I love how you post a Sarah Lacy video for this post. I srsly L-O-L’d

Your on the right track Mike! You living you dream! keep up the good work with your staff!

lol, I like how he pronounced hyperbole like “hyperbowl” LOL

Ha Ha

Mostly not, in other words, somewhat yes.

Prediction: TechCrunch buys up some blogs! Do it!

@Michael - I think this applies to every company. You need to have a solid roadmap and raise funding when you truly need it. I think a lot of companies think there is a set in stone to-do list for succeeding and raising funding is one of those steps. You need to consider your roadmap and how financing fits into those plans. Unless you can demonstrate a need for additional funding, don’t bother. I also think the way technology blogs glamorize A rounds and B rounds doesn’t help. It makes “raising funding” and “overall success” synonymous in the eyes of many readers when the two are not the same and once certainly does not guarentee the other.

You should concentrate on your product first. When you are discussing your product with the team and the need to raise funding rises as a result of that discussion…. that is when you truly need it.

At Digsby we have put all our focus on creating a product our users will love, responding to feedback, and sticking to solving real problems. We launched our public beta today and I’m sure you can tell from the fanfare around the world that this is what makes the difference between a successful product and a Deadpool product.

Steve Shapiro
President
http://www.digsby.com

Very interesting indeed. Just exciting to watch the transformation of old media to new media. I just hope new media and your proposed dream team concept doesn’t translate into old corrupt media tactics controlled by powerful special interests and corporations.

Sarah Lacey jokes aside, great stock photo of Mike…cracks me up =)

Jump the shark baby all the way….

I think you are secretly planning world domination by lulling us all in to thinking its all about the tech blogging when really its about creating this massive market where you have all the power…. now where is the picture of you with an eye patch stroking a fluffy cat :p

I think Tech Crunch will have to buy other blogs and build a better brand not out great bloggers, but out of great content. Let us not forget that content is why we come to blogs and horrible content can drive us away from blogs also. Why is Michael Arrington is the public face and not really ‘running the show’.

Techcrunch should expand into a social network blog.

The types or readers here are educated and aspirational.

They would love to network with others with shared interest from around the world.

They could be an optional log in and personal page for those wishing to become members - and regular comment options for those who don’t

or to paraphrase:
——

Interviewer: IS THERE A GRAND STRATEGY FOR GOOGLE? IT SEEMS AS IF YOU’RE DIVING INTO ALMOST EVERYTHING.

Larry Page: We don’t generally talk about our strategy … because it’s strategic. I would rather have people think we’re confused than let our competitors know what we’re going to do. That’s an easy trade-off.

-Time Magazine group interview with Eric Schmidt, Larry Page, and Sergey Brin
February 2006
http://www.time.com/time/magaz.....56,00.html

Nothing like some good Yahoo loving payback after the sl defense. VW 250!

(long post)

Two comments:

1) @Mike: I am sure you are an intelligent guy and understand the ups and downs of getting funding and the responsibility that comes with that. Also, the cost of the money. The question is: Are you ready for what that means? Having a great team is the very important part of building a company, but managing it in the right direction is just as important. It is all in the execution even more so than the actual product. Add a good product and then … success!!

2) A while back somebody sent me a link to a video (I wish I had kept the link) that prophetized the end of printed media in favor of online media. It was a VERY dramatic video with “Demolition Man” undertones. And the truth is clear, it is happening before our own very eyes. So, blogs, blog networks, individual blogs like mine for example, are replacements of the old media. The question of how you make money through these tools is about to be answered, and ads can not be just the only answer. It do not think it makes it a sustainable model at the network level albeit maybe at the individual level.

A long time ago I would hope that somebody would be my patron and pay me to produce work, or be a noble or be in commerce and find some time to produce. With the industrial revolution the model changed and my hope would be to write a book, convince somebody to publish and market my book and hopefully, enough people would buy it and I would begin to be set. An extension of these would be serial deals.

But in the technology revolution or globalization revolution where blog networks are the newspapers of today and tomorrow, neither model work for individual writers. The independence and nobility of content is censored simply because I now need to tow the line (so-to-speak). I choose to produce and publish MY OWN content - it is what it is … boring to some, good to some, etc. - and while the internet and the web have democratized publishing along with other things, it has hardly level the playing field. It all remains the same, for better of worse. There is simply a change of hands and a changing of the guard. However, Mike, if the NY Times offered you good money for your network, wouldn’t you sell? Of course, and there is the rub. In the end, just a changing of technology.

