Why We Sold TechCrunch To AOL, And Where We Go From Here(techcrunch.com)
techcrunch.com
Why We Sold TechCrunch To AOL, And Where We Go From Here
http://techcrunch.com/2010/09/28/why-we-sold-techcrunch-to-aol-and-where-we-go-from-here/
19 comments
> The technical reason seems like a very bogus reason
That reason isn't a technical one. As an administrator of your small company you have to hire people that are good enough and keep them happy.
All small companies have this problem. Programmers don't want to work for small wages, feel unappreciated, work on uninteresting problems forever, or be second-class citizens. Those that do and are half-decent, would rather prefer the job security of a big company.
Another reason would be the stress of any small business to be profitable. Not only that, but you've started the business partly to get rich.
If what he's saying is true, and AOL can't interfere with their writing, and it's in the contract, and he also earn a handsome sum of money, then I can see why they agreed.
That reason isn't a technical one. As an administrator of your small company you have to hire people that are good enough and keep them happy.
All small companies have this problem. Programmers don't want to work for small wages, feel unappreciated, work on uninteresting problems forever, or be second-class citizens. Those that do and are half-decent, would rather prefer the job security of a big company.
Another reason would be the stress of any small business to be profitable. Not only that, but you've started the business partly to get rich.
If what he's saying is true, and AOL can't interfere with their writing, and it's in the contract, and he also earn a handsome sum of money, then I can see why they agreed.
To be honest, both the TC blog and Crunchbase aren't that complicated to do. Arrington could theoretically hire contract programmers to do upgrades to the software if and when they need them.
Perhaps what Arrington means is that it's really hard to find programmers willing to work on these two products for the long term. It is a blog and a database, after all, and the nature of the software doesn't make for terribly exciting work.
Perhaps what Arrington means is that it's really hard to find programmers willing to work on these two products for the long term. It is a blog and a database, after all, and the nature of the software doesn't make for terribly exciting work.
It's never as easy as "hire some contract programmers to [insert thing here]." Management is a pain in the ass. Finding talented contractors is hard. Finding one's whole be available past that one feature you need is harder. Finding folks who will deliver when they say they will is even harder than that.
Making sure that the 3 guys working together are actually working ltogether is tough. Then you deal with schedules, deployments, personality conflicts, and the whole thing.
Managing things is a profession unto itself. My guess is Arrington doesn't like doing it.
Making sure that the 3 guys working together are actually working ltogether is tough. Then you deal with schedules, deployments, personality conflicts, and the whole thing.
Managing things is a profession unto itself. My guess is Arrington doesn't like doing it.
Finding one's whole be available past that one feature you need is harder.
It took me a while to parse this as "Finding ones who'll be available after finishing that one feature you need is harder." :)
It took me a while to parse this as "Finding ones who'll be available after finishing that one feature you need is harder." :)
I think your second point is exactly what he means. He needed a CTO but no one good wanted to be a CTO for a company focused on writers rather than engineers.
"To be honest, both the TC blog and Crunchbase aren't that complicated to do. Arrington could theoretically hire contract programmers to do upgrades to the software if and when they need them."
No offense but his sounds so incredibly naive it's not even funny.
No offense but his sounds so incredibly naive it's not even funny.
None taken. That said:
http://sivers.org/how2hire
http://sivers.org/how2hire
That article makes my point exactly. It basically says 'spell out every detail and make sure the programmer doesn't have to think about the bigger picture, and can focus purely on the coding'. For example, from the article, "Leave off all details that the programmer doesn't need to know.", "Write a detailed walk-through of every click.", "In a text file, write down every thing you know this Version 1.0 needs to do. Every click. Every action. A long list of small simple things.", ...
From the post I take it that is is exactly what Arrington didn't want to do any more. The article you linked to basically says 'to make your idea a success, you treat the programmer in detail, and let him focus solely on the technical aspects of the software.'.
From the post I take it that is is exactly what Arrington didn't want to do any more. The article you linked to basically says 'to make your idea a success, you treat the programmer in detail, and let him focus solely on the technical aspects of the software.'.
Thats exactly what I was thinking, besides independent contact workers (in my experience) doesn't care much if the work is boring as long as they are getting paid. Thats why to me the excuse seemed empty and makes no sense.
