Tag Archive for 'Michael Arrington'

How the super angels are saving Silicon Valley

Michael Arrington has written about the current bubble in Silicon Valley: the angel investor. He suggests a war is occurring with this new class of investor, and that entrepreneurs need to pick their faction. I don’t doubt the politics is real, and I’m sure it exists between the angels themselves – let’s hope they realise that united they stand, but divided they will all fall.

But I think this “conflict” is really about a change in times. Much like how the traditional gatekeepers of information – the newspaper industry – are battling the process-journalism innovators that we call ‘bloggers’. (Like, ahem, TechCrunch.) No one appointed the Venture Capital industry as the gatekeeper for technology innovation, which is similar to the arrogance of the newspapers that think they ‘own’ the news and deserve special protection because of it. Maybe these over-sized funds should take a lesson from the newspapers and realise the times have changed and their model needs to change as well.

But where I differ with Arrington’s perspective is his prognosis that this is bad for innovation. Conflating this with ‘bigger ideas not getting funded’ is wrong. The point is, is that more innovation can get funded, more veterans are being developed, and more value is being created in the long run. This should be analysed not by the growth of a single tree, but the overall development of the entire forest.

We need more seed-accelerators, more super-angels, and more incubators – because inevitably, it will lead to more startups. And whilst not all will hit a home run, the odds of ‘the next big idea’ happening will improve dramatically.

The makings of a media mogul: Michael Arrington of TechCrunch

After recognising in my previous post that Michael Arrington has successfully captured the dynamic of the mass media to pioneer new media, my mind asked how did this guy do it. With some time on my hands, I looked into what I think is one of the most remarkable stories to occur in the recent tech boom that was Web 2.0 (yep, that’s past tense – it’s an innovation era that now has closed). How "a nobody ‚Äî a former attorney and entrepreneur who, at 35, looked as if he might never hit it big " became one of Time’s 100 most influential people in the world. I’ve never interacted with Arrington, although I know plenty of people that know him well (through the Aussie mafia that grace the Valley). So this is coming from a completely objective but aware view. An outside view with purely the public record to track his success. Let’s see what the evidence tells us.

The accidental start-up
Reading through the archives of his main blog TechCrunch.com and his companion blog CrunchNotes.com, I came to realise his success could be identified as early as his first five months from the first post written. He launched TechCrunch.com on the 11th June 2005 with posts released daily if not multiple times per day. The blog averaged 5 posts every two days in its first year, with 879 posts (it was actually more, but a half dozen or so have since been removed).

TechCrunch posts per day (year one)

His first post, which has since been removed (God bless the Internet archive), gives an insight into motivations for starting the blog.

TechCrunch is edited by Michael Arrington and Keith Teare, with frequent input from guest editors. It is part of the Archimedes Ventures network of companies.

Archimedes Ventures was at the time a two partner firm that specialised in the "development of companies focused on Web 2.0 technologies and solutions." The fact the page listed Teare and is marked as part of Archimedes Ventures network of companies suggests this was a conscious business development effort on the part of Arrington. As he would later reveal, he was inspired by Dave Winer who said: ‚Äúif you are going to build a new company, go to the trouble of actually researching what other companies have already done." Several months later in October, he posted an announcement that his startup Edgeio would be live soon, validating that TechCrunch wasn’t so much a "hobby" but a need to understand your market. Indeed, it seems TechCrunch just became a more formalised affair as he had been posting research into potential competitors on his personal blog publicly from March 2005 – and by the time he launched TechCrunch there were already four employees at Edgeio. No doubt, exposure and networking like any smart businessman was part of his agenda as well, which perhaps is why we saw a transition from a personal site to a TechCrunch brand (more on community building later).

On October 2005, TechCrunch was ranked the 566th blog by Technorati based on the amount of links it received from other websites. In December of that year, its ranking had climbed to 96th. One year on, in June 2006, it became the 4th most linked-to blog and has subsequently maintained its status as number 2 (not being able to beat another new media mogul Arianna Huffington who dominates the table, but that’s a story for another time).

