The magazine ranks Arrington and TechCrunch in tenth spot on its list of 25 Internet celebrities. Forbes:
The site obsessively profiles and reviews new Internet products and companies–a mere mention can make or break a start-up, and a positive review of a service can translate to overnight success.
Arrington says tech media are increasingly releasing embargoed stories early, which gains them traffic via Google News and Techmeme, and public relations firms are too desperate to punish them:
As the economy turns south, PR firms are under increasing pressure to perform and justify their monthly retainers which range from $10,000 to $30,000 or more. In short, they have to spam the tech world to get coverage, or lose their jobs.
He says it is a race to the bottom:
We’ve never broken an embargo at TechCrunch. Not once. Today that ends. From now our new policy is to break every embargo.
A person with knowledge of the deal tells Business Insider that AOL paid $25 million for Tech Crunch, while a separate source tells CNBC it paid $40 million. The $25 million figure would be low at 2.5x estimated valuation compared with a recent deal for a comparable company at 6x – the $40 million may be the total price including earnouts for performance and retentions.
The company annouces the acquisition along with the purchases of instructional video site 5min and Thing Labs Inc. People familiar with the deal say it paid around $30 million for TechCrunch. Arrington is retained on a multi-year deal. AOL chief executive Armstrong:
The one thing that doesn’t change is people’s consumption of content.
Arrington responds to an alleged threat of legal action by Calacanis over the proceeds of the TechCrunch Disrupt sale to AOL. He says that the event – when it was known as TechCrunch 50 – had productive years in 2007 and 2008 when it was first competing with the paid events like Demo but that it became apparent Calacanis wasn’t putting in as much as TechCrunch despite the 50-50 profit split. He also wasn’t approving some expenses, forcing TechCrunch to either sue him or take the hit – it chose the second option. Reportedly Calacanis became abusive on a phone call and made a TechCrunch employee cry. Arrington:
And his most shining moment – he got so drunk the night before the last day of the 2008 conference that he couldn’t show up to be on stage until hours after the event started.
Arrington says he still considers Calacanis a friend but that all efforts to work with him – including offering 10% of TechCrunch and a board seat – have failed.
Arrington writes about a woman identified as EJ who had her Chicago apartment burglarized by people who had booked it for a week using the service:
The event happened, which is a terrible blow to the company’s reputation. The confusion seems to be around whether or not Airbnb will compensate her for her losses.
Schonfeld takes over the managing editor role. He is rumored to have been de facto filling the position for some time before the official announcement. AOL spokesman:
[Arrington] will focus on the funds and continue to write
Arrington says he is confused about his employment situation:
I have no idea what AOL’s final position on this will be. I look forward to hearing it.
Greylock’s Hoffman says the blog will give the fund a competitive advantage:
Techcrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, Crunchfund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.
AOL announces that Arrington no longer works at the blog:
AOL is not comfortable with TechCrunch being used as an access point for deal flow.
He had previously been expected to hold both roles, with investors in CrunchFund saying that deal flow via TechCrunch would be an advantage for the fund.
Arrington writes that the main issue isn’t his employment status. He says two options have been proposed to AOL:
1. Reaffirmation of the editorial independence promised at the time of acquisition. Given the current circumstances, that means autonomy from Huffington Post, unfettered editorial independence and a blanket right to editorial self determination. To put it simply, TechCrunch would stay with AOL but would be independent of the Huffington Post.
2. Sell TechCrunch back to the original shareholders.
He sets an ultimatum:
If AOL cannot accept either of these options, and no other creative solution can be found, I cannot be a part of TechCrunch going forward.
Siegler writes on the blog that the uncertainty is affecting its future:
TechCrunch is on the precipice. As soon as tomorrow, Mike may be thrown out of the company he founded. Or he may not. No one knows. And if he is, he will be replaced by — well, again, no one knows. No one knows much of anything. Certainly no one at TechCrunch. This site is about to change forever and we’re in the total f-cking dark. I’ve been able to piece together little bits of information here and there, and it’s not looking good.
Part of the blog’s effectiveness depends on Arrington’s ability to break news, including on companies he is invested in:
Could TechCrunch survive without Mike Arrington? Probably. We’re doing so many pageviews now, and the machine is so profitable, that you can plug in other parts and it will run. But without him, it will not be the same.
AOL announces that Arrington is officially out of the blog. Arrington:
It’s no longer a good situation for me to stay at TechCrunch. [It’s] a sad day for me.
We love Mike and it was the right, amicable decision that we came to together. We’re super excited about our relationship with him going forward.
Arrington announces that he has been ‘unfired’. He says he is not running the blog, and AOL has already killed one post:
So that was new. Being told “no,” that is.
He plans to post a couple of times a week:
There are tons of other venture capitalists writing regular guest posts for TechCrunch already. Just consider me one of those.