TechCrunch Blogger Michael Arrington Can Generate Buzz … and Cash

TechCrunch Blogger Michael Arrington Can Generate Buzz … and Cash


Fred Vogelstein 
06.22.07 | 2:00 AM


Photograph by Darcy Padilla

One Tuesday morning
in early May, Michael Arrington was sound asleep in his bedroom in
Atherton, California, when three men burst in. Naturally, he was
startled. His first reaction, he recalls, was to tell them to "get the
fuck out." But he quickly realized they meant no harm. Clad in white
business suits and speaking English with a Dutch accent, the apologetic
men looked more like dandies on their way to a garden party than
criminals. They were, it turns out, overeager entrepreneurs from
Amsterdam making the rounds of Silicon Valley big shots. All they
wanted — desperately — was to tell Arrington about their startup.

Over the last two years, Arrington has gotten used to
entrepreneurs beating a path to his door. (His cluttered office is in
his rented house, just across the hall from the bedroom.) Since he
launched TechCrunch — an
obsessively updated blog that chronicles Web startups — in 2005, he’s
been getting at least one unannounced visitor practically every week.
The drop-ins have become a distracting side effect of being among the
most influential — and quite possibly the richest — business writers in
Silicon Valley. Indeed, he wonders if he’ll soon need to move. "It’s
hard, because in some ways I want to help these guys," he says. "But
sometimes I feel like I need a little privacy, and I end up taking it
out on whoever shows up."

To the world outside Silicon Valley’s tight-knit community of
startups, venture capitalists, and angel investors, TechCrunch is just
another mouthy blog. But to entrepreneurs in the white-hot consumer
Internet boom — known to many as Web 2.0 — Arrington has become a power
broker. In April, after an onstage conversation with the director of
Web technologies at Sun Microsystems, he looked like a groom in a receiving line:
For nearly an hour, the procession of entrepreneurs was 10 deep — all
wanting to give Arrington a business card and an elevator pitch. At a
recent conference in San Francisco, Rodney Moses, founder and CEO of FatSecret,
an online dieting site, followed Arrington around for about 30 minutes
to secure 10 minutes with him. "I had read that’s just what you do,"
Moses says. "You wait your turn."

The wait can be worth it. A positive 400-word write-up on
TechCrunch usually means a sudden bump in traffic and a major uptick in
credibility among potential investors. In early March, for example, the
site profiled Scribd, a San
Francisco startup that bills itself as a YouTube for documents. CEO and
cofounder Trip Adler says he had 10 calls from venture capitalists
within 48 hours. "We didn’t want to raise venture capital initially,"
Adler says. "But the offers were at such good valuations that it
finally didn’t make sense not to do it."

VCs and entrepreneurs read Arrington for the same reason they
pay attention to any top journalist or columnist: He’s smart, sourced
up, and ahead of the curve. "He has more information than any of us,"
says David Hornik, a partner at August Capital and an occasional source for TechCrunch. Arrington breaks news — like his scoop about Google buying YouTube or Yahoo’s internal financial analysis of acquisition target Facebook — well ahead of the mainstream media. One day he’ll review the pros and cons of all the online photo-editing sites, another day he’ll give you the blow-by-blow on why a company like Filmloop was sold, and on yet another day he’ll rant about how Silicon Valley could use a downturn.

And unlike most solo bloggers, Arrington has turned his passion
into a tidy business. Revenue from advertising, job listings, and
sponsorships now totals about $200,000 a month. He says he could have
sold the operation last fall to a media company (which he won’t name)
for $8.5 million, and he may still. But with a new top-flight CEO from
Fox Interactive Media, roughly $1 million in the bank, and VCs lining
up around the block to invest, Arrington talks like a man who wants to
build an empire. There are lots of blogs with more raw traffic — mostly
celebrity or political sites like A Socialite’s Life and Daily Kos —
but few with as much business influence. Based on how many times other
Web sites link to his content — an unscientific but accepted yardstick
— Arrington is the world’s fourth-most-powerful blogger, according to
Technorati.