TechCrunch subscribers

The above graph shows an explosion, but it’s the first year that tells the story which forms the basis of this post:

Over that first year, 23,713 comments had been left, with around 1-2 million page views per month. However as the figures show, it was the first six months where this research turned into a prospective business ("help "), with subsequent months and years simply consolidating his growth: by year two, there were 2,000 more posts (double the output of the previous year); 115,608 comments and trackbacks in total (an average of 40 per post); and 435,000 RSS subscribers. Pages views in the month leading up to the 24th month in operation were 4.5 million, twice what it was the previous year. In September 2008, over a million people subscribed to the blog.

So how did he do it?
Compared to his peers/competitors, he joined the game quite late, and yet he is absolutely smashing them. Same software in some cases and same focus. The question is, what did Arrington do that others didn’t?

Whilst the metrics might track his growth, they don’t track how he did it, which has less to do with Search Engine Optimisation and more to do with hyping up a boom. Below I describe what I think are the Critical Success Factors that made TechCrunch what it is today.

1) Events.
TechCrunch wasn’t just a blog; it was a host. Early on, there were events hosted at Arrington’s house where people could network and mingle. It would be a mistake to think that TechCrunch later on got into the conference business as an alternative revenue stream, but the reality is, social networking was being organised in the real world in parallel to the online blog from as early as August 2005. To create a new blog and have 63 people subscribed to it within a week indicates a lot of offline activity to get those subscribers. The social meet ups reinforced his readership base.

2) Web2.0.
Arrington saw a tide building for a second tech boom and formed a loose group of allies promoting this tide. Add to the mix some existing high profile personal brands like Dave Winer and Robert Scoble – and in the process, you build your own personal brand. To use his words, he saw a parade and got in front of it.

When Tim O’Reily coined “Web 2.0”, it was a buzz-speak marketing word. What Arrington did was successfully exploit this dynamic by recognising the rising investment trend occurring. He built a community around Web 2.0 by being its tireless champion and channeling existing energies. And as the community grew, so did he. He realised that what goes down, goes back up again – and by tapping into this growth, he could grow with it. If this second boom was anything like the first, being at the front of it would be such a good career move that it probably didn’t even need to be said.

3) Excellent content.
Don’t underestimate the difference quality content has. Arrington has an analytical mind and is a clear communicator – he is a lawyer after all. Intelligence and an ability to communicate will beat even the most experienced journalist. I‚Äôve been told that Arrington doesn‚Äôt understand tech, or at least makes a convincing image of not getting it, which probably explains the why he writes in plain English – even in the conversational style of writing that blogging is associated with, good clear English is rare to find. More importantly, he understood what all publishers have long known: good content is not just about the words. As Scoble highlighted long ago, one of the reasons that made Arrington such a popular writer is the simple use of images to break up the text.

No doubt, Arrington’s previous staff writers, ones I am familiar with like Nik Cubrilovic, Duncan Riley and Marshall Kirkpatrick, made a big difference in TechCrunch’s growth: Kirkpatrick’s ground-breaking RSS and research skills to find news, Cubrilovic’s Arrington-style writing ability, and Riley’s industry relationships to often break news – is how they made compelling content. However, Arrington quite uniquely stands out and it‚Äôs why when he tried to take a break and to focus on the business side, he was pulled back in to raise the quality. TechCrunch is Mike Arrington: it’s been proven you can’t separate the two (at least, yet).

4) The media dynamic.
As I recently argued, the mass media at its core is about playing a game, but in the context of web 2.0 it is about understanding the dynamics of a market place. He had access to Venture Capitalists (VCs) as he was a corporate lawyer as well as an entrepreneur with experience to boot Рaccess that other entrepreneurs quite simply didn’t have.

He was able to successfully take advantage of the VC paranoia that they might miss the next Google or Facebook. They literally were desperate to hear about the next big thing. For them, Arrington was a deal-type lawyer who would review things in plain English and present it with pretty pictures. On the flip side, you had entrepreneurs dying to get in front of these VCs as well as general exposure for their start-up. When Arrington decided to put advertising on the blog, it was a natural progression: entrepreneurs wanted to get exposure to VCs, future employees, and buzz amongst their peers. People on the other hand, are willing to consume this content because it’s free market research for them – catering in the audience for both investor and the entrepreneur. Powerful stuff? God yeah – that’s the kind of captive audience that’s addicted to crack cocaine.

