Michael Arrington Is Starting His Own Venture Capital Fund With AOL’s Blessing (and Money) [Updated]

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Photo: Noah Berger/Bloomberg via Getty Images

AOL's recent attempt at editorial hegemony ramped up with last year's purchase of the Silicon Valley blog TechCrunch for $30 million and culminated in a high-profile pairing with Arianna Huffington. But unlike the Huffington Post, which meshed its blog properties with what AOL had already, TechCrunch remained largely independent with its founder and dominant voice Michael Arrington pretty much doing what he pleased, even announcing that he would be investing in tech companies as well as covering them journalistically. Arrington is now taking conflicts of interest to a new level with the founding of a venture capital fund, CrunchFund, which he'll use to invest in even more start-ups his site covers, regardless of journalism's stuffy traditions. "TechCrunch is a different property and they have different standards," said AOL CEO Tim Armstrong. AOL will invest about $10 million in CrunchFund.

"We have a traditional understanding of journalism with the exception of TechCrunch, which is different but is transparent about it," said Armstrong. (Other AOL sites like finance blog Motley Fool and tech blog GigaOm also allow staff to invest in companies they cover.) Arrington will step down as the site's managing editor, but he will still contribute. Arianna Huffington, in an attempt to clarify, told David Carr that Arrington is no longer on AOL's editorial payroll, and "will be welcome to write for TechCrunch as unpaid blogger, but have no editorial role." Carr called the "optics" of the arrangement "still murky."

Arrington maintains that his new responsibilities will not affect coverage, and insists he will disclose his investments. He says that he holds himself "to higher standards of transparency and disclosure," and anyway, "Friendships and marriage are far more potent than financial conflicts."

"I don't claim to be a journalist," Arrington added. In other words, it's the Internet equivalent of "I am not a role model." Get money.

Update: Rewriting the rules is complicated. CNN Money reports:

[AOL] told the NYT that Arrington would still have a (reduced) role with the site, and continue reporting directly to Arianna Huffington. Then AOL said he would report to AOL Ventures. Today it says that he is no longer employed by the company, but can continue contributing to TechCrunch as an unpaid blogger. In other words, AOL is acting like AOL typically acts: Scattershot.

Early this afternoon corporate communications is giving what sounds like the final word: "Michael is now a professional investor working for AOL. He will have no editorial control." Peter Kafka of All Things D writes:

Hear that, CrunchFund investors? The guy you are handing $20 million to won’t be able to influence the way TechCrunch interacts with your companies, your investments and your potential investments. Is that what you signed on for?

Update 2: TechCrunch writer Paul Carr has chimed in now and is not happy with how this announcement was handled, so he's slamming his bosses, both Arrington and, more pointedly, Armstrong. "For. Fuck’s. Sake," he writes, acknowledging that, "the milk is spilled."

Can we really hope that other media outlets will continue to support our campaigns against the wrongdoing of tech companies, or will those campaigns now be so bogged down in ethics disclosures that the message is muted to the point of impotence? 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?

Tech Blogger to Invest in Start-Ups [NYT]
CrunchFund confusion [CNN Money]
Mike Arrington, AOL Employee, Won’t Have “Influence on Coverage,” Says AOL [All Things D]
The CrunchFund: Actually, Tim, We Don’t All Have “Different” Standards [TechCrunch]