The new economy is not so different from the old one. The medium might have changed, but the topics remain the same and the personalities have not changed except for their names.

And it is all good!! Yes … I can rant any time of the day

Navel-gazing (yawn).

Next time, hit save, get some sleep, show post to Heather, edit, and then press “publish.”

Or maybe it was all just a St Paddy’s hangover…

He said “hyperbowl” pretty sure the teleprompter read hyperbole!

The new media network (NMN) that has the best brand, will have the richest talent pipelines, and will in turn be able to set their own terms for compensation. NMN’s that have a lesser known brands, will pay a premium for their talent and will need to compensate for those premiums through additional revenue streams.

I assume (and there are always assumptions) that aspiring journalists will prefer to work for a NMN inspired by Business 2.0, versus working for a NMN inspired by Perez Hilton. Under this assumption, Arrington has a head start on Denton in developing a pipeline of writers. But (and there is always a but), that sneaky Calacanis wants a piece of the NMN action. Mahalo; and its team of thirty (30) editors as of June 2007, brings to the table a detail-focused web publishing machine with a VC funded ATM to pay new talent.

I am ready to pop some corks and see what happens.

I look like a whale in that outfit.

Cripes. Blog companies are nothing new, they’re just like “old” media except with little fact-checking and more frequent updates. With their supposed independent viewpoint, blogs are more like the old-old media of printed pamphlets. And CNET isn’t even old media anyhow; what difference does it make to anyone if you “beat” them?

It’s easy to see where this is all going. The blogs being run as businesses will be bought or merged and turn into any other media company, selling eyeballs to advertisers. The personal blogs will remain but with diminished readership.

Tech-blogging-community: What are you talking about Michael? Don’t say this to me.

Arrington: Drainage! Drainage, om, rafit, Blodget et all! Drained dry. I’m so sorry. Here, if you have a tech-blog, and I have a tech-blog, and I have 35million. There it is, that’s 35million, you see? You watching?. And my millions reaches acroooooooss the room, and starts to drink your tech-blog… I… drink… your… tech-blog!
[sucking sound]
Arrington: I drink it up!

Tech-blogging-community: Don’t bully us, Michael!
[Michael roars and throws bloggers across the room]

Arrignton: Did you think your song and dance and your little rounds of capital would help you, bloggers? I am the Third Revelation! I am who the Google has chosen!

[/hyperbole]

Big blogs… who are they?.. presumably one view being techmeme’s leaderboard… who else?

I think of that a lot of times, to brand my blog and start more serious then it is. Hopefully this year is the year.

Somebody is going to roll-up the big blogs and then take a bath on it. Blogs by definition are personality driven. Will the public faces of the blogs stay for long after they get their payday? Will they stay for a second bite of the apple? Will there even be a second bite of the apple? Doubtful…the company that finances the roll-up to Tier One blogs won’t be able to give away meaningful ownership to the founding bloggers. If they did, the entire value proposition of a roll-up would fall apart.

Economics of a roll-up:

a) By small properties for cheap - you get them for cheap because they are small.
b) Combine them into a large property that is more powerful.
c) Sell it for more.

Two problems trying to roll-up Tier One blogs - they won’t sell because they realize you are trying to buy them for cheap. If you pay top dollar for them, you are missing the point of a roll-up. (And they have very little incentive to stay afterwards.)

You can roll-up bloggers, it will just be the mid-tier ones that go.

There’s going to be consolidation in every industry. The key is to imagine a flow chart of how things could progress in the future and team up with one of the guys at the top. For TC i think it’s News Corp. Skip the VC round and go put yourself at the top. Tech Crunch is a product that is capable of creating brand loyalty and brand recognition. I’d never heard of gawker until tonight. The branding reminds me of Friendster.

…I think what everyone want’s to know is……what is up with that guy’s eyebrows??!

@26. lol - the guy’s eyebrows.

He’s what they call a ‘metrosexual’

I believe bloggers should be careful about raising too much money and thereby killing opportunities to work with others.

You made this assertion already. I have yet to see a compelling argument. Of course, if you raise money from one place, it could preclude you from raising money from another place. For example, if Bill Gates gives you ten million dollars, it might ruin your chances for getting approved for welfare. You want people to give up a bird in the hand for n birds in the bush, where n is presumably some positive integer greater than 1?

