Tag Archives: Crunch Fund

What passes for tech journalism

So this is the scene in the Silicon Valley

It’s tough being a journalist, especially if you’re covering technology and living in Silicon Valley, because it seems as if everyone around you is getting fabulously rich while you’re stuck in a job that will never, ever make you wealthy. What’s worse is that all these people who are getting rich don’t seem to be any brighter than you are and in fact many of them don’t seem very bright at all. So of course you get jealous. And then you start thinking maybe you could find a way to cash in on this gold rush. But how do you make gobs of money when your only marketable skill involves writing blog posts?

This is the conundrum, but lately I’ve been thinking of a business plan that sounds like it could work. 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 can use your influential personal blog to savagely attack those journalists and try to discredit them.

So you raise $10 million or $20 million, and now you’re an “angel investor.” Step two is you go around to startups and tell them you’d really like to invest in their companies. Not big investments — maybe $100,000. They don’t need your money; they can raise money from anyone, and usually you’re one of 10 or 20 small investors in a round. But the value you add is that you’re an “influencer” and can be helpful when it comes to getting good press or offsetting bad press. (See paragraph above.)

You might think of this as a new kind of PR, only you’re way meaner and more effective than a PR flack, and instead of getting paid in billable hours, you’re taking payment in angel-round equity, which in a few years should be worth 10-100x whatever those billable hours would have been worth.

In fact this is a new version of an old racket that used to be practiced in the tech space by guys who called themselves “independent analysts.” Their deal, back in the day, was this: “Pay seven figures a year to buy a corporate subscription to my newsletter and I’ll say nice things about your company, and when the press needs a quote, I’ll be there to puff you up. Or, don’t buy a subscription and I will bash you relentlessly.” Most big companies paid up and considered it a cost of doing business.

Well, this is the model I was thinking about, but it turns out someone beat me to it — it’s called CrunchFund, and in the past few days we’ve seen the machine in action, and it is indeed a beautiful thing.