07:59 AM

MediaWatch: Dan Lyons Calls Silicon Valley Journalism A 'Cesspool'

Dan Lyons, a columnist for Newsweek, has written a scathing attack on Mike Arrington and MG Siegler, who run CrunchFund, a small VC fund.

The former editor and his reporter at TechCrunch, a leading AOL tech news site, are accused of being part of a trend among Silicon Valley journalists to raise money from investors in exchange for favorable PR services.

Here is the formula:

First you establish yourself as an "influencer" by posting a lot of noisy stuff on a blog and building an audience. Then you need to "monetize" your influence. You tell all the VCs in the Valley that you are starting an "angel fund," and you ask each one to give you, say, $500,000.

They go along because

(a) $500,000 is pocket change to these guys -- so small, in fact, that they don't care if they lose every penny of it; and

(b) you're an influential hack and they don't want to piss you off; and

(c) they figure you can maybe write nice things about their portfolio companies, which would be especially useful if/when one of their portfolio companies gets caught up in some scandal; and

(d) if any independent journalists write something critical about one of the VC's portfolio companies, you can use your influential personal blog to savagely attack those journalists and try to discredit them.

This is exactly what happened recently when Path, a startup in which CrunchFund is an investor, was criticized by Nick Bilton, a reporter for the New York Times, about Path's secret spying on users' address books. Mike Arrington launched a "blistering critique" of Mr Bilton, calling him a pit bull.

Almost before you could stop throwing up in your mouth at the idea of Michael Arrington accusing a Times journalist of being less than noble, Arrington's partner at CrunchFund, MG Siegler, weighed in with his own attack...

I'll give them this much. They're good at what they do. Siegler especially is a nasty little ankle-biter who has developed some level of expertise in launching ad hominem attacks. He did one on me a while back. Then he did one on Josh Topolsky at The Verge.


He takes on another Techcrunch alumnus, Sarah Lacy and her new site PandoDaily, saying that she is working the same type of angle as CrunchFund, taking investments in exchange for friendly coverage.

He doesn't call it blackmail, but Mr Lyons quotes an unnamed VC, who tells him that some tech blogs have business models that seem to be based on "hush money."

Mr Lyons is right to point out the bias in the posts by Mr Arrington and Mr Siegler, but he unfairly tars all local media when he writes:

This is what now passes for "journalism" in Silicon Valley: hired guns and reformed click-whores who have found a way to grab some of the loot for themselves. This is perhaps not surprising. Silicon Valley once was home to scientists and engineers...

Now it is being turned into a silicon cesspool, an upside-down world filled with spammers, liars, flippers, privacy invaders, information stealers -- and their grubby cadre of paid apologists and pygmy hangers-on.

Hit men, click whores, and paid apologists: Welcome to the Silicon Cesspool » Real Dan Lyons Web Site

There's plenty of good journalism in Silicon Valley. Mr Lyons is not from around here and is clearly looking in exactly the wrong places but most people know where to go and who to read.

Mr Lyons should also take a look at New York City's tech media scene. VCs might be looking for favorable coverage there too.

Business Insider, edited and founded by Henry Blodget, a former high flying Wall Street analyst, raised $7 million in September 2011. This followed the publication's first profitable year -- making $2k on revenues of about $5 million.

Leena Rao reported:

The round was led by new investor IVP, writes the site's co-founder and CEO Henry Blodget. The company had previously raised funding from RRE Ventures, Allen & Co., Marc Andreessen, Gordon Crovitz, Ken Lerer, and others. This latest round bring Business Insider's total funding to nearly $14 million.

We know how much VCs love low margin businesses -- so what else are they looking for?