To give you an idea of impact, I was told by an entrepreneur whose company was profiled in that first six months, that they got something like 30 VC calls and e-mails over a holiday period. After less than three weeks, they had Kleiner Perkins Caufield & Byers email, say "Hi, just another VC here. Can we meet next Thursday?". They had a list of meetings that kept them going for weeks. My own personal experience this year through the DataPortability Project saw first hand what exposure and support from TechCrunch could do, and suffice to say, it’s impressive. We had VCs wanting to talk to us about data portability, even though we‚Äôre non-profit!

This offline social networking is key to what ultimately became an online social media business. What’s very telling is a comment left by Valley legend Dave Winer, a man Arrington repeatedly showed admiration for and I am sure his relationship is what gave him a boost at the start. It reflects several things, but foremost, Arrington had a lot of goodwill in the community as a leader of the industry by existing heavy weights. He connected the various participants in what ultimately is a marketplace. Forget about Edgeio – this was the making of a new media business that would show the dying mass media what the future looks like for their industry. TechCrunch became the channel of choice for so many people to get their voice heard for competitive, strategic and ego reasons.

Concluding thoughts
TechCrunch started as a hobby and research project to test a bunch of the stuff he’d been reading about in the Web2.0 space. After the crash, he pretty much dropped out and watched a lot of college football – he needed a way to get back into it. Arrington probably knew he could write well, but I don’t think he realised how much of an impact his ability could have. The use of images in content, and the frequency of his posts made TechCrunch in the first six months, combined with offline social networking, the positioning as a champion of the Web 2.0 community, and exploiting the dynamic of a marketplace is what made him what he is. By the end of 2006, I don’t think Edgeio got much of Arrington’s attention at all – he’d been hooked by the excitement of writing, leading opinion and eventually, the power that attracts people to positions of note and influence, whether it be media, celebrity, business or politics.

This post only touches on the surface, as the Critical Success Factors in that first year do not give a full picture. Arrington‚Äôs involvement with the presidential primaries process, his disruptive influence with DEMO through the TC40/50, the Crunchies and even the people who keep trying to take him down add a further dimension to the TechCrunch story. He’s a man with more haters than Murdoch, but that’s doesn’t make him any less brilliant.

Arrington can get right up the nose of people with massive vested interests, and he loves to stir the pot – like the traditional press practice, controversy sells. Living in a massive rented house with all but a big dog, he can pretty much operate without fear. If it all exploded tomorrow, he’d probably have a beer, and enjoy a good long holiday and another season of college football. That’s what makes a journalist fearless, and that, combined with his obvious passion for the sector and the power he wields makes for a pretty dynamic combo.

He’s made no secret of his desire to be bigger than C|Net (without having to cop the overheads of their business model). Take out download.com, and I think it safe to say he’s reached that: maybe it’s time he puts his eyes on something a bit bigger. Although I doubt he needs to be told that – he’s already making history along with another select few, who through raw talent are pioneering “new media”, ready to replace the financially bankrupt mass media as the influencers in our society.

The future of journalism and media

Last week, Deep Throat died. No, not the porn actress but the guy who was effectively in operational control of the FBI during the Nixon years. Mark Felt was a guy who was in line to run the FBI from his number three position, but was passed up by Nixon who brought in an outsider. Whilst people often remark that the Russian government is controlled by the intelligence services, it’s worth reflecting that the poster-child of the free world has its own domestic intelligence services yielding too much power over the presidents. Nixon broke tradition for the first time in 48 years, doing something other presidents couldn’t do: it was appointing an outsider to run the agency. And so lays the roots to his downfall, in one of the most dramatic episodes in the mass media’s history – a newspaper brought the downfall of one of the the most powerful men in the world.

