6 ms·

Why We Sold TechCrunch To AOL, And Where We Go From Here

117 points by ssclafani 16y ago

mycroftiv 16y ago
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.
- markbao 16y ago
  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.
- tapp 16y ago
  "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!
  - cletus 16y ago
    You make a good point. It also gives credence to Calacanis' allegations that Arrington blew up TC50 to screw him out of a payout.
  - jackowayed 16y ago
    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.
    - bbatsell 16y ago
      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.
      - count 16y ago
        But if he's no longer living in California, and has a WA address, drivers license, etc. then how can California do anything?
        jseliger 16y ago
        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.
        jtbigwoo 16y ago
        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.
        protomyth 16y ago
        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.
  - jseliger 16y ago
    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 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."
petervandijck 16y ago
He mentions their "endless tech problems". Never noticed that.
- markbao 16y ago
  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.
  - justin 16y ago
    TC downtime on Wordpress VIP: http://techcrunch.com/2010/06/10/wordpress-gives-us-the-vip-treatment-goes-down-on-us-again/ http://techcrunch.com/2010/06/10/wordpress-gives-us-the-vip-...
  - deleted 16y ago
    [deleted]
- rscott 16y ago
  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.
- deleted 16y ago
  [deleted]
- Mystalic 16y ago
  As the co-editor of a competing blog with similar scale, let me just say this: the tech headaches are endless. There's so much crap we deal with behind the scenes that you just don't see on Mashable.com or TechCrunch.com. But I assure you, I've had my share of late nights dealing with technology issues.
- mrkurt 16y ago
  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.
deleted 16y ago
[deleted]
deleted 16y ago
[deleted]
there 16y ago
does arrington get an @aol.com address now?
- fleaflicker 16y ago
  They were all recently changed to @teamaol.com from @corp.aol.com
  - deleted 16y ago
    [deleted]
pavs 16y ago
Since this is Arrington you have to take things with a grain of salt. 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.
- cletus 16y ago
  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.
- napierzaza 16y ago
  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.
- bad_user 16y ago
  > 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.
Kaizyn 16y ago
If this means we don't have to see any more TechCrunch headlines on Hacker News, then I'm all for it.
- zackattack 16y ago
  Aw, give him this one.
philfreo 16y ago
Best comment: "Congratulations, Mike! Now stick to your roots and leak the price! :-)"
chrisgoodrich 16y ago
I don't care what MA says, it's a sad day for getting the controversial embargo-breaking news that TC is known for.
vl 16y ago
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.
k33n 16y ago
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.
kingkawn 16y ago
AOL?
bosch 16y ago
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?
paramendra 16y ago
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 http://goo.gl/fb/GAxZ5
- JoachimSchipper 16y ago
  This isn't Twitter - you can write out your comment, or at least your URLs.
Nate75Sanders 16y ago
Anybody have thoughts on what will happen to CrunchBase? Will the terms of use stay the same?
jtbigwoo 16y ago
> 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.
- protomyth 16y ago
  Look at the history of some of Paramount's divisions (book vs film/tv). I remember there was some threats of lawsuits there.
chailatte 16y ago
"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?
gfodor 16y ago
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.
yayitswei 16y ago
I like the comment about halfway down: A $25M – $40MM sale, doesn’t this make techcrunch a “dip shit company”?

117 points by ssclafani 16y ago

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.

markbao 16y ago
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.
tapp 16y ago
"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!
- cletus 16y ago
  You make a good point. It also gives credence to Calacanis' allegations that Arrington blew up TC50 to screw him out of a payout.
- jackowayed 16y ago
  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.
  - bbatsell 16y ago
    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.
    - count 16y ago
      But if he's no longer living in California, and has a WA address, drivers license, etc. then how can California do anything?
      - jseliger 16y ago
        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.
        jtbigwoo 16y ago
        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.
        protomyth 16y ago
        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.
- jseliger 16y ago
  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 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."

petervandijck 16y ago

He mentions their "endless tech problems". Never noticed that.

markbao 16y ago
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.
- justin 16y ago
  TC downtime on Wordpress VIP: http://techcrunch.com/2010/06/10/wordpress-gives-us-the-vip-treatment-goes-down-on-us-again/ http://techcrunch.com/2010/06/10/wordpress-gives-us-the-vip-...
- deleted 16y ago
  [deleted]
rscott 16y ago
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.
deleted 16y ago
[deleted]
Mystalic 16y ago
As the co-editor of a competing blog with similar scale, let me just say this: the tech headaches are endless. There's so much crap we deal with behind the scenes that you just don't see on Mashable.com or TechCrunch.com. But I assure you, I've had my share of late nights dealing with technology issues.
mrkurt 16y ago
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.

deleted 16y ago

[deleted]

deleted 16y ago

[deleted]

there 16y ago

does arrington get an @aol.com address now?

fleaflicker 16y ago
They were all recently changed to @teamaol.com from @corp.aol.com
- deleted 16y ago
  [deleted]

pavs 16y ago

Since this is Arrington you have to take things with a grain of salt. 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.

cletus 16y ago
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.
napierzaza 16y ago
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.
bad_user 16y ago
> 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.

Kaizyn 16y ago

If this means we don't have to see any more TechCrunch headlines on Hacker News, then I'm all for it.

zackattack 16y ago
Aw, give him this one.

philfreo 16y ago

Best comment: "Congratulations, Mike! Now stick to your roots and leak the price! :-)"

chrisgoodrich 16y ago

I don't care what MA says, it's a sad day for getting the controversial embargo-breaking news that TC is known for.

vl 16y ago

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.

k33n 16y ago

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.

kingkawn 16y ago

AOL?

bosch 16y ago

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?

paramendra 16y ago

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 http://goo.gl/fb/GAxZ5

JoachimSchipper 16y ago
This isn't Twitter - you can write out your comment, or at least your URLs.

Nate75Sanders 16y ago

Anybody have thoughts on what will happen to CrunchBase? Will the terms of use stay the same?

jtbigwoo 16y ago

> 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.

protomyth 16y ago
Look at the history of some of Paramount's divisions (book vs film/tv). I remember there was some threats of lawsuits there.

chailatte 16y ago

"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?

gfodor 16y ago

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.

yayitswei 16y ago

I like the comment about halfway down: A $25M – $40MM sale, doesn’t this make techcrunch a “dip shit company”?