I believe the politics of linking is at times distasteful, but necessary for any blog to thrive (that is something I’ll write more about later).

It’s called “logrolling” and it’s a “network effect” older than dirt. You scratch my back and I’ll scratch yours. To some extent, it just happens naturally — birds of a feather, the bandwagon effect — but in networks where there are loose ethical standards, the quid pro quo often devolves into an “Old boy network,” bribery, payola, racketeering. “You give me what I want and I’ll fix your Wikipedia entry.” “You say something nice about my company and I’ll give you some juicy insider information.” There’s your Web 2.0. ♫ Meet the new boss, same as the old boss. ♫

The Sarah Lacy video contrasted Mike Arrington with Nick Denton, which was amusing. Both Arrington and Denton seem to be aghast that writers want to be paid “market wages.” Denton publishes rumor and unsubstantiated opinion; Arrington says TechCrunch isn’t “objective” and doesn’t pretend to be. Denton says a certain amount of sleaziness is inevitable; Arrington says the backroom politics of linking is distasteful but “necessary for any blog to thrive.” Denton wants to create a media empire, and Arrington wants to create a media empire. So remind me what the difference was again? Denton likes blueberry Pop-Tarts and Arrington likes strawberry?

Michael, I know it’s hard when you are friends with people, but why not just come out and write the piece entitled, “Why Om Malik was wrong for taking VC money”, it would be a great and beneficial piece for the masses that would teach a lot, but you’d have to in some way crucify OM for having a shitty business model.

karim - regarding your first point - it has to do with valuations. Once you raise money, you’ve got someone who sits on your board and has a veto right over a sale. and he/she also gets to take their money out first, sometimes a multiple of their money. If you don’t raise money and sell for, say $10 million, you get to keep all the $10 m. But if you raise $5, you may need to sell for $20 -$25 m to get $10m in your pocket. And there’s a good chance that the investor will veto that deal anyway. So, in a nutshell, once you raise money you are closing a lot of doors.

The rest of your comment is really just a poorly thought through personal attack, which i won’t comment on.

I agree with Steve Shapiro’s comment and Michaels #30 comment.

Technology blogs are totally glamorizing funding rounds, and making it out to be like this is a necessary step for any company to grow. This could not be further from the truth. Any business school will show you the process of growing your company, from creating a product, to hiring the right people and generating revenue. Companies these days focus on VC’s, Angel investors and rounds of investments when they should be learning what a statement of cash flow and PNL statement is.

I will never forget a meeting we had with Valley-based company where a certain person bragged how they were funded by Sequoia, and asked who funded Digitaltrends.com. We told them no one did, and he chuckled. He wanted to use our videos on their site and create a chat room around it, and then he wanted us to put their chat room on our site. I asked how they would make money and he told me they were going to try and sell ads, and they would be bringing in a “Revenue Officer” or something like that to kick start an ad program. Here I am thinking: Digitaltrends.com is profitable with revenue in the millions growing the old fashion way, organically, with a product, credit lines (yes folks, you can go to the bank and get a credit line instead of taking VC money – imagine that), and a business plan. Yet, this company brags about being backed by Sequoia and has no clue how to make money (at the time of the conversation).

And like Michael pointed out once you raise money, you have a person on your board – with control. You will have to sell your company for 20X (example) what you normally would to walk away with the same amount of money you would have received without a VC on the board. Why do you think Digg or FM are asking for such high valuations for example? Because in order for the “owners/creators” to walk away with the money they want, they need to sell for a lot more because their ownership percentage is a lot less.

@ #23 -

Holy shit. Are you kidding me? LiveCrunch? You run a tech blog called LiveCrunch? You’re thinking about branding it, just like Mike? Maybe you should have your tag line be “If I could be like Mike”. Someone may have used that one already though. Maybe you could call it The Tech “Jungle” and readers who comment on your posts could get some “Jungle Karma”. That may not be too original either now that I think about it.

Sorry for the rant - couldn’t let that one go unnoticed.

I love that video!

“The old dream is gone.”

Wow.