Felt’s identity has been protected for decades, and was only made public three years ago, arguably because someone else was going to expose him and he beat them too it. In an interesting article by George Friedman at Stratfor:

Journalists have celebrated the Post’s role in bringing down the president for a generation. Even after the revelation of Deep Throat’s identity in 2005, there was no serious soul-searching on the omission from the historical record. Without understanding the role played by Felt and the FBI in bringing Nixon down, Watergate cannot be understood completely. Woodward, Bernstein and Bradlee were willingly used by Felt to destroy Nixon. The three acknowledged a secret source, but they did not reveal that the secret source was in operational control of the FBI. They did not reveal that the FBI was passing on the fruits of surveillance of the White House. They did not reveal the genesis of the fall of Nixon. They accepted the accolades while withholding an extraordinarily important fact, elevating their own role in the episode while distorting the actual dynamic of Nixon’s fall.

Absent any widespread reconsideration of the Post’s actions during Watergate in the three years since Felt’s identity became known, the press in Washington continues to serve as a conduit for leaks of secret information. They publish this information while protecting the leakers, and therefore the leakers’ motives. Rather than being a venue for the neutral reporting of events, journalism thus becomes the arena in which political power plays are executed. What appears to be enterprising journalism is in fact a symbiotic relationship between journalists and government factions. It may be the best path journalists have for acquiring secrets, but it creates a very partial record of events — especially since the origin of a leak frequently is much more important to the public than the leak itself.

Now consider my own experiences as an amateur journalist.

After several years of failed media experiments, my university enterprise (I did it as a society, not as a company, because I want to treat this as my "throw-away" startup to learn but not be tied down when I left) at changing student media suddenly hit the gold mine: we created an online weekly "news digest" that literally became the talk of the campus for those in the university administration and the people surrounding it. An elite audience (not the 40,000 University of Sydney crowd), but the several hundreds of people that theoretically represented the campus and ran the multi-million dollar student infrastructure. Of the 23 editions we created that year, we literally had people hanging off their seats for the next edition: trying to predict the new URL, and e-mails with quotes of it sent out within hours of publishing.

The News Digest, October 29th 2004.

It was interesting because of how the product evolved during its first year. I started it thinking it would be a cool thing to have a summary of the news, once a week, in a "digest" format. The news was split arbitrarily as student, Australian and international. However within a few editions, the student news segment was no longer just about the latest party but about confidential information and the core reason why people read it. In the second edition I wrote:

USYD UNION : Chris Farral has been hired as the Union 's new General Manager. Farral has a highly reputable background in the ABC and various community-based groups. It has been a decade since the Union 's last General Manager was appointed, and as such we hope Farral will bring a new flair and vitality to the position. Chris also happens to be the father of Honi Soit editor Sophie. Does this mean an end to critical analysis in Honi's reporting of the traditionally stale and bitter Union ? No. That would require there to have been critical analysis in the first place. (EB)

Cheekily written but an innocent attempt to report news. Someone saw that, realised we had an audience, and in edition three we revealed:

SYDNEY UNIVERSITY UNION: Last week we reported that Chris Farrell was appointed the new General Manager of Sydney University’s student union. This week we can reveal that close to $50,000 was spent on external recruitment agencies to find Mr Farrell. Where was he hiding? The selection panel was evenly split for two candidates: Paul McJamett, the current Facilities Manager and previously expected next-in-line for the job, was supported by Vice-President Penny Crossley, Ex-President Ani Satchithanada, and Human Resources Manager Sandra Hardie. Meanwhile Farrell was supported by current President Toby Brennan, and the two senate reps (one of whom is new this year to the Board). Crossley is rumoured to have crossed the floor, and made the casting vote for Farrell. (Elias Bizannes)

And then we go threatened with a law suit (the first of many in my life, it would turn out) because we exposed some dirty secrets of a very politicised group of people. The reason I wanted to share that story, was to have you see how we evolved from a “summary of the news” to a “tool for the politicians”. The rest of that year, I had people in all the different factions developing relationships with me and breaking news. Yes, I knew I was being played for their own reasons. However it was a two way using: I was getting access to confidential information from the insiders. Our little creation turned into a battleground for the local politicians – and so long as I could manage the players equally, I won just as much as they did, if not more.

