I'm guessing the top 10 super angels would include Marc Andreessen, Chris Dixon, Ron Conway and the PayPal guys Peter Thiel, Reid Hoffman, Max Levchin, Keith Rabois
The Quora list is very different from yours. And I think we should all be really careful about guessing, considering how much damage you could do to someone's reputation by guessing wrongly. There's at least one person on your list above who I'd be surprised to see part of this.
Vide the cognitive psychology experiments which show that once you mention a person's name, it gets connected in memory regardless of how doubtful the source ought to be, etcetera.
My list was complete guessing, just me thinking of famous angels. The Quora list seems to be based on more actual evidence.
In any case, it was Arrington that fingered all these people when he called them the "10 or so highest profile angels" who do "nearly 100% of early stage startup deals in Silicon Valley". Though after seeing Quora's list I think Arrington mischaracterized the group.
Thiel seems like a clear thinker, but almost anybody can gradually drift in the wrong direction--especially if, as grellas says above, it probably wasn't quite illegal.
he also leaves just enough to the imagination. sure, everyone is assuming the top 3-4 usual suspects, but it was a room full of people -- wondering who were 8,9,10
Mike tends to push posts out as he develops the story (eg. the Scamville saga) so expect this to be the first of many posts.
When he picks up a story like this, watch out - Scamville didn't end until Offerpal lost their CEO, Zynga apologized and Facebook changed their policies.
I changed it to add "[Allegations of investor collusion]", but then I changed it back because it looked weird. PG or one of the mods can modify the headline if it needs clarity; I generally prefer to use whatever the post title is.
I do hope he's wrong, or that this a mistake of some sort. The rise of Angel investors has seen a lot of ideas and entrepreneurs get needed money when they might not have under the traditional VC model.
Something like this, if true, will cause the government to step in, and probably regulate and change things for the worse for a great many people. It won't just hurt these few super angels. It will take everyone with it.
I think your statement was clear. However, I find it hard to believe Arrington would put some of his best sources at risk if his claims were completely unfounded.
Strange how any post that could be construed as being negative about Arrington gets down-modded by about 5 points, regular as clockwork.
That being said, I think he's on the money with this one.
This can only be good for YC overall. The suspicion that YC alternatives are all colluding against your startup is likely to make YC seem more attractive still, to the class of startup that would be wavering between YC and a rival.
In Arrington's defense his claims are laid out clearly without any weasel words. Either this is happening or it isn't. So while I'm pretty meh about TC as a whole, I'm giving him the benefit of the doubt on this one.
He didn't name a single name. If he really believed this was so certain, he could have. Unless he's trying to make them do something, the only reason to keep names out of it is because he thinks this might be libel.
Yes, but that's the thing — you can't get sued for "obvious names." Even if he's completely making this up, if one of the obvious suspects sues him, he can just say, "Oh, no, I didn't mean him."
The comment I was replying to said, "his claims are laid out clearly without any weasel words. Either this is happening or it isn't." I disagree with that — Arrington is not laying it all out here as a black-and-white truth. He's consciously omitting facts in a way that happens to shield him from repercussions if this is false. As a traditional dead-tree newspaper guy, I'm very familiar with the ways reporters fudge their claims to avoid being responsible if it turns out to be crap. That's what this sounds like to me.
This goes well beyond sensationalism. I'm inclined to believe him for three reasons:
1. Mike's not known for boldly lying. He might publish rumors that Facebook is building a phone too liberally, but I've not heard of him saying "I saw x happen" and it wasn't true. Assuming the account of what he himself saw was accurate it's hard to imagine collusion wouldn't be the purpose.
2. This sounds like something that would happen. VCs do this crap all the time, why not angels?
3. Publishing this might be bad for him, and if it were untrue, it would definitely be really bad for him.
Add to that that there is no convincing reasons why this group of angels would manufacture this story to lead him on. Unlike with some other TC stories which turned out to be manufactured to discredit TC, in this one, the sources themselves would risk a lot by leaking this - true or false.
Well, that depends. If they have nothing to do with YC, then you may be correct. But then again it would be unlikely that they would only single out YC by name at such a meeting. Or any meeting. If, on the other hand they are co-investors with YC, which they must be since according to this scenario between them they see "100%" of the deals, then their "collusion" against YC would be a rather amateurish attempt to close the loop between them and a newly-prominent YC, made all the more so now that this "leaked" news item highlights just how much of a player YC is, as per the envy of all these angels.
