Arringtown and MG-Boys

There’s an early scene in the skate documentary Dogtown and Z-Boys where team Zephyr crashes a 1970s skateboarding competition, hoping to demonstrate new tricks. They were full of attitude and ego. They were also, by and large, thuggish assholes with a huge chip on their shoulder.

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With friends like Michael Arrington…

I first learned of Michael Arrington’s “scoop” regarding possible Super Angel investor collusion via this Mike Davidson tweet:

Mike Arrington uncovers collusion among prominent SF angel investors. Really ballsy, but great reporting here, if true: http://wp.me/pNaxW-VJI

I read the article around 10 O’Clock and by then several prominent outlets—and Gawker—had picked up the story. Most were longer versions of Davidson’s tweet: “Arrington’s got a huge pair of cajones.” None seem to evaluate Arrington’s version of events.

Something feels off about his reporting, though. 

Yesterday I was tipped off about a “secret meeting” between a group of “Super Angels” being held at Bin 38, a restaurant and bar in San Francisco. “Do not come, you will not be welcome,” I was told.

So I did what any self respecting blogger would do – I drove over to Bin 38, parked my car and walked in.

The last sentence first: It’s intriguing and important to me that he refers to himself as a blogger, and not a journalist, because I think his reporting is a great example of the difference between blogging and journalism. I suspect a “self respecting” journalist might have reported this differently. More on that in a bit.

Arrington’s tip-off is also intriguing. Why would the tipster tell Arrington not to go, knowing as he must have that Arrington is in the business of sticking his nose where it’s probably not wanted?

“Hey, man. Something super awesome is about to go down. Super secret. COUGH. At Bin 38. COUGH. It would be a HUGE scoop. Don’t, uh, go. You’re not in the club. Wink, wink. Seriously though. Don’t go.”

Arrington’s later sources are some of the investors who were at the actual meeting, and Arrington says he was tipped off by a guy who said “don’t come” which leads me to believe that the tipster was going. “Don’t go” could mean anything but “don’t come” infers participation.

in the back of the restaurant in a private room was a long oval table. Sitting around the table, Godfather style, were ten or so of the highest profile angel investors in Silicon Valley. These investors, known as “super angels” because they have mostly moved on to launch small venture funds of their own, are all friends of mine. I knew each person in the room very, very well.

Emphasis mine.

Arrington then paraphrases the reaction of the investors once they realize he’s crashed their party:

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.

At least, I hope this is paraphrased because otherwise it reads like dialogue from an incredibly boring detective story. As written, I can only assume that saloon music was playing right up until the “Hey!” at which point a scratching record noise cut through the room, heads turned in unison, everyone froze, and…

…silence. (But for cricket noises.)

“Cut! Great job guys! Let’s take an early lunch.”

The whole scene is incredibly bizarre. Arrington doesn’t help his cause by referencing The Godfather, the gold standard for intense crime dramas, and then launching into an episode of the Ten Stooges.

I’ve never seen a more guilty looking group of people. But that alone isn’t that big of a deal. Lively conversations often die quickly when I arrive, and I’ve learned not to take it personally. But I did sniff around a little afterwards, and have spoken to three people who were at that meeting. And that’s where things got interesting.

It’s about fucking time.

Why on Earth did they have a look of guilt on their faces? Surely the meeting in and of itself wasn’t illegal? Maybe it had something to do with the fact that someone who was a mutual friend of all involved but who wasn’t invited to the party showed up anyway?

In their private room.

Speaking of which: Did Arrington have to knock out a Bin 38 server, don his apron, and walk in with drinks? For a bunch of fearful, guilt-ridden, would-be criminals, they sure didn’t pick a very private private room.

But the conversation has evolved to the point where these super angels are actually colluding (and I don’t use that word lightly) to solve a number of problems, say multiple sources who are part of the group and were at the dinner. According to these souces, the ongoing agenda includes:

It’s curious to me that Arrington very specifically mentions “three” sources “who were at that meeting”, but switches to the less specific “multiple sources who are part of the group and were at the dinner” only a paragraph later.

At least two people attending were extremely uneasy about the meetings, and have said that they are only there to gather information, not participate.

So, two of his three or multiple sources were uncomfortable. Does this mean the third source had no issue admitting to Arrington that they were colluding? “Yeah, we were totally colluding, but I’m comfortable with that.” Why would the third man blow the whistle or speak to Arrington if he wasn’t uncomfortable with the group’s actions?

Perhaps he was uneasy, but not “extremely” uneasy?

One source has also said that there is a wiki of some sort that the group has that explicitly talks about how the group should act as one to keep deal valuations down.

These men are incredibly inept if Arrington’s allegations are true. Nothing says “master criminal” like a public record of illegal activities, stored on the internet.

I’m not going to say who was at the meeting since at least a couple of the attendees are saying they were extremely uncomfortable with the direction the conversation was going. But like I said, it included just about every major angel investor in Silicon Valley.

On a side note, this is a difficult post to write, because I call nearly every person in that room a friend. But these actions are so completely inappropriate it has to be called out.

This is where I start to feel as though he’s acting like a blogger rather than a journalist.