Photograph by Darcy Padilla

By any measure, it has been a remarkable rise. Two years ago,
Arrington was a nobody — a former attorney and entrepreneur who, at 35,
looked as if he might never hit it big. Now, without a journalism
background or media-giant bankroll, he is mentioned in the same
sentence as big-shot tech journalist Walt Mossberg and venture
capitalists John Doerr and Michael Moritz, two of the guys who backed
Google. But Arrington is not only a self-made Silicon Valley rock star,
he’s a textbook example
of how to turn intelligence, tenacity, and arrogance into an Internet
brand. "He’s become an icon and done it in record time," says angel
investor Ron Conway.

While mainstream media outlets have been scrambling to figure
out how to make blogging work, Arrington has emerged as a blogosphere
phenom. When he realized that no one was writing about the explosion in
new consumer Internet companies, he began working 16 hours a day, seven
days a week, to build an audience. Originally a solo operator, he now
has a half dozen writers and researchers pumping out three to 10 posts
a day in addition to maintaining an opinion blog called CrunchNotes, a
gadget blog called CrunchGear, a classified-ad site called CrunchJobs,
and a portable-computing blog called MobileCrunch. He says he has
looked at, however briefly, more than 7,000 startups in two years and
has written about nearly 500 of them. "I saw a parade," he says, "and I
got in front of it."

Arrington’s longtime associate and mentor, Keith Teare, says he’s never met anyone with as much drive as Arrington has. He says it’s part of the reason Arrington
has had so many employers — six (not including part-time consulting
gigs) since graduating from Stanford Law School in 1995. Arrington
always wanted more power and responsibility than his employers were
prepared to give him, and he was never good at concealing his
frustration — or any emotions, really — when he didn’t get his way.
Arrington has ended many an argument with Teare by essentially
declaring their friendship over. "Keith, we’re done!" Arrington will
say, only to apologize the following day.

Arrington’s impatience extends to the niceties of traditional
journalism as well. He sees no problem commingling the roles of
entrepreneur, investor, publisher, reporter, and columnist. Most
journalists work hard not to write about friends. They avoid covering
people or companies that would create even the appearance of a conflict
of interest. Arrington doesn’t observe any such boundaries. He’s better
today at disclosing his conflicts than he was when he first started
TechCrunch, but he’ll tell you that it is exactly those conflicts — and
his refusal to pull punches in spite of them — that give him his
competitive advantage. "One of my friends, Tom Ball, is mad at me
because I just trashed his startup, Jigsaw. He’ll get over it — I hope," Arrington says. "I’m an investor in a company called Daylife, and I shredded
them." He’s also happy to use his friends as sources. "When I broke the
YouTube story, it’s only because I was online at 2 am, and a friend
told me about it."

Arrington’s four-bedroom ranch house sits on a 1-acre plot in Atherton, which is ranked number two on the Forbes
2006 list of the nation’s richest zip codes. But don’t be fooled; he’s
not living large. The place is a rental — and it’s a dump. The kitchen
looks like it hasn’t been redone since the ’70s, and the beige shag
carpet badly needs a shampoo. One of the bedrooms is unfurnished save
for a bed "where out-of-town entrepreneurs can stay if I like them,"
Arrington says. Another bedroom is outfitted with a desk and a futon on
the floor. His new CEO, Heather Harde, uses the room as an office during the day. His research assistant, Nick Gonzalez,
often crashes on the futon on weeknights. Arrington’s office at the end
of the hall looks like it belongs to a grad student: two computer
monitors, papers stacked everywhere, a bottle of generic antacids.

The seeds of Arrington’s fascination with entrepreneurs were
planted during his years as a young corporate attorney. Not long after
graduating from Stanford Law School in 1995, he joined the Valley’s
premier high tech law firm, Wilson Sonsini Goodrich & Rosati. He
specialized in helping companies prepare for initial public offerings.
He even coauthored a book
on the subject. He was, by his own account, "an exceptionally average
attorney," but he always loved hanging around startups. "Entrepreneurs
are crazy," he says admiringly. "It makes no sense to quit a job as a
lawyer or an investment banker making $200,000 a year to take a
one-in-ten chance of getting rich."