I don't know. Maybe it happened, maybe it didn't. But I find it unlikely that such a group, if they had to name one institution by name at such a risky meeting, would name YC and not, say, KPCB.
I believe it too. You succinctly enumerate the reasons. The biggest for me was that (he claims) he saw it happen. That puts his personal reputation at stake, which I think will have to meet a far higher standard than the rumour publishing "go tos" of "an anonymous source".
The FB phone was (imho) classic Arrington (the bad side). Posted on the weekend (in the hopes that FB PR would be slow to respond and debunk it), quoting anonymous sources and no substance at all. Basically, link bait. That sort of story does him (or rather his credibility) no favours.
Arrington is smart, a lawyer himself, and already know he is headed straight to the witness stand. Thanks for blowing this whistle Mike. That's the TC we like.
I don't know if witnessing a table full of people go silent when he turns up proves anything, and the rest is all info that would put his source on the stand, not him.
If you read the full post, take in account that he was present and saw who was there, and assume he has not chosen to reveal everything about the sources through TC at this time (that's highly understandable - protecting his sources and only disclosing what he feels is verifiable), there is definitely a lot here and absolutely enough for a climb to the witness stand!
In what sense do antitrust laws apply to investors? Why is it unlawful for investors to band together to get better terms for themselves?
Wouldn't it be perfectly legal for these people to sit around a table an agree to merge and start a fund? If that's the case, how could it be unlawful for them to work on a joint venture? Just because I don't like the JV doesn't make it unlawful!
They are a group of people supposedly conspiring to generate the worst possible terms for the people they are providing money to, while trying to force out or marginalize competition.
IANAL though - even if not illegal, it's still pretty stinky, and a big part of me hopes it's not illegal. If it's not illegal, I hope they're outed and shamed if this is true. If it is illegal, it give the government reason to step in and screw everything up.
Or, this is a group of people collaborating to generate the best possible outcome for their own business. Every joint venture can be framed in anticompetitive terms. But in this case, what possible undue market influence can they have? The market will find other people to take these deals.
That's an unrealistically high standard and I can't think of any recent case which would meet it. Why didn't the market find a solution to Microsoft in the 90's or Intel in 2000's and, more importantly, why did the Feds feel the need to intervene?
Because bay area technical angel investing isn't just about writing cheques. It's about managing and guiding those startups, helping them find the resources they need. It's about leveraging your connections throughout the industry to help them grow sales, build manufacturing, hire talent, or any of a hundred other things. This is why startups go back to these handful of investors over and over again. Founders aren't stupid. They know these investors wield serious power in the tech world, and they want that power to be on their side.
If you think the only requirement to being an angel investor is having a big bank account, you haven't been paying attention.
This is a group of people, comprising the top angel investors in a given area, investing lots of money, into a lot of companies, supposedly discussing - in private - how to "divide the market" and "set prices" and "exclude/marginalize competition". Angel investors, despite being individuals, still have regulations and laws to follow.
Frankly, I think the feds would jump at the chance to have an excuse to jump in and more tightly regulate/tax/etc the entire system, including angel investors.
You could very well be right; admittedly, I'm not the smartest tool in the shed when it comes to understanding FTC and government investment regulations, as well as the legal status of angel investors.
Heck, I really hope this is all wrong, because the last thing I want is the feds meddling in this industry even more. I make my living on startups; the last thing I want is the federal government to make it wither and die.
If (i)most angel investors are significantly less likely to make investments in early stage tech startups at a given price and/or (ii)due to connections these investors provide a significant non-monetary value-add to the startups they invest in then it's conceivable they might wield a significant amount of market power.
I cannot speak to the letter of the law, but I'd venture to say the alleged misbehavior violates at least the _spirit_ of the law, since these angels would be considered competitors outside of that room.
It sounds like price fixing, even though they are buying and not selling. Check out Wikipedia for a good write-up:
"Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand. The group of market makers involved in price fixing is sometimes referred to as a cartel.
The intent of price fixing may be to push the price of a product as high as possible, leading to profits for all sellers, but it may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied.
...
Colluding on price amongst competitors is viewed as a per se violation of the Sherman Act regardless of the market impact."
Would it still be price fixing if all of them got up from the table and announced the formation of Super Angel Capital Partners? I can't see how; there's tons of VC firms already. If that's not unlawful, how is a joint venture among them unlawful?