Mike, maybe I am misunderstanding you, but your argument seems to be along the lines of, “Don’t take out a loan if you don’t need to?” Yes, ok, if you take VC money, the VC wants a degree of control. Yes, it would be preferable to not take venture capital, and retain all the control, and take all the profits when you sell. But presumably, entrepreneurs seek venture capital because they want to grow their businesses, and can’t do that without capital? If they could just sit there and watch their valuations grow without making such deals — by raising debt, instead, for example — it seems like they’d do that. If they could grow from $0 to $10 million by just wishing for it, they’d do that too.

You said, “If you don’t raise money” you get to keep all the marbles. Ok, you don’t raise money. Now what? Don’t hire those additional writers? Don’t buy that CMS, or pay for that redesign, or buy more bandwidth, or whatever you were going to do with the venture capital? You’re telling people NOT to do something, but not advising them what to do instead, other than obliquely hinting they should wait for The Great Rollup.

And I’m still trying to tie this “don’t take financing” advice back to your original “Dream Team” idea. You were talking about rolling up a bunch of blogs and having someone “pony up a big round of financing” around that. So your advice is, “Don’t take venture capital, unless of course you’re in the Dream Team, in which case we, as a group, will take venture capital?”

My apologies — I didn’t intend for the rest of that comment to be an attack, personal or otherwise. I look forward to your post on “the politics of linking” and am curious to see how you justify “distasteful” behavior.

And I don’t personally know you or Nick Denton, so forgive me if I fail to see significant differences between your blog empire ambitions and his. The video seemed to suggest that you wanted cult-of-personality bloggers, whereas Denton wanted more anonymous bloggers writing under a brand — a difference which (everything else considered) seems about as significant as toaster pastry flavor preferences.

No, Mike, my personal attack on you was over on Scoble’s blog, where I referred to you as “Cap’n Ahabarrington” and CNET as your Great White Whale. But you’re right, it was poorly thought out. LOL

“what have you done for me lately” ?

demand and supply…

Interesting that Mrs. Lacy in this interview is still bringing up what happened in Austin.

She is just speaking her mind in a professional interview. Is this professional or is this the future of Internet mainstream journalism?

It sorta irked me that she brought it up, as we are used to reporters speaking only in a objective fashion, rather then subjective. But, this could be where mainstream journalism on the net is heading…. Hmmmm

Agree 100% to @30 first point.

That said, it’s also true that most the time it’s the investing VC (reputable ones) that gets the venture the highest valuations for a sale… henceforth, it’s more like a all-or-nothing risky decision.

@30: Only if u sell preference shares though?

If they just purchase regular A-Class shares then they get their proportion of any return, whether it be 20% of $10mil or 20% of $25mil.

@ Karim
As an associate at an independent IB, I work with a number of companies seeking funding at various stages of development. It is generally understood that the earlier you seek funding the more you must give up. This applies to both control and future earnings.

Let’s say you are pre-revenue and think the company is valued at $10 million. Well, in order to raise even $3-5 million you would most likely have to give up a controlling interest in your business. This is generally very hard for a true entrepreneur to swallow. I have found that those who start businesses to get their name in the papers have no problem giving up 51%. However, those who developed their business because they love what they do, tend to have a hard time giving up control. Early stage investors generally require higher returns than later stage investors. They are taking on a lot more risk and tend to have a lower success rate. This is part of the reason they need a controlling interest, even though it may end up hurting them.

Instead of raising money at the pre-revenue stage, you may be able to assemble a team of dedicated employees who believe in the long term value of your company. These people will be far more interested in having an equity interest themselves than in getting a fat bonus. Essentially, your team members become your equity source and are happy to do it for a much smaller ownership interest. At a later stage, the company can raise money at much more favorable terms. If the team and model have already proven themselves, then the perceived risk is much lower and investors are willing to accept a lower return.

The dream team/super-blog-network would be able to raise money at much more favorable terms than most of the blogs individually. This is a strategy that has proven successful in many other industries both inside and outside of tech. Who wants to buy a tire when you can buy a piece of a running car?

The problem with investing in blogger is that a blog is more personal than any other media. Would you invest in ONE person? Maybe, but normally not because that persons thougts and opinions.

I love too see more money to the bloggers (not only the big ones, every little blogger can make a cup of coffe/year on their blog) but invest in a personal opinion is something really bad. Even Techcrunch, that got a lot of writers, are personal. And that’s why we like it. But do we invest in Techcunch? No… organic development is the best.

USA is actually really, really invest-driven. There’s other ways to make a nice business than find an investor and shooot.

