, it doesn't mean he's going to give attention to the companies he considers boring or losers or whatever. This basically allows him to place bets on the companies that he probably would have have been a cheerleader for anyway.<p>Yeah, it's hard to get too worked up over this.

Hi Paul Graham,<p>I’m one of your customers.<p>We don’t really know each other. We’ve chatted at a few events, Hacker News features some of my posts, but I’m mostly just a guy who reads Hacker News a lot. I find it’s a pretty good place to see what’s important in the industry.<p>I am software guy, not a media critic. But I’m a big believer that economic incentives shape behaviors in subtle and unmeasurable ways. And I think your decision to make investments in startups is going to make Hacker News a worse product.<p>I can’t tell you exactly how. Are you going to be a little more likely to flag stories about competitors to your companies? Upvote them, even when they’re not newsworthy, to show you’re not biased?<p>I don’t know. But I think it’s going to happen, it’ll be subtle, and it’ll make Hacker News worse.<p>I’m not making demands or threatening to leave. Just making a request, from one software guy to another: moderator independence is a great feature. Please don’t cut it.<p>Best wishes,<p>Reg Braithwaite

Probably this is why some startups get so much coverage from TC while others hit the wall.

What journalistic organization doesn't play favorites?<p>It is role of the reader and other journalistic organizations to balance out any inconsistencies in one organization's proclamations over another's. They do this by:<p>* writing counterpoints that refute a proclamation<p>* walking with their feet<p>It may take time and a lot of effort to counteract a journalistic organization that strays too far off the path, but that time and effort always results in the truth.

File this in the category of "questions I never would've thought to ask".<p>There is a fine line between being a blog and being a journalistic organization. Some argue the former is a case of the latter. In the latter, there is clearly an ethical obligation to disclose any conflicts of interest. Many journalists are either required to or choose not to voluntary (to avoid the appearance of impropriety) invest in anything they're covering.<p>So while bloggers may not fall under the same umbrella, ethical bloggers I believe would either avoid such potential conflicts of interest or at least disclose them.<p>It's a real problem here because the issue isn't simply the coverage itself but what companies get coverage and what don't. There's nothing to disclose on for a story that isn't written. For startups this is a <i>huge</i> problem.<p>What's more, I think AOL views itself as a journalistic organization. As such, I'd be surprised if Arrington's angel investments didn't run afoul of AOL's ethics policies.<p>Basically it looks to me like Arrington has gotten his big payout and he's not so much interested in his earnout. Basically, I think he wants AOL to fire him. He'd no doubt get some kind of acceleration on any vested stock or earn out and I think he'd be happy with that.<p>Whatever the case, I think for TechCrunch to survive and be taken seriously (as seriously as it ever was at least) it needs someone at the helm who, well, gives a shit. That isn't Arrington.

This is interesting to me.<p>I wonder if we - to a certain degree - might receive better reporting since he is more active on a day-to-day basis in the actual investing. I really have no idea if this would be the case, but it's entirely possible that he might be privy to additional info than he would otherwise.<p>As for as the open letter...Mike appears to be open about who he's investing with and I would doubt he would want to harm his reputation - or TechCrunch's - by appearing to be biased towards those he has a vested interest in.<p>Well written letter but perhaps wait until you have examples of the downsides before you write the next. It will carry far more weight.

Blogs are written by subject matter experts that know their topic better than any generalist. They are, by definition going to have their hands in the pie.<p>So if you want coverage from people that are unbiased (or less biased) but who don't quite get it, stick with mainstream media. If you want expertise with potentially an axe to grind, go with blogs.<p>Better to look at both and always question what you read from both angles of competence and integrity.

Now that he's sold TechCrunch to AOL, I'm not clear why anyone would expect that he would not invest in start up companies. TechCrunch is no longer just him or him and a few bloggers, it's part of a major media organization. If their rules allow him to invest in the companies he covers then that is a problem with their journalistic policies, not with him acting in his own best interest.

Only time will tell, and startups or established business es that will suffer it or not, will let us all know. I dont agree with the letter, and even the analogy with PG. You can still build and launch. and be successful not depending on MA or PG. Let them do what they do, because they do it amazing. Again, time will tell if MA is doing it all wrong. I dont think so.

TechCrunch has already gone downhill. Arrington covers himself more than any other subject. Him investing startups will only exacerbate this.

He's always had "companies", i.e. Edgio.<p>I'm fed up of hearing peoples whiney opinions.