By providing hints about the identities of “10 or so” prominent investors, Arrington is inviting speculation about the identities of men who (he alleges) are engaging in illegal collusion and price fixing activities. How many prominent Silicon Valley investors are there? How many are now suspects in an allegation of collusion due to Arrington’s vague write-up?

Arrington refuses to name names because a handful of those men now claim to have cold feet regarding activities that they are nevertheless wrapped-up in. Activities that Arrington wouldn’t know about but for their willingness to talk about them. Further, he admits that part of his reticence in reporting is based upon established “friendly” relationships with all of the investors involved. 

Arrington claims that the group is now “on notice” but what does that even mean? Is it a veiled threat to stop whatever it is they’re doing? Is he imploring them to self-regulate their behavior? (“Please, guys? I really, really still want to be friends!”) Given that they’ve already (allegedly) broken the law, real journalism seems like it would have entailed waiting longer than a day to collect all the facts and evidence before nailing these investors to the wall. 

Reading Arrington’s post, I just can’t help but get the feeling that he blew a major story by rushing to publish the rather boring first act of a much longer drama. Part of that is because he’s letting personal relationships get in the way of his reporting.

If he’s got at least two uneasy sources who are deeply involved in the discussions, why rush it?

I attempted to get in touch with someone at Bin 38 to confirm that a group of investors did, in fact, have a table and a meeting on the day Arrington claims he crashed their party—as well as names—but, as expected, I was told by owner Don Davis they couldn’t “offer personal information about any of our guests.”

He did, however, invite me in for a glass of wine and bite to eat. 

Savvy. 

Oh well. It was worth a shot. Now, if only I lived in San Francisco. 

At this stage, Arrington has raised more questions than he’s answered. I thought investigative journalism worked the other way around? Meanwhile, he’s left the real scoop to someone else.

UPDATE 01

Dave McClure admits to having been at the meeting, and he paints a decidedly less damning picture:

mike arrington is a friend, an imposing figure, and a hard-nosed, hard-working journalist. that said, he’s dead fucking wrong about there being some story around ” collusion” (def’n). makes for great red meat on TechMeme & Twitter, but it’s just so much horseshit.

Two things:

1. If Arrington’s allegations are correct, despite McClure’s denial, his rush to publish has put all the power in the hands of those who were involved. Here’s hoping Arrington has more evidence than he’s presented thus far. Given that less than 24 hours passed between “developing story” and “published allegation” I have my doubts.
2. If Arrington is wrong, as indicated by McClure’s denial, he’s a dolt. As a blogger though, he’ll get away with being wrong because as soon as he posts a scoop about something else that may or may not be accurate, this will all be forgotten. If you’re looking for the real distinction between blogging and journalism, there it is. 

Assuming Arrington is wrong, and this was just a friendly meeting of investors, that leaves the question of why his sources—people involved with the meeting—would indicate otherwise? Why would his initial source tell him he wouldn’t be welcome? Did the investors simply not want a nosy blogger there looking for a scoop not realizing that the bigger risk is that he’d implicate them in criminal activity? This denial simply raises even more questions.

UPDATE 02

Despite the fact that Arrington, if wrong, is libeling McClure at worst and implicating him in criminal activity through a series of honest journalistic mistakes at best, McClure doesn’t seem too put off by Arrington’s allegations. He denies them, yes, but he also seems more than happy to continue his friendship with Arrington as though his “friend” didn’t just stab him in the back.

Which makes me wonder: Perhaps there is collusion going on, here. Perhaps Arrington and several of his investor friends concocted a non-story which would culminate in a tit-for-tat, back and forth pissing match that would be difficult to prove and would lead to exposure for TechCrunch and…what?…for McClure and his cohorts?

All of the irregularities I mention above start to make a lot more sense under this scenario. Maybe Arrington and McClure only raise questions because there are no actual answers?

UPDATE 03

If Arrington’s allegations are true, this is a huge story. It’s way bigger than anything else posted on TechCrunch right now. Curiously, it’s been removed from the headlining “top stories” module. An hour ago, it was still listed there as a “must read” article. It’s now buried two pages deep.

UPDATE 04

As expected, this story is all over the place and we’re starting to see some actual analysis of the claims and counter-claims. Daily Finance wonders if anything can be proven, assuming Arrington sticks to his story:

Goldman notes that at this point the allegations don’t rest on much hard evidence — it’s all hearsay. “I’m skeptical that the facts are that extreme, especially because Arrington wasn’t at the meeting, and so is relying on secondhand information where people might view the conversations very differently,” he said.

I made a similar point when I wondered if Arrington moved too fast by publishing his story prior to gathering more evidence, but it’s not really true that this is all hearsay: We still haven’t heard from Arrington’s sources who—if it’s true that they took part in these discussions—would have direct knowledge of the situation. At that point it’s up to a jury to decide which side tells the more persuasive story.

And, of course, there’s the wiki that one of his sources alluded to which allegedly detailed the group’s nefarious efforts.

So the problem isn’t that there was no empirical evidence to prove Arrington’s allegations—it’s that there may not be now that he’s published his allegations.