Are we just stuck on the fact that they're "angel investors"? The law doesn't recognize any such sector of the venture capital business.
What? No they don't. There's no such thing as a "monopoly of angel investors". There are as many angel investors as there are people with extra money to invest. In a lot of cases already, groups of powerful people with extra money to invest have already formed very famous companies to do exactly what we're talking about!
Shouldn't the DoJ be going after Kleiner and Sequoia first?
Don't hundreds of doctors and dentists already do stuff like this?
Hah, this made me laugh. As if they owe anybody anything! They're the ones taking the risks with their own money; if they want to be better informed through information sharing, more power to them.
My buddy and I in college colluded to maintain market conditions on Lamborghini prices. As far as I can say, 300 million other Americans are participating in this. Our agreement was specifically regarding price (and lack of 0% financing).
</sarcasm>
I think in buyer's market it only makes sense when the supply of buyers is artificially limited. Not only it doesn't look like there's any shortage of capital, the conversation in question specifically discussed excluding new angel investors, furthering the point.
A joint venture (or a legal entity aka as a company) operates under very different rules than parties working together, probably without a contract.
I don't know how the antitrust laws apply, not even if what they are doing collude with any law at all, despite preventing healthy competition, but your questions come from the wrong premises.
As we just saw with TechCrunch v FusionGarage, the paper contract has little to do with whether something is or isn't a joint venture.
Broaden the word "antitrust" to "laws against all contracts in restraint of trade", and re-ask the question to yourself. These people are investors. Investors are allowed to work together, aren't they?
I don't know what law they broke (if any at all). I don't know if they can keep doing whatever they are doing.
I was just arguing against "legal to ... agree to merge and start a fund?", because yes, it would be legal.
You're saying they are one step of becoming something we all agree it's ok to do. But they haven't take this step.
Again, I'm not saying they're doing something illegal. Just that you can't apply the "joint-venture/company" operating rules for them, because this is not what they are.
Bringing "what if" conditions to a situation doesn't change it. You have to analyze for what it is.
Sorry if it looked like I disagree with you about the legality. I just didn't think you had a strong backup for the questions.
Before I turn into "the guy on the thread arguing that the Evil Angels are just peachy", banding together for the sole purpose of pushing back YC and making life harder for founder is a total dick move, and I'm happy Arrington is shaming them for it.
But it is a much more ambitious claim to say that they're breaking federal laws by doing it.
Any time individuals or businesses get together to collaborate on a strategy that restrains trade or supply, thus artificially skewing prices, this runs afoul of antitrust law.
Collusion between angels to keep valuations low and prevent newcomers from participating sounds like a textbook case. In this case, they're artificially inflating their cost of capital by reducing the overall valuations of the businesses they fund. They artificially reduce the supply of capital by conspiring to keep out new participants.
Similarly, the Department of Justice is looking into Valley hiring, since companies have a gentlemen's agreement not to poach from one another:
In this case, the argument would go that the companies are artificially constraining the supply of paying work for qualified applicants, while reducing the competitive landscape that would drive up their salaries.
If the FTC determines that the joint venture would form a monopoly, they could in fact block it on antitrust grounds. The FTC blocks mergers all the time.
Explicit cooperation in restraint of trade is always illegal, though.
According to Wikipedia [1], there were over 250,000 angel investors active in 2007. If 10 of those investors were to get together to form a "super-group", I'm not sure it would match up with the definition of a monopoly.
I don't know anything about the collusion arguments though.
I agree. Not saying they're a monopoly. The merger-blocking issue is the only reason I can think of for a joint venture being illegal.
The difference is that explicit collusion is ALWAYS illegal. Otherwise innocuous activities that may have an anticompetitive effect (e.g. forming a joint venture) are sometimes legal, depending on what the FTC thinks.
The real question would be their investment market share, right? There might be 500 companies building operating systems, but a Microsoft/Apple merger would probably be a monopoly concern.
That said, while their market share is certainly larger than 10/250,000, it probably doesn't even approach 10%. So you're probably right.
True, but you need to consider possible sub-markets. They might have much less than 10% of angel funding nationwide, but 60% of tech angel funding in the bay area. Or something like that. It all depends on how the regulators draw boundaries around markets.
I have no idea whether this specific arrangement is legal or falls under laws regulating price fixing but it is fundamentally different from a JV - there is transparency in the case of a JV so someone looking for financing knows they are dealing with the same entity. If it was the same thing as a JV, parties doing the collusion wouldn't bother to do it in secret.