But you always need someone who cares. Someone who pulls everything together, not technically, but who thinks of how things should work, what's best for the users or business goals. This you cannot subcontract because subcontractors don't care. They will do whatever you tell them to, to spec. You need someone with a connection to the company to make great things, someone who values the long-term benefits, not just the amount he's paid this week. Day-laborer programmers are easy to find, rent-a-code is full of them. But while you can use them to do menial tasks, or specialized ones, or absorb a demand spike, you can't count on them to drive your business. Sounds like that came all on him, he didn't want to do that anymore.
Same is true for other industries btw. I'm living through this in the real estate sector right now and sometimes I want to punch people in the face for not just thinking for one freaking second before blindly doing what some other non-invested person wrote on a spec sheet or plan, but then I remind myself that they're all mercenaries who just do what I (directly or indirectly) tell them, and that I need to be on top of every little detail and double- and triple check everything. That's what driving (not just running) a business is about.
Same is true for other industries btw. I'm living through this in the real estate sector right now and sometimes I want to punch people in the face for not just thinking for one freaking second before blindly doing what some other non-invested person wrote on a spec sheet or plan, but then I remind myself that they're all mercenaries who just do what I (directly or indirectly) tell them, and that I need to be on top of every little detail and double- and triple check everything. That's what driving (not just running) a business is about.
Not sure why you got down voted so +1.
You're right about the technical. As for what he's offloading I guess that's running TC as a business. Ad sales, budgets and so forth.
On a side note it's very strain to me to run something so intertwined with the valley from... Seattle.
You're right about the technical. As for what he's offloading I guess that's running TC as a business. Ad sales, budgets and so forth.
On a side note it's very strain to me to run something so intertwined with the valley from... Seattle.
You'd be shocked how many technical challenges and headaches go into operating a major technology blog. Trust me, I should know.
I trust you. But how much of that is Arrington's headache? The server is hosted by Wordpress VIP, and they mostly like down't have a full-time developer and sys-admin like Mashable does.
Does the editor and founder of Mashable maintain the server and fixes software issues?
I hope not!
Does the editor and founder of Mashable maintain the server and fixes software issues?
I hope not!
Financial backing is a huge weight off his back. Not necessarily for his personal cash flow, but the business itself. The company now has a much better cash flow that can allow them to branch out to do other things.
But it should also be a payday for him, a more reliable one at that.
But it should also be a payday for him, a more reliable one at that.
Arrington's post says all the right things, but it does not contain the word "money". It's not a dirty or shameful word, and a discussion of a sale of a company that makes no reference to it is obviously incomplete.
"Tim asked me how things were going at TechCrunch. I told him I was exhausted after five years but that a recent move to Seattle made it easier to balance my life."
Translation: Dear California FTB, my move had absolutely nothing to do with tax avoidance on a cash windfall and I really am a Washington resident. I had NO idea we were being acquired when I made the move 4 months ago... I'm as surprised as you are. Seriously. For reals.
Teasing aside, Mike's built an impressive media business from scratch over the last 5 years. It's been fun to watch, and I'm sincerely happy for him. If you're reading, Mike - congratulations!
Translation: Dear California FTB, my move had absolutely nothing to do with tax avoidance on a cash windfall and I really am a Washington resident. I had NO idea we were being acquired when I made the move 4 months ago... I'm as surprised as you are. Seriously. For reals.
Teasing aside, Mike's built an impressive media business from scratch over the last 5 years. It's been fun to watch, and I'm sincerely happy for him. If you're reading, Mike - congratulations!
Translation: Dear California FTB, my move had absolutely nothing to do with tax avoidance on a cash windfall and I really am a Washington resident. I had NO idea we were being acquired when I made the move 4 months ago... I'm as surprised as you are. Seriously. For reals.
This is actually more legitimate than it sounds. My family's business (www.seliger.com) does grant writing, and my parents really wanted to move to L.A. from Seattle. But they moved to Tucson (where I'm in grad school) instead, because of the cost of housing and the tax situation. Their thinking informed this comment: http://news.ycombinator.com/item?id=1711350 . WA State is contemplating an income tax, which to me sounds like suicide and idiocy because Seattle's biggest advantage over CA is not having an income tax.
In any event, none of my family will step foot in CA for business because of the franchise tax board. But a lot of our clients are there, so every other year or so we'll get a nastygram from them, which requires that we reply and say, "We have no physical presence there, so fuck off."
This is actually more legitimate than it sounds. My family's business (www.seliger.com) does grant writing, and my parents really wanted to move to L.A. from Seattle. But they moved to Tucson (where I'm in grad school) instead, because of the cost of housing and the tax situation. Their thinking informed this comment: http://news.ycombinator.com/item?id=1711350 . WA State is contemplating an income tax, which to me sounds like suicide and idiocy because Seattle's biggest advantage over CA is not having an income tax.