Up until now, I never realised (or really thought) that my experience in student journalism was actually how the big players of the world operate. Forget the crap about what journalism is: at its core, it’s about creating relationships with insiders and being part of a game in politics, that as a by-product (not a function) also creates accountability and order in society.

On the future of journalism
For as long as we have politics, we will have “journalists”. In the tech industry for example, the major blogs have become a tool for companies. I recently saw an example where I e-mailed a CEO of a prominent startup about an issue, and within days, two major blogs posted some old news to get exposure to fixing the issue. This CEO used his media credits with the publishers of these blogs, to help him with the issue. It’s the same dynamic described above: people who create news and people with the audience. Heck – we have an entire industry created to manage those two groups: the Public Relations industry.

So the question about the future of journalism, needs a re-look. It’s a career path being disrupted by the Internet and breaking traditional business models, with the new innovations going to have their bubble burst one day. Where we will find answers to the future, is where we can see in play the dynamics of news creators and news distributors, as that is where journalism will evolve.

Personally, I’m still trying to work out if the captive audience has now left the building. But my 2004 experiment in student media – targeting the same Gen Y’s that don’t read newspapers – is recent enough experience to prove the Internet hasn’t broken this relationship yet. If you are looking to see what the future of journalism and especially the media is – you need to follow where the audience is. But a word of caution: don’t measure the audience by its size, but by its type. One million people may read the blog TechCrunch, but it’s the same one-million early adopters around the world that are asked by their Luddite families to fix the video recording machine. There is an indirect reader of a publication, but they are just as much influenced and can be reached out to, if determined by the direct reader. Even though Michael Arrington who started TechCrunch was a corporate lawyer, his successful blog has now done what the mass media used to do. That’s something worth recognising as the core to his success, I think. Certainly, it validates that the future is just like the past – just slightly tweaked in its delivery.

What is data?

The leading voices in technology have exploded in discussion about data portability, data rights, and the future of web applications. As an active member in the DataPortability Policy group, here is my suggestion on how the debate needs to proceed: break it down. Michael Arrington seems pretty convinced you own all your data, but I don’t think that’s a fair thing to say – and at core is the reason he is clashing with Robert Scoble’s view. For things to proceed, I really think a deeper analysis of the issues need to be made.

1) Define the difference between data, information and knowledge. There’s a big difference.
2) Determine what things are. (is an e-mail address data or information?)
3) Recognise the difference between ownership, rights and their implications.
4) Determine what rights (if that’s what it is) the various entities have over data (users, web apps, etc).

This is a big area and has a lot of abstract concepts – break it down and debate it there.

Some of my own thoughts to give some context

1) Data is an object and information is generated when you create linkages between different types of data Рthe ‘relationships’. Knowledge is the application of information.

  • 2000 is data – a symbol with no meaning. Connect it with other data, like the noun "year", and you have information because 2008 now has meaning. Connect that information with other information, like "computer bug" and "HSBC and you now have an application of that information. That being, there was an issue with the Y2K bug that has something to the bank HSBC.

2) Define what things are

What’s an e-mail address, a phone number, a social graph, an image, a podcast…I’m not entirely sure. I wouldn’t be blogging this if I had all the answers. Once we agree on definitions, we can then start categorising them and applying a criteria.

3) Ownership:

Here is something Steve Greenberg explained to me

– Ownership is relevant when there is scarcity.
РOwnership is the ability to deny someone else’s use of the asset.
– So, if data is shared and publicly available, it is a practical impossibility for me to deny use
Рand if data is available in a form where I can’t control others’ use of it, I can not really claim to own it

Nitin Borwankar has a very different argument: you should have ownership based on property rights. He explained that to me here .

4) Rights over data

I personally think no one owns data (which is inspired by the definition of data being inherently meaningless); instead you own things further down the value chain when that data becomes something with value. You own your overall blog posts – but not the words.

But again, this goes back to what is data?