Michael Arrington Turns Silicon Valley Upside Down

Michael Arrington

There is one thing you have to love about Michael Arrington, he is no coward. I was reading and listening today all about Mike’s whistle-blowing on the secret VC society out there in Silicon Valley. According to Arrington, price fixing and other collusive activities by some of the world’s key angel investors, is one order of business. Now let’s weigh this news shall we?

Investors trying to fix prices and manipulate a market? Seems logical. The tech world’s most visible personality inventing BS which could be libelous and slanderous? Less likely.

Okay Mike Arrington has lost some friends over the years, so has just about anyone who has had to deal with the likes of the wheelers and dealers of Web 2.0 and the digital boom. Arrington’s place in all the movement has obviously been, like it or not, characterized by the single handed ability to make or break most startup developments. That said, there are always opposing forces – call them circumvention elements – a natural occurrence where too much influence is outside (or within) the hands of others.

“So A Blogger Walks Into A Bar” goes live on TC and out come the opposition forces. Arrginton haters and of course some of the people who attended the supposed “mafia type” dealings at Bin 38 have begun the lambasting already. But Arrington’s suggested sources who attended this Machiavellian event are actually the ones who spilled the beans on Silicon Valley’s elite angels of startup mercy (yes I have had some dealings with a few of them). The so called “Super Angels” who Arrington describes as old friends seated about “Godfather style” in the back of the wine bar – somehow I am envisioning this just the way he describes – and his description below from TC pretty much galvanizes that credible vision:

Me: Hey!
Person who was talking: oh, oh no.
Me: Hi. I heard you guys were here and I wanted to stop by and say hi.
Them: dead silence.
Me: so….
Them: Deafening silence.
Me: This is usually where you guys say “sit down, have a drink.”
Them: not one sound
Me: This is awkward. I guess I’ll be leaving now.

Any way. As Arrington correctly points out here – the problem with these investors meeting as competitors in such a way is that it is illegal. Agreeing to fix the game of early stage startup funding, any market for that matter, is a federal offense. Now it looks like the FBI will be in the works – undoubtedly. What is that going to do for the industry I wonder? Y Combinator may end up running all the VC out of business, wouldn’t that be a hoot?

I am sorry, I believe very much in symbols – the traces of signs as to whether something is right or wrong – call this “normative” logic above empirical judgment if you must, but fish tend to smell like fish – that sort of thing.  If you look at this post by one of the so called “Super Angels” who was at this cloak and dagger affair, Dave McClure, fairly loses his mind and sense of decency in this profane piece. Let’s get our head screwed on straight here for a second – McClure is apparently at odds with everything Y Combinator stands for and illustrates it too.J Just one disagreement between he and Y Combinator guru Paul Graham seems symbolic to me here. McClure says “Open is for losers,” referring in context to iPhone’s nature – but maybe openness in general?

I don’t know Dave McClure at all, so I cannot speak (and will not) about his true motivations – the point is Arrington’s suggestion, combined with the way these people carry themselves, what they promote – smells like seafood. I see a geek investor type ranting and raving like a madman, and worse like a 14 year old Digg super user – rather than taking a grown up approach to all this. Just my view. McClure is feeling the heat regardless of the validity of the Angel Gate implications. The dude cannot stop Tweeting and whining about it.

Another admitted attendee at the Angelgate table was Bryce Roberts, O’Reilly AlphaTech Ventures Managing Director. As one would expect from an O’Reilly associate, Roberts took the adult (if smartass) approach to fencing with Arrington’s allegations. “The table I was sitting at..” sort of thing. Roberts’ contention that price fixing talks would be be illogical and ineffective being maybe the most sensible rebuke of Angelgate credibility – but still there is Arrington’s credibility and weight! I just cannot see him leaping off a cliff (personal knowledge of similar situations not divulged). Despite the seriousness of all this – it is laughable on the one end with investors professing innocence.

Angelgate and the ties that bind

Angelgate Kingpins work out startup valuations to their liking

The BBC has jumped on the band wagon now, expect everyone else within hours of reading this too. There are plenty of jokes and geeky idiocy going around the web too – but I fear this will be a very serious affair in the end. Speculation is all any of us have at the moment – well except probability and normative variables that is. I will end with two more observations for now (I will call Mike in a minute).

The latest from Fox News on the breaking story suggests that the Silicon Valley startup investment game is a “cozy” affair – this bears fruit for me – it has always seemed like a closed and secretive group. Secondly, as a friend and especially a critic of Michael Arrington – for me there is just no way he would say such things without validity being there. Mistakes – yes, misunderstandings – yes, keen business sense – yes, but destroying himself and TechCrunch – that ain’t happening.

Something very fishy is going on – that’s a no brainer. Again, my personal view. As a final possible indicator here, Michael was in a debate with academics which was captured on TC TV long after his post about Angelgate – he seems more calm and “Mike-ish” than ever to me – as you can see below. Just more normative stuff you know?

Leave a Reply

Your email address will not be published. Required fields are marked *