AOL terminates TechCrunch founder Mike Arrington; raises questions about strategy

AOL dismisses TechCrunch founder Michael Arrington after news leaked that he was starting a venture capital fund to invest in companies he covers. Is this the kind of "bold move" Tim Armstrong meant to make?
Written by Andrew Nusca, Contributor on

TechCrunch founder and Silicon Valley blowhard Michael Arrington was swiftly terminated (UPDATE: or not! Even AOL spokespeople don't seem to know) by parent company AOL yesterday after news emerged earlier this week that he was starting a venture capital fund to invest in startups.

The problem, of course, is that his influential blog writes about startups, putting Arrington in the crosshairs of every journalist's sacred compact: no conflicts of interest.

Arrington has been accused of pay-for-play coverage on TechCrunch before, and he's also pushed back against criticism from established members of the press by accusing them of having significant conflicts of interest that are acceptable only because they've disclosed them. (And you know what? He's right.)

The entire story is navel-gazing to the extreme, and I won't go on about the particulars. But what strikes me about this story is that AOL once again seems to lack control of its own company.

Arrington, of course, is no stranger to angel investing -- it's what he did long before he launched TechCrunch. And he has previously suggested that he would consider making new investments, before and after his website's acquisition by AOL in September 2010. Unsurprisingly, this violates AOL's (and any media company's) code of conduct policy.

But news of Arrington's new activities came swiftly this week. Even quicker was his dismissal by AOL, suggesting that the company is barely able to control its own properties. Arrington was considered a loud-mouthed beast to be tamed after news of the $30 million AOL acquisition broke; it turned out that it wasn't his words that put his parent company in hot water, but his actions.

It certainly doesn't help that Arrington named the $20 million fund after the website: the CrunchFund.

In the New York Times' report on the subject, AOL chief executive Tim Armstrong is quoted as saying, "TechCrunch is a different property and they have different standards."

Mr. Armstrong, that's no way to run a media company. And Arrington's quick release this week shows that it's no way to run a public relations strategy, either.

The whole thing shows that Armstrong and Arrington's supervisor, Huffington Post founder Arianna Huffington, were either unaware of Arrington's actions -- or deluded into thinking they would be acceptable by the industry, which for all of its faults tries to maintain a unified ethical front for authority's sake.

Say what you want about conflicts of interest (and please do in the TalkBack section below; I'm interested if readers care as much as the press do about such things), but the whole thing shows a real lack of leadership on AOL's part and casts doubt as to whether it can, financially or structurally, execute on its grand plan to be a reputable, lucrative content company. (That, in full disclosure, would compete with ZDNet's parent company, CBS Interactive.)

Are these the kinds of bold moves Armstrong and Huffington plan to make? Judging by the way this news leaked, it looks like there wasn't any plan at all.

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