In 1999 — at the peak of the Internet bubble — Arrington took
just such a chance himself. He left the law firm and went to work as
head of business development at Real Names, a hot startup with an idea
that seemed sexy at the time: Replace long, nonintuitive Internet
addresses with simple, natural-language entries. Teare was the Real
Names founder and CEO, and Arrington was captivated by both the idea
and the entrepreneur.

The hoped-for IPO riches never came. Instead, the Internet boom
went bust, taking Real Names down with it. But instead of going back
into law like a lot of boom-time washouts, Arrington jumped to another
startup: Achex, a service that
promised to make online money transfers a snap. That didn’t work out
very well either. A little upstart called PayPal swooped in to dominate
the sector. The Achex founders ended up selling the payment
architecture to a financial services firm for $32 million. "I made
enough to buy a Porsche. Not much more," he says.

He spent the next three years living in England, Denmark,
Canada, and Los Angeles working for companies that bought and sold
domain names. It was easy work for a generous paycheck, and by the
middle of 2004, with a few hundred thousand in the bank, he rented a
beach condo in LA and took nine months off. "All I did was work out,
surf, and watch movies," he says. "I watched almost every movie at
Blockbuster — three a day for a year." But in 2005, Teare told him he
was starting an online-classified site called Edgeio. The idea was to compete with craigs­list. Arrington was intrigued, and the two again struck up a partnership.

The invention of TechCrunch happened pretty much by accident.
Arrington started blogging as a way to get up to speed on new business
models. "Remember, I was gone in 2004 when Flickr came out and
Bloglines and all the cool new Web 2.0 stuff," he says. "So half my day
was spent researching old startups. I figured at the very least I’d use
it as a networking tool." Instead, TechCrunch became so popular, so
fast, that Arrington quit Edgeio less than six months after he started
working there.

To drum up excitement for the blog, he started hosting
barbecues at his house in Atherton. The first attracted only 20 guests.
But the second drew 100, and the third 200. For the fourth, he put up a tent in his backyard, and more than 500 people came. Before long his wild parties, which lasted into the wee hours, became a major stop on the Valley social circuit.

Of course, Arrington’s success is about more than partying like
a frat boy and schmoozing like a Hollywood agent at a cast party. With
the exception of a three-week vacation (during which he worked
half-time) at the end of 2006, he says he has worked every day for two
years straight. He gets up at about 10 or 11 am, is at his desk 10
seconds later, and tends to the business side of his operation until
early evening, seeing entrepreneurs, doing phone interviews, tracking
the news of the day, and writing posts. He’s often at parties or other
events until 10. It’s typically not until 10 or 11 pm, when things
quiet down, that he has time to think and write more thoughtful,
analytical blog entries. "I’ve actually cut back," he says. "In the
beginning, I got up every day and worked until I passed out. I’ve
always been like that. It’s probably why I’m not married yet."

Arrington relishes the rough-and-tumble of online feuds,
comment wars, and one-upmanship. And as an A-list blogger, he’s obliged
to wade into controversy most every day. Online and in person, he can
be intimidating. At 6’4", he projects a persona somewhere between an
aging linebacker and Tony Soprano — a large man always on the verge of
losing his cool. Indeed, a couple of his online tantrums have become
legendary.

Last fall, for example, he was pilloried by journalists during a panel discussion in Washington, DC. They trashed him for saying that a New York Times
technology story was so flawed it could only have been "generated from
back-scratching or lack of understanding of the product." He blasted back
with a 1,200-word rebuttal on his blog, ranting about how he’d been
sandbagged and how the mainstream media was out to get him. "It’s the
first time I addressed ‘real’ journalists head-on," he wrote. "And all
I saw was fear, loathing, and disdain."

The cluelessness and arrogance of major media outlets is a
favorite talking point. Arrington is especially enraged by journalists
who follow in his wake without credi­ting him. He keeps a mental list
of such offenders. "Two weeks ago, I broke the news that Microsoft and
Tellme were in acquisition discussions," he says. "Yesterday CNET
writes a post. I know the writer reads TechCrunch. She didn’t even
mention it." He vowed never to link to another CNET story, but he has
since said that he was exaggerating.