In any event, none of my family will step foot in CA for business because of the franchise tax board. But a lot of our clients are there, so every other year or so we'll get a nastygram from them, which requires that we reply and say, "We have no physical presence there, so fuck off."
Could CA do anything to him even if he came right out and said, "I moved so I could avoid California taxes"? There's nothing illegal about that.
Yes. They would re-classify him as a permanent California resident with a temporary residence in WA, which would make him subject to CA franchise tax. Not paying his taxes would then be illegal.
But if he's no longer living in California, and has a WA address, drivers license, etc. then how can California do anything?
then how can California do anything?
There are probably rules about how long you need to be there to establish residency. And the franchise tax board is notoriously nasty. I remember reading an article about how they go after athletes who play games in CA (read: all of them). So if you're a basketball player and you play the Lakers, if you earn $200,000 that night, CA wants $20,000, even if that's the only thing you've done in the state.
There are probably rules about how long you need to be there to establish residency. And the franchise tax board is notoriously nasty. I remember reading an article about how they go after athletes who play games in CA (read: all of them). So if you're a basketball player and you play the Lakers, if you earn $200,000 that night, CA wants $20,000, even if that's the only thing you've done in the state.
This is true everywhere, not just in California. All forty-one states with a personal income tax have laws on the books to collect taxes from non-residents who work in their state. If you're affiliated with a pro team (including players, coaches, trainers, etc.), you can expect to file your taxes about a dozen states (plus Canada.) If you're a musician or other entertainer (circus clown, for example) on a huge tour, you could conceivably file 41 state returns plus a few for other countries.
Technically, MN and ND have a reciprocity agreement where residents of one state that work in the other can pay tax in the state they are residents of and not the state they are earning money from. It is generally there because of the Grand Forks / East Grand Forks and Fargo / Moorhead areas crossing states.
It partly depends on just how legit he's been about the move. My guess is that the amount of time he's spent in CA since he "moved" to WA a few months ago will turn out to be suspiciously high for a non-California resident. Bin 38, if I recall, is not located in WA, and he seems to have just happened to be in that area a few weeks ago, several months after he "moved" to WA. Perhaps he flew out specifically for the occasion and really is not usually around. But I wouldn't be surprised if he still lives/works primarily in California, and has a sham WA residency.
You make a good point. It also gives credence to Calacanis' allegations that Arrington blew up TC50 to screw him out of a payout.
Even if it didn't mean disclosing the sale price. It's strange that MA doesn't talk at all about money—seems like it's his character to be blunt. Perhaps it (ironically) reveals more than he'd like to.
Best comment:
"Congratulations, Mike! Now stick to your roots and leak the price! :-)"
"Congratulations, Mike! Now stick to your roots and leak the price! :-)"
He mentions their "endless tech problems". Never noticed that.
Any company where tech people are the equivalent of high tech janitors is going to have endless tech problems. Smart nerdy types won't want to work there, and the company won't want to put enough resources into a cost center.
There's a good lesson in there about only working at places where you contribute to income.
There's a good lesson in there about only working at places where you contribute to income.
They're on WordPress VIP. I don't know why they would have endless tech problems seeing that they're hosted on the largest WordPress system.
EDIT: Yes, I know that WordPress VIP does go down, but that's WordPress.com's problem, not TechCrunch's.
EDIT: Yes, I know that WordPress VIP does go down, but that's WordPress.com's problem, not TechCrunch's.
TC downtime on Wordpress VIP: http://techcrunch.com/2010/06/10/wordpress-gives-us-the-vip-...
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For me, before I find out a tech issue is minor, I have flashbacks to all those major issues that caused major headaches. Minor issues tend to be an "oh crap not again -> relief" ride rather than "I wonder whats wrong -> that isn't so bad".
I always noticed massive slowdowns loading all their JS rubbish when I load their page, but I agree; I've never seen their site down that I recall.
> Tim told me that he doesn’t want whatever makes TechCrunch special to go away. He also said it was important that we feel free to criticize AOL when we think they deserve it. And the agreement we signed with AOL fully reflects this.
I can't figure out how this agreement could actually be enforced. If AOL shuts down a story on TC, what's going to happen? It's not like TC/AOL is going to sue corporate/AOL for breach of contract. There are almost certainly performance and tenure based incentives in the buyout to push Arrington and other higher-ups at TC to be a good soldiers. (They might choose not to be good soldiers, but their only option at that point is to quit.) The editorial freedom of TC is entirely dependent on the honor of upper management at AOL.
