In 2011, TechCrunch founder Mike Arrington was fired from his own website for reasons including flagrant conflicts of interest over his newly hatched VC firm, CrunchFund. But he never really left. For every year since his firing, Arrington's used the TechCrunch Disrupt conference to help his wallet.
The Disrupt event brand, which now spans both coasts of the U.S. and a European spinoff, is of course as much a business venture as a publicity machine—tickets are thousands of dollars a head, and prominent sponsors like IBM, Microsoft, and Sequoia Capital all clamor to make their logo seen by attendees. Blogging sure isn't a lucrative operation, but charging people a king's ransom for an opportunity to pitch bloggers on your startup idea sure is—and the marquee attraction, even after his exceptionally ugly exit, is Mike Arrington. Even if AOL isn't paying Arrington handsomely to show up—we've heard it go both ways—he's getting a wrapped gift: for the past three years, he's had the privilege of judging Disrupt's best startup competition in San Francisco. The flagship event. And for the past three years, one of Arrington's personal investments has won the competition; fool me thrice, shame on this whole fucking sham conference, really.
In 2011, just a week after news of Arrington's ouster broke, he was at Disrupt to pick its champion. The winner was "Shaker," a comically bad concept that aimed to make cartoonish "virtual chat rooms" out of your Facebook friend list. Today, it's a complete dud, which shouldn't have surprised anyone two years ago—but Arrington had invested in the idea through CrunchFund, and it was given first place. Just to make sure he had his bases covered, the runner-up was also a CrunchFund project.
In 2012, the winner, selected by a panel starring Arrington, was "YourMechanic." The startup entered the conference with a $1.8 million investment round already under its belt that included CrunchFund.
And then this week, because everything is better in trios, Michael Arrington did it again: for the third year in a row, a company he is financially invested in was the winner in a competition he helped judge.
When I asked TechCrunch co-editor Alexia Tsotsis about the conflict, she didn't seem concerned: "Arrington disclosed his Layer investment and informally recused himself from judging that specific startup onstage." But he didn't recuse himself from the competition altogether, as even the most rudimentary MOOC Ethics 101 class would demand. Ask TechCrunch, and they'll shrug it off as just another occupational hazard of doing anything on Silicon Valley's amoral money pond: "There are quite a few seed investment vehicles in the Valley, with multiple LPs, including Arrington. Due to the intertwined nature of investor relationships, it's inevitable that judge conflicts will arise." Tsotsis added that "Regalii, a Y Combinator startup and one of this year's finalists, had a clear conflict in judges David Lee and Chris Dixon, through SV Angel and Start Fund." As if adding extra conflicts of interest would somehow balance the whole shoddy tower instead of toppling it.
It's "inevitable" that massive financial conflicts will taint the entirety of a competition if you keep inviting compromised investors to judge year after year. It's "inevitable" that Mike Arrington, infamous for his bullying and bellicosity, will keep wrangle winners that benefit himself if he's invited to do so, over and over. Given that past Disrupt champs have gone on to cash checks—Qwiki won in 2010, picked up an investment from Arrington after, never gathered much of a following, and was recently purchased by Yahoo!—it's "inevitable" that startups will keep lining up every year for a chance to charm Mike. It's a perpetual favor machine.
We can only hope that it's also inevitable that Disrupt reforms or comes to a shameful conclusion. Not every silly idea will get picked up during a Marissa Mayer shopping trip, like Qwiki. For the rest of the contenders, Disrupt might become a scarlet letter—so obviously distorted by impartial judging as to lose clout. A dishonor, or a joke, at best.
Or, TechCrunch can do the almost-impossible: stand up to Michael Arrington, for once. It's entirely feasible to run a competition that doesn't juice the investments of one man, no matter how much he terrorizes you to the contrary.