Earlier this year, while attending DEMO, the annual tech conference for entrepreneurs, he announced on his blog
that he planned to create a competing conference — this while he was
sitting in the audience connected to the Wi-Fi network. "They stole one
of my writers, so I was pissed at them," he says of the DEMO
organizers.

He even lost his cool over this story. In April, two of his friends — Jason Calacanis,
who started Weblogs Inc. and sold it to AOL, and Dave Winer, who is
considered the father of RSS — blogged about my emails to them seeking
phone interviews. Titling his post "With friends like these," he scolded them for blowing a great opportunity for him. He was worried that Wired would kill this story because of the advance publicity.

Arrington readily admits that he’s prone to
excess and uncontrolled outbursts — of temper, partying, and work. But
it’s that very quality that has helped make him one of the most
compelling Silicon Valley heavyweights in a long time. He doesn’t deny
that some of the fits of anger are for show, but he also insists that
he’s just a passionate, emotional guy. "I’m human. I’ve put my entire
life into this blog, and when I’m attacked, it’s emotional," he says.
"I’m going to react sometimes — that’s just me. Does that mean I’m
flawed? Yeah. Does that mean I’m not being 100 percent efficient about
business? Yeah. But it really hurts when people attack me, and I think
people who don’t respond aren’t very human or very interesting."

To bring some balance to his enterprise, he hired Harde, a
former mergers-and-acquisitions specialist for Rupert Murdoch’s News
Corp. He says she is as steady as he is volatile. And if he’s going to
make TechCrunch into the media empire he envisions, he knows that he
needs someone like her to run things.

Already, he’s laying the groundwork for a whole stable of
clued-in, hard-driving news blogs: MusicCrunch, SoftwareCrunch,
TelecomCrunch. "The goal is to have 15 to 20 sites 18 months from now,"
he says . He plans to hire popular bloggers and create a home­page with
the best news from each site to draw readers. From there, they could
drill into each topic in more depth. His aim is to become the premier
technology news site on the Internet, one that goes head-to-head with
CNET and potentially with other technology news sites, including
Wired.com. Arrington figures he can get by with just a few dozen
employees. "With 25 to 30 paid writers against CNET’s huge cost base,
they won’t be able to compete," he says.

It’s a crapshoot, to be sure. But there is some precedent for
turning a string of blogs into a business success. Calacanis sold his
blog fiefdom two years ago for $25 million. And based on pageviews,
it’s estimated that Nick Denton‘s
Gawker Media — which includes Gawker, Lifehacker, Valleywag, Gizmodo,
Wonkette, Defamer, and a half dozen other blogs — could fetch more than
$100 million.

Arrington is clearly in that league, and he’s counting on Harde
to help him win. "If we need to make acquisitions, she can do that in
her sleep," he says.

But it’s one thing to be an opinionated entrepreneur with a
platform. It’s another for Arrington to replicate his investor-
entrepreneur-journalist model at dozens of sister publications.

Some TechCrunch readers, like Reid Hoffman,
founder and former CEO of Linkedin, believe that Arrington may need to
decide whether he wants his new blogs to be stocked with journalists
working from the outside or players working from the inside. When you
combine the two roles, Hoffman says, no one knows how to behave around
you: Are you a journalist or a power broker?

Arrington says it’s a false dilemma. He and his new bloggers
can straddle this line forever, he says, as long as they disclose their
conflicts. "I strive to be fair and say only what I believe the truth
to be. But that’s where it ends," he wrote last year
in an 800-word post on his companion blog, CrunchNotes. "Human
interaction is simply too complex to pretend that we are all
objective." Like the capitalist he is, Arrington trusts the market to
reward or punish him as it sees fit. If readers and advertisers keep
coming back — so far, so good — what’s the problem? And if the market
shifts, expect to hear it from Arrington first.

>BackTrack

Leave a Reply

RSS Daily Search Trends