I can't figure out how this agreement could actually be enforced. If AOL shuts down a story on TC, what's going to happen? It's not like TC/AOL is going to sue corporate/AOL for breach of contract. There are almost certainly performance and tenure based incentives in the buyout to push Arrington and other higher-ups at TC to be a good soldiers. (They might choose not to be good soldiers, but their only option at that point is to quit.) The editorial freedom of TC is entirely dependent on the honor of upper management at AOL.
Look at the history of some of Paramount's divisions (book vs film/tv). I remember there was some threats of lawsuits there.
The reason TechCrunch is TechCrunch is because they are TechCrunch, not AOL. Now everything they write is going to (legitimately) be put under the microscope to find a pro-AOL slant.
Arrington got his FU money and so what does he care at this point. I'd be surprised if you don't see the startups AOL is courting get positive spin on TC, and the startups AOL loses to in acquisitions to suddenly drop from the headlines. I wouldn't blame them, as the pressure is going to be absolutely huge on them to shift their reporting as AOL is in negotiations with startups.
Arrington got his FU money and so what does he care at this point. I'd be surprised if you don't see the startups AOL is courting get positive spin on TC, and the startups AOL loses to in acquisitions to suddenly drop from the headlines. I wouldn't blame them, as the pressure is going to be absolutely huge on them to shift their reporting as AOL is in negotiations with startups.
Yeah, I'm sure the CEO of AOL just mentioned that he wanted to acquire TechCrunch out of the blue and that Arrington had no idea.
If this means we don't have to see any more TechCrunch headlines on Hacker News, then I'm all for it.
Aw, give him this one.
does arrington get an @aol.com address now?
I don't care what MA says, it's a sad day for getting the controversial embargo-breaking news that TC is known for.
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Anybody have thoughts on what will happen to CrunchBase? Will the terms of use stay the same?
I like the comment about halfway down:
A $25M – $40MM sale, doesn’t this make techcrunch a “dip shit company”?
A $25M – $40MM sale, doesn’t this make techcrunch a “dip shit company”?
I think instead of TechCrunch now losing its character, Arrington will take TechCrunch to new heights. This "merger" makes sense to me. http://goo.gl/fb/GAxZ5
This isn't Twitter - you can write out your comment, or at least your URLs.
The whole post was FAIL due to the fact he never once mentioned price - even though he's dying to do that about every other deal in the tech scene!
Do as I say, not as I do Mike?
Do as I say, not as I do Mike?
AOL?
"Internet Innovation Is Like The Auto Industry In The 1950s — Big, Stagnant Companies Rule", an article posted on Techcrunch earlier this week, is indicative of why Arrington sold. He is sitting at the forefront of the consumer internet space, and as such, sees the death of startups in that space. I am sure he got tired of putting out press releases for big companies.
At an age when the giants (facebook, google, amazon, zynga) can quickly react to your new startup and assemble a team and build your website features in a few month, all the while retaining distribution power, what chances do startups have against them?
At an age when the giants (facebook, google, amazon, zynga) can quickly react to your new startup and assemble a team and build your website features in a few month, all the while retaining distribution power, what chances do startups have against them?
Most of the spam I get comes from AOL addresses, I actually think about blocking the entire domain altogether. I'm sure same competent engineers will help TechCrunch shine.
The technical reason seems like a very bogus reason. Its true that the TC design could use some help and the general site layout and speed could use some improvement. But any half-decent developer and a designer who is worth his balls could solve this problem. After all they are running on wordpress using PHP. In regards to the speed of the site, its no so much of a technical problem as it is a "widget problem" they have more external JavaScript widgets pulling in than the site itself. The only solution to that problem is a reduce the number of external calls.
The other reason he used was that he is tired. I can understand that, it is very much possible to get tired of something that you have been very involved with for several years, even if the project is the love of your life. It can be both mentally and physically taxing. But he is not going anywhere... he is staying with TC even after the sale. What responsibility is he offloading other than the technical aspect of the site? And it isn't much offloading because its not like he is sitting behind the computer and developing the site, he would be hiring someone to that job.
The only thing that he doesn't mention and doesn't talk about (anyone else in his position would have done the same), is money. It is possible that AOL offered something that was too good _for him_ to refuse or he really needed the money. Everything else he mentioned sounds like a bunch of hogwash to me.