Tuesday, May 10, 2011

Conflicting conflicts of interest

I missed this story initially until Michael Arrington posted a follow-up, which led me to read the original story, which described Arrington's policy on reporting on items in which he has a financial interest.

Unlike Louis Gray, whose blog has a staff of one (at least until Matthew and Sarah learn their ABCs), Arrington also has to worry about anyone working for him who might write about one of his investments. Hence, this tale:

There’s a period of time with any investment when I know an investment is possible or likely but it can’t be announced yet. During that time I don’t write about the startup at all, because I can’t disclose the investment. When another writer wants to break a story we may have to hold that story, or it becomes a forcing function in announcing sooner. That’s what happened with Yo. MG [Siegler] had the story independently and wanted to run with it. I can’t reasonably ask him to hold the story (THAT would be a conflict of interest in itself), but he can’t publish it here without the disclosure that I’m investing. Which led to the interesting situation where I was the only investor who confirmed on the record.

I find this fascinating. If Arrington had prevented Siegler from running the story, that would have been a conflict of interest (since Arrington was killing a story that Siegler discovered independently). But if Arrington had allowed Siegler to run the story, that would have been a conflict of interest (since Arrington was promoting his own investment).

So how exactly did Siegler (and Arrington) handle the situation? Here are the appropriate excerpts of Siegler's story:

We previously broke the news that Fanning had raised a small amount of money last year for the project....Since then, other details have become more clear. That includes some big potential funding — and one of the investors is someone we know very well: Michael Arrington. More on that below....

In digging into this story, we heard that a man by the name of “Arrington” is involved. Yes, that one. When confronted, he squirmed for a bit but eventually acknowledged his involvement. In fact, he’s the only one willing to confirm involvement at this point, but even he won’t spill more juicy details yet.

Arrington and Gray aren't the only ones who disclose. There's Christine Young and a slew of others.

And myself.

But there are times when I might not necessarily disclose things.

I'll give you an example - or, to be more precise, I won't. You may have noticed that, although I've been writing proposals for over a year now, I haven't discussed any of those proposals in particular. The reason for that is because the results of the proposals that I have written have not been publicly announced. A portion of my proposals resulted in wins. A portion resulted in losses. And a portion have not yet been determined. However, for the blogging record, I am remaining silent on those at this time.

Two recent MorphoTrak wins, the North Carolina driver's license win and the FBI NGI win, did not include my involvement. Oh, and I didn't write anything for the India project either.

Now one of the proposals which was a win has already been delivered and accepted by the customer. So why keep silent? Because my company has not formally announced the win, and the customer has not formally announced the win. And in many cases (although I honestly can't remember if it applies for this customer), the contract includes very specific provisions that govern any announcement that the vendor may make about the customer win. I'd be willing to bet that breaking the news of a customer win in the Empoprise-BI business blog isn't necessarily what the customer had in mind.

In a sense it's pretty silly, because if you wander around in Milwaukee, Wisconsin in August of this year, and if you happen to be at the Frontier Airlines Center, you'll run into a bunch of people that could probably tell you more about that particular customer than even I know. So people already know about this win. Yet those hallway conversations are verbal and not blasted out on the Internet.

And that particular proposal happens to be one of the first five proposals that I wrote. So, needless to say, I won't be telling you what I'm working on today.

Although I'm still happy to explain how someone could be either a male, or a female, or both.

Yes, it's a crazy industry. And as long as criminals keep on forgetting to wear gloves, I'll still have a job.
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