Caught in the act?
This story has been running for a few days and doesn't really directly affect the established technology world. But the soap opera-like twists and turns it has taken compel us to tell you about it regardless.
First a bit of background. TechCrunch is one of the world's best known technology blogs because of its combination of excellent Silicon Valley sources and its willingness to publish what it's heard from them, usually well before the subject of the story is willing to go public with its news. The site originated as a Silicon Valley startup blog.
An Angel investor is a venture capitalist who typically invests at an earlier stage in a startup's life than traditional VCs and invests their own money. Accordingly they tend to have quite an intimate relationship with the startup they're investing in and play a big part in guiding and nurturing the business.
The founder of TechCrunch - Mike Arrington - heard through his sources that a bunch of ‘super angels', who collectively account for the vast majority of early-stage startup deals in Silicon Valley, were all meeting at a San Francisco restaurant called Bin 38. He decided to gatecrash the meeting and was given a frosty reception, so he left.
Subsequently Arrington said he spoke to three people who were at the meeting, and they revealed that the agenda of the meeting was essentially to look at ways in which these theoretically competing investors could cooperate with each other in order to stifle competition from outside the group.
As Adam Smith, the free-market economist, said in his legendary 1776 book An inquiry into the nature and causes of the wealth of nations: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Cue a fenzy of speculation about who was there, what was discussed, and what the implications are. The first attendee to break cover was Dave McClure, founder of 500 Startups. Some choice quotes from his blog post include: "...the agenda was drinks, good food, & shooting the shit... it wasn't to collude, to price fix, to put out a hit on Paul Graham, or generally bust a cap in any founder's ass." McClure went on to accuse Arrington, who he counts as a friend, of chasing reads.
