Friday, September 2, 2011

Are you buying the founder, or are you not? (AOL vs. Arrington)

I've been involved in a few company acquisitions, and I've seen a bunch of other company acquisitions. Whenever you have a company acquisition, you have to decide what to do with the head of the acquired company. Sometimes (Motorola's acquisition of Printrak), the head of the acquired company is out of the picture the moment the deal is closed. At other times (Facebook's acquisition of FriendFeed), the head of the acquired company is more important than the company itself.

And there are still other times when you acquire both the company and the company head, with the belief that the company head is integral to the success of the acquired company.

Loren Feldman shared a link to a New York Times item that concerns an acquired company, TechCrunch, and its head, Michael Arrington.

On Thursday, Mr. Arrington, the founder and co-editor of TechCrunch, and AOL, which owns TechCrunch, announced that Mr. Arrington would start a venture capital fund to invest in start-ups like the ones that TechCrunch covers, but that he would remain involved with the blog....

Mr. Arrington said on Thursday that his new title would be founding editor and writer. “I am TechCrunch and TechCrunch is me,” he said. “There’s no way around it.”

Enter Arianna Huffington, another AOL acquisition, and Arrington's boss - make that former boss.

[B]y Thursday night, Ms. Huffington told David Carr at The New York Times that Mr. Arrington was no longer on AOL’s editorial payroll and would have no editorial role. And Friday morning, AOL’s press machine changed its tune.

“Michael’s role has changed,” said Maureen Sullivan, an AOL spokeswoman. “He now works within AOL Ventures. He’s becoming a professional investor. He is no longer involved in editorial.”

Arrington didn't exactly echo Sullivan's words.

Mr. Arrington said that he was confused by the back-and-forth.

“I have no idea what AOL’s final position on this will be,” he said. “I look forward to hearing it. I’ll respond once Arianna has made her last statement.”

Adding to the confusion was the fact that the Wall Street Journal reported that Arrington had resigned from TechCrunch, based upon a statement from AOL spokesman Mario Ruiz...but with no corresponding statement from Arrington.

Now some will argue that when Arrington's company, or anyone's company, is acquired by a larger firm, then the acquired head becomes a mere employee of the larger firm, free to be reassigned to whatever. Perhaps next week Arianna Huffington may similarly be reassigned, and the Huffington Post will have no Huffington content.

Unfortunately for AOL, there's a kernel of truth to Arrington's Louis XIV-like "I am TechCrunch and TechCrunch is me" statement. Yes, it is certainly possible for TechCrunch to continue without Arrington. The Inquisitr has continued with Duncan Riley, the Howard Jarvis lobby has continued with Howard Jarvis, and the Beatles still sell millions of albums despite the fact that half of them are pining for the fjords.

But AOL and Arrington should have anticipated that something like this could happen, and should have prepared for it. If Arrington wanted guaranteed employment at TechCrunch, he should have negotiated that as part of the sale. If AOL wanted to oust Arrington at some point, it should have considered the ramifications of such a move.
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