Why would VC firms meeting and agreeing to change terms for their clients in lock-step not be collusion whereas if the brick and mortar banks did, it would be? (and was: http://redtape.msnbc.com/2008/04/did-banks-collu.html)
There's only half the story here because Arrington isn't naming names.
It was a meeting of a group of people in a semi-public place, I don't see why he hasn't named who was there:
"So, I went into the restaurant to find Dave, Ron, Jeff, Mike, Josh, Chris, ..." (I'm just naming, um, random first names here folks for the purpose of illustration!)
He's clearly running a power play around the identities...
Because Dave, Ron, Jeff, Mike, Josh and Chris would have a defamation suit filed by end-of-day. Clearly MA reached out to the attendees.. I wonder what the other 8 or 9 had to say. That's the other half of the story.
If Arrington lists a bunch of people were at a gathering, and they were, then there is nothing to sue over there.
If he says "they were talking about pricing deals and how to club together to avoid convertable notes", and they were, then there is nothing to sue over even if he has named the people there.
I don't actually get your comment. If we DON'T believe this group were talking about what Arrington is claiming then there is a bigger issue here regardless of whether people were named or not.
I spent the earlier part of my career working for independent and free media and campaigning for free press.
Of course you should never publish anything libelous or incorrect but it saddens me to no end to think that people wouldn't publish something that they could stand by as true, right and accurate simply because they were scared they might get sued.
And certainly someone as the proprietor of a publication of record like TechCrunch (which while perhaps not the most whitest-of-white media outlet, still has something to stand for) owes it to his readership to do what's right.
I guess it all comes down to why you are publishing in the first place - to communicate truth and facts or for power and ego (which sure, is hard to tell with TechCrunch at times)
It is a process of journalism. He is using the story as leverage to fill in the remainder of the story. See how the Scamville story evolved.
I think Arrington has shown time and again that he places the story and public interest above all else. To even suggest or insinuate that Arrington is only publishing this story to fuel his own ego is completely wrong. He likely burnt a lot of bridges with todays story and lost a lot of sources in order to give the public a very rare view of what takes place behind closed doors.
This is major. I worked with Michael Arrington years ago. He wouldn't say this without being sure and there is no stopping him now. He went to Stanford Law School and worked at one of the Valley's top law firms (wsgr.com). Mike, get ready for the witness stand!
Not saying that he's wrong, but does it seem odd to anyone else that a group of people who are clearly very smart and successful would create a wiki to document their illegal scheme of collusion and price fixing?
On the flip side, are valuations becoming over-inflated? I also think it's entirely appropriate for this group to be discussing strategies to increase their competitiveness versus YC, newcomers, and VCs. The real sinister claim is that they were talking about "more mundane things, like agreeing as a group not to accept convertible notes in deals." I wonder how that will pan out now.
The way to combat over-inflation is to simply not buy. You don't need a secret meeting for that. When investors aren't buying, that's a collective signal to founders selling that their valuations are too high.
I bet it's people leaking fake conspiratorial meetings just to screw with Arrington.
We need more information though. Were there any, ahem, cons there? How about any balding acebookfay employees? Were there fewer, greater than, or exactly 500 hats in attendance? Was there anybody there using saccharin? Did your spy camera catch theone?
Was it the Adam Smith quote "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public."
Why do I know that off the top of my head? Civ IV... who says games can't be educational?
Arrington tried to manufacture a happy medium between not saying anything and outing every person at the meeting. Not outing everyone implies you're not entirely sure. Not being entirely sure, yet talking about it anyway is a cheap way to get a story.
Waiting until things are more clear cut would have earned him points in my book- I suppose it's not worth it when the alternative is having everyone follow the story on TC from now until its conclusion.
I'm assuming he's trying to both get a good scoop AND stop the damage these angels can do to startups - the longer he waits, the more damage might be done.
I think he's struck a pretty good balance here by saying what needs to be said and no more, while still keeping it interesting.
The original tweet was removed in the past few minutes (others have dug it up again). His latest tweet doesn't seem to be taking Arrington too seriously:
Thanks Mike for techcrunching me for no reason. Note to self: hold next secret meeting in underground bunker to get the feds off my trail.
But the conversation has evolved to the point where these super angels are actually colluding (and I don’t use that word lightly) to solve a number of problems, say multiple sources who are part of the group and were at the dinner.