TechCrunch is a publicity machine (jaggernaut - sp?). That, in general, is a very good thing. But at times the question can become, “Is all publicity good publicity”. How much industry brushback is helpful, and how much not?

What a fun show!

Keep the entertainment coming, y’all.

I need something to get my mind off my problems!

FYI:
Just saw the video. The closing comments that make assumptions about young journalism majors viewing blogs and so forth as the way to go is totally offbase from what Paul Conley observes on his j-school visits that he discusses on his awesome blog:
http://paulconley.blogspot.com/

I stopped watching this video when the guy mispronounces hyperbole as “hyper-bowl.” Lame.

Karen, thanks for the thoughtful reply. What you say makes perfect sense. Clearly, the earlier you seek funding, the more control you’ll tend to give up. Clearly, if you can put off seeking funding, you’ll be better off. This seems like common sense.

But Mike Arrington doesn’t seem to be saying “put off funding” so much as “let’s put together a Dream Team and THEN go out and get funding,” so it doesn’t seem like putting it off per se is his point.

No, rather, his point must be, as you say, “the dream team/super-blog-network would be able to raise money at much more favorable terms than most of the blogs individually.”

First, while this is generally true, it shouldn’t be taken as a given. Arrington seems to be yelling at the folks who took money, “Idiots! We could have gotten a group rate!” But if you don’t know what was negotiated in each case, isn’t it presumptuous to say you could do better?

It would be a more compelling argument if what he was proposing allowed people to do something they wouldn’t be able to do otherwise. Instead, he’s asking people (who, he doesn’t exactly say) to WAIT, and turn down EXISTING OFFERS for pie-in-the-sky.

“Favorable terms” might also mean different things to different people. For some people, owning 49% of a business might be preferable to, say, losing an independent and authentic voice and being told you’re not passing the ball to the other guys on the team. (logrolling, engaging in the “politics of linking,” etc.)

Which brings to my second point: that if it’s a “Dream Team,” egos are bound to be involved. If you’re Charles Barkley and you’re scoring a quarter of the points on the team, you might start to wonder why you’re only getting a 12th of the gold. And why Mike gets the damn Wheaties box cover. Who knows, maybe Mike wants a bigger piece of the pie, ’cause, you know, it’s his ball, and his court they practiced on, and his mom made the lemonade. He wants to take people who are used to being fiercely independent and make them all play nice. Maybe less of a Dream than a Nightmare.

Third, I know it was a “rant,” but Arrington didn’t come near making a convincing case for a merger or roll-up. He didn’t describe how you could take a handful of assorted car parts and turn them into a $200 million CNET-crushin’ tank. He was too busy browbeating people about how if they didn’t participate, they’d be “left out in the cold” “alone and lonely,” “having a generally miserable time.”

It’s one thing to call for cooperation and union. It’s another thing to goad people into it and then drop hints that it’s only natural that you be appointed King.

Haven’t we learned to narrow our eyes just a little when someone proposes a merger and yells “Synergy?” Especially when the pitch is thin on numbers and thick on FUD?

You said, “Who wants to buy a tire when you can have a piece of a running car?” True. But a car is more than an engine, a fuel pump, a side view mirror, an AM radio, and a single tire overinflated with hot air.

This man is reading from something or is nervous. He is 40 and seems focused on this fact.

Hyper bowl?

Sell ient?

I still maintain that we should replace Web 2.0 with the word corndog.

Corndogs need an easy interface for the mass market such as a stick. There has to be mustard to add to the experience. There also has to be a way to distribute the manufacturing and promotion so that everyone enjoys corndogs.

Corndogs production will need financial backers and cross promotion opportunity from the established old economy condiment industry.

Blog sites are going to take away much of the advertising business of the old school magazines/goliath newspapers and the question for mediums like techcrunch is “how to stay small and retain that “David” aura and make money like the “goliaths”, I feel the key here is to working with other “reputed” blog sites (mutally co-dependent) i suppose. You create a bigger pie by allying yourself to prominent “guerilla news outlets”.
Also in the age of multitasking, scanning news, you have an opportunity to quickly change to cater to people’s evolving preferences.

this way, you are more agile and more robust, opinionated and bring faster reactions from your readers thus winning (hopefully) trust which enables people to throw money at you to be around you and your business.

enough ranting good video.

As for super teams - doesn’t have to fit into a one person one company model. Free lance and independent guerilla teams could fit into your dream team model, Michael.

Good luck !.