TechCrunch Blogger Walks in on Conspiracy

Michael Arrington reportedly walked in on a conspiracy – and not just the usual stuff

By Sarah Jacobsson Purewal, PC World |  Internet, Michael Arrington, venture capital

  • Complaints about Y Combinator's growing power, and how to counteract competitiveness in Y Combinator deals
  • Complaints about rising deal valuations and they can act as a group to reduce those valuations
  • 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
  • More mundane things, like agreeing as a group not to accept convertible notes in deals (an entrepreneur-friendly type of deal)
  • One source has also said that there is a wiki of some sort that the group has that explicitly talks about how members should act as one to keep deal valuations down

For those of you who are wondering exactly what's wrong with these meetings, if they are, in fact, discussing these topics - it's collusion and price-fixing. "Collusion" is an agreement to limit competition (illegal), while "price-fixing" is an agreement to maintain a fixed price on something by coordinating with sellers and/or buyers. Groups of colluders and/or price-fixers are sometimes referred to as a "cartel" - and, well, that should pretty much tell you everything you need to know.

This is some pretty juicy stuff ... if it's true.

Unfortunately, it raises a bunch of questions--namely, (1) how did Arrington become so privy to all this information, and (2) why is this top-secret high-profile investor cartel so incredibly dumb?

First of all, the story looks like it pretty much just fell into Arrington's lap. He was "tipped off" about a secret meeting, went, and managed to get three people to spill some serious details that could get everybody in trouble. According to Arrington, at least two of the people he spoke with were "extremely uneasy" about the meetings and said they were "only there to gather information, not participate."

Yeah, that'll hold up well in court.

Which brings us to the second point - if, in fact, this is a top-secret tech cartel that has funded almost all Silicon Valley start-ups, how are the members so dumb? Not only do they (a) tell Arrington when and where they're meeting, they (b) share meeting notes with him, and (c) even keep a wiki where they can talk about all their illegal colluding and price-fixing.

Is it just me, or does something not add up? Honestly if they're stupid enough to write all of their notes down on a wiki, maybe they deserve to be caught. Looks like Vallywag's Ryan Tate agrees with me.


Originally published on PC World |  Click here to read the original story.
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