Given Arrington's allegations, why would someone in the group or at the dinner admit to the collusion? These are smart guys talking to a prolific, ballsy blogger--what do they expect will happen? What's in it for them?
At least two people attending were extremely uneasy about the meetings, and have said that they are only there to gather information, not participate.
It also strikes me as odd how specific he is when mentioning figures. Why not simply say, "Several people who attended the meeting..."? By specifically saying that there were two, he will have everybody who was there guessing who those two are. Also, if there was just one person, it would make sense for him to specify that there were two to throw off the rest of the group, no?
> why would someone in the group or at the dinner admit to the collusion?
He mentioned that they were uneasy with the direction the talks had taken. I could definitely understand a couple of them seeing this admission as a good way to get out of a compromising situation while not leaving themselves at the disadvantage of being an outsider.
I wouldn't be surprised if that's the last we hear of this story; very unlikely Arrington will name drop in the future. However, if this story is true, hopefully it scares off these Angels from forming an investment 'mafia.'
I disagree -- I can't imagine that Arrington will hold those names back. He's a journalist first, and increasingly, what seems to be a sort old school one -- he's there for the story.
Right now, there's no need to drive traffic with names -- he's got today's scoop. Give him time.
Game theory. 10 players make for a highly unstable equilibrium, especially given the potential for absurdly high profits for deviating to fund one hot company. One of them is even "highly uncomfortable." The key is to shop around and negotiate intelligently.
There's also the game theory going on within the 10. The one uncomfortable person could have gathered data and evidence on the scam while dragging their feet in participating, then informed to the FBI, gotten their main competitors shipped off to prison, and been the only Superangel left in the game with the pick of the litter and their choice of valuations.
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[ 5.2 ms ] story [ 366 ms ] threadWho else?
http://www.quora.com/Who-are-the-Super-Angels-that-Michael-A...
Vide the cognitive psychology experiments which show that once you mention a person's name, it gets connected in memory regardless of how doubtful the source ought to be, etcetera.
In any case, it was Arrington that fingered all these people when he called them the "10 or so highest profile angels" who do "nearly 100% of early stage startup deals in Silicon Valley". Though after seeing Quora's list I think Arrington mischaracterized the group.
When he picks up a story like this, watch out - Scamville didn't end until Offerpal lost their CEO, Zynga apologized and Facebook changed their policies.
I know u just kept the original headline, but it's confusing for people who haven't read the post.
Just a request. 'Tis a VERY important thing for all to read in the community.
"What's all the buzz about?"
Something like this, if true, will cause the government to step in, and probably regulate and change things for the worse for a great many people. It won't just hurt these few super angels. It will take everyone with it.
That being said, I think he's on the money with this one.
This can only be good for YC overall. The suspicion that YC alternatives are all colluding against your startup is likely to make YC seem more attractive still, to the class of startup that would be wavering between YC and a rival.
The comment I was replying to said, "his claims are laid out clearly without any weasel words. Either this is happening or it isn't." I disagree with that — Arrington is not laying it all out here as a black-and-white truth. He's consciously omitting facts in a way that happens to shield him from repercussions if this is false. As a traditional dead-tree newspaper guy, I'm very familiar with the ways reporters fudge their claims to avoid being responsible if it turns out to be crap. That's what this sounds like to me.
He clearly wanted to avoid using weasel words. The only way to do that without being reckless is to not refer directly to the objects of the post.
He did mention that they were his friends. Perhaps he wants to nip the illegal activity in the bud with as little collateral damage as possible.
1. Mike's not known for boldly lying. He might publish rumors that Facebook is building a phone too liberally, but I've not heard of him saying "I saw x happen" and it wasn't true. Assuming the account of what he himself saw was accurate it's hard to imagine collusion wouldn't be the purpose.
2. This sounds like something that would happen. VCs do this crap all the time, why not angels?
3. Publishing this might be bad for him, and if it were untrue, it would definitely be really bad for him.
I don't know. Maybe it happened, maybe it didn't. But I find it unlikely that such a group, if they had to name one institution by name at such a risky meeting, would name YC and not, say, KPCB.
The FB phone was (imho) classic Arrington (the bad side). Posted on the weekend (in the hopes that FB PR would be slow to respond and debunk it), quoting anonymous sources and no substance at all. Basically, link bait. That sort of story does him (or rather his credibility) no favours.
The rest is heresay, which is admissible in no non-kangaroo court that I know of.
Wouldn't it be perfectly legal for these people to sit around a table an agree to merge and start a fund? If that's the case, how could it be unlawful for them to work on a joint venture? Just because I don't like the JV doesn't make it unlawful!
IANAL though - even if not illegal, it's still pretty stinky, and a big part of me hopes it's not illegal. If it's not illegal, I hope they're outed and shamed if this is true. If it is illegal, it give the government reason to step in and screw everything up.
Are you suggesting that 10 angel investors have control over all the money? Is one of them Lex Luthor?
If you think the only requirement to being an angel investor is having a big bank account, you haven't been paying attention.
Frankly, I think the feds would jump at the chance to have an excuse to jump in and more tightly regulate/tax/etc the entire system, including angel investors.
You could very well be right; admittedly, I'm not the smartest tool in the shed when it comes to understanding FTC and government investment regulations, as well as the legal status of angel investors.
Heck, I really hope this is all wrong, because the last thing I want is the feds meddling in this industry even more. I make my living on startups; the last thing I want is the federal government to make it wither and die.
Semantically yes. But is every joint deal bad for the market?
"The market will find other people to take these deals."
Don't be naive. Anticompetitive practices are specifically meant to prevent the market from functioning normally.
"Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand. The group of market makers involved in price fixing is sometimes referred to as a cartel.
The intent of price fixing may be to push the price of a product as high as possible, leading to profits for all sellers, but it may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied.
...
Colluding on price amongst competitors is viewed as a per se violation of the Sherman Act regardless of the market impact."
Are we just stuck on the fact that they're "angel investors"? The law doesn't recognize any such sector of the venture capital business.
Shouldn't the DoJ be going after Kleiner and Sequoia first?
Don't hundreds of doctors and dentists already do stuff like this?
Right. And I'm sure they're all doing it out of the kindness of their hearts. They're definitely not intending to make money off of the deal.
Regardless, Arrington accuses them of discussing:
* How the group can act together to keep traditional venture capitalists out of deals entirely
* How the group can act together to keep out new angel investors invading the market and driving up valuations.
This is definitely sounds anti-competitive to me (assuming it's true of course).
Yes. That would effectively make SACP a cartel. Price fixing is price fixing if it was done by a group of entities or one entity.
</sarcasm>
I think in buyer's market it only makes sense when the supply of buyers is artificially limited. Not only it doesn't look like there's any shortage of capital, the conversation in question specifically discussed excluding new angel investors, furthering the point.
I don't know how the antitrust laws apply, not even if what they are doing collude with any law at all, despite preventing healthy competition, but your questions come from the wrong premises.
Broaden the word "antitrust" to "laws against all contracts in restraint of trade", and re-ask the question to yourself. These people are investors. Investors are allowed to work together, aren't they?
I was just arguing against "legal to ... agree to merge and start a fund?", because yes, it would be legal.
You're saying they are one step of becoming something we all agree it's ok to do. But they haven't take this step.
Again, I'm not saying they're doing something illegal. Just that you can't apply the "joint-venture/company" operating rules for them, because this is not what they are.
Bringing "what if" conditions to a situation doesn't change it. You have to analyze for what it is.
Sorry if it looked like I disagree with you about the legality. I just didn't think you had a strong backup for the questions.
But it is a much more ambitious claim to say that they're breaking federal laws by doing it.
Any time individuals or businesses get together to collaborate on a strategy that restrains trade or supply, thus artificially skewing prices, this runs afoul of antitrust law.
Collusion between angels to keep valuations low and prevent newcomers from participating sounds like a textbook case. In this case, they're artificially inflating their cost of capital by reducing the overall valuations of the businesses they fund. They artificially reduce the supply of capital by conspiring to keep out new participants.
Similarly, the Department of Justice is looking into Valley hiring, since companies have a gentlemen's agreement not to poach from one another:
http://www.forbes.com/feeds/ap/2010/09/17/technology-special...
In this case, the argument would go that the companies are artificially constraining the supply of paying work for qualified applicants, while reducing the competitive landscape that would drive up their salaries.
Explicit cooperation in restraint of trade is always illegal, though.
I don't know anything about the collusion arguments though.
[1] http://en.wikipedia.org/wiki/Angel_investor
The difference is that explicit collusion is ALWAYS illegal. Otherwise innocuous activities that may have an anticompetitive effect (e.g. forming a joint venture) are sometimes legal, depending on what the FTC thinks.
That said, while their market share is certainly larger than 10/250,000, it probably doesn't even approach 10%. So you're probably right.
It is still very much illegal for them to collude against US customers.
[1] http://en.wikipedia.org/wiki/Edge_Act
[2] http://www.answers.com/topic/edge-act-corporation
It was a meeting of a group of people in a semi-public place, I don't see why he hasn't named who was there:
"So, I went into the restaurant to find Dave, Ron, Jeff, Mike, Josh, Chris, ..." (I'm just naming, um, random first names here folks for the purpose of illustration!)
He's clearly running a power play around the identities...
Another one would be "don't out your sources". Which he would have done if he had of named names.
If he says "they were talking about pricing deals and how to club together to avoid convertable notes", and they were, then there is nothing to sue over even if he has named the people there.
I don't actually get your comment. If we DON'T believe this group were talking about what Arrington is claiming then there is a bigger issue here regardless of whether people were named or not.
Never give a person wealthier than you a reason to sue you - regardless of if you are wrong or right.
Of course you should never publish anything libelous or incorrect but it saddens me to no end to think that people wouldn't publish something that they could stand by as true, right and accurate simply because they were scared they might get sued.
And certainly someone as the proprietor of a publication of record like TechCrunch (which while perhaps not the most whitest-of-white media outlet, still has something to stand for) owes it to his readership to do what's right.
I guess it all comes down to why you are publishing in the first place - to communicate truth and facts or for power and ego (which sure, is hard to tell with TechCrunch at times)
I think Arrington has shown time and again that he places the story and public interest above all else. To even suggest or insinuate that Arrington is only publishing this story to fuel his own ego is completely wrong. He likely burnt a lot of bridges with todays story and lost a lot of sources in order to give the public a very rare view of what takes place behind closed doors.
He is not trying to merely state matters of fact. He is stating some matters of fact while also betting his reputation on a few matters of inference.
Betting your reputation is one thing, but committing libel is something else.
A safe article would have said, "I saw these people together. The end."
To go beyond that, he'd need sources on tape. He may or may not have that, and even if he does, he may not feel like escalating this that quickly.
We need more information though. Were there any, ahem, cons there? How about any balding acebookfay employees? Were there fewer, greater than, or exactly 500 hats in attendance? Was there anybody there using saccharin? Did your spy camera catch theone?
Why do I know that off the top of my head? Civ IV... who says games can't be educational?
Civ CIV
http://www.squidoo.com/civ4quotes
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public."
- Adam Smith
Arrington tried to manufacture a happy medium between not saying anything and outing every person at the meeting. Not outing everyone implies you're not entirely sure. Not being entirely sure, yet talking about it anyway is a cheap way to get a story.
Waiting until things are more clear cut would have earned him points in my book- I suppose it's not worth it when the alternative is having everyone follow the story on TC from now until its conclusion.
I think he's struck a pretty good balance here by saying what needs to be said and no more, while still keeping it interesting.
Collusion is to be expected in all industries, but something of this scale — if true — just blows the mind.
http://twitter.com/speechu/status/25083299594
"Timestamp is 8p yesterday. RT @speechu: Bin 38 is like heaven right now, chock-full of angels. #superevil #evidence cc @arrington"
http://twitter.com/mattmireles/status/25159683448
http://cc.bingj.com/cache.aspx?q=http://twitter.com/speechu/...
But the status link is deleted
Thanks Mike for techcrunching me for no reason. Note to self: hold next secret meeting in underground bunker to get the feds off my trail.
http://twitter.com/speechu/status/25174604517
Given Arrington's allegations, why would someone in the group or at the dinner admit to the collusion? These are smart guys talking to a prolific, ballsy blogger--what do they expect will happen? What's in it for them?
At least two people attending were extremely uneasy about the meetings, and have said that they are only there to gather information, not participate.
It also strikes me as odd how specific he is when mentioning figures. Why not simply say, "Several people who attended the meeting..."? By specifically saying that there were two, he will have everybody who was there guessing who those two are. Also, if there was just one person, it would make sense for him to specify that there were two to throw off the rest of the group, no?
He mentioned that they were uneasy with the direction the talks had taken. I could definitely understand a couple of them seeing this admission as a good way to get out of a compromising situation while not leaving themselves at the disadvantage of being an outsider.
Right now, there's no need to drive traffic with names -- he's got today's scoop. Give him time.