The PandoDaily Problem: Why the AllThingsD Team Needs to Avoid Tech Investors

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By early next year, two high-quality technology news publications are going to make their debut. And if the owners of these publications are smart, they will turn their backs on the tech investors that are likely lining up outside their doors.

As some of you may have heard, Walt Mossberg and Kara Swisher, two of the most powerful and credible titans in tech journalism, are parting ways with News Corp. and The Wall Street Journal. Starting in January, they will be running a new online publication for technology news, complete with Ina Fried, Mike Isaac, Liz Gannes, Peter Kafka and the entire AllThingsD team. Swisher and Mossberg won’t be keeping the AllThingsD brand, unfortunately — that is still the property of News Corp. But given their massive reach and stellar reputations, they don’t need it.

Right now they’re shopping for investors. Reportedly they’re in talks with NBC Universal and several others at a (reported valuation of $40 million).

Meanwhile, somewhere in a quiet corner of the universe, former Wall Street Journal reporter Jessica Lessin is building a yet-to-be-named technology news publication. She’s been collecting star reporters from Fortune, WSJ and The New York Times. We actually discussed her new publication a little on Jason Calacanis’s This Week in Startups, though she’s keeping all the juicy details close to the vest.


Both are going to need cash to run their operations from outside investors. Lucky for Lessin, Swisher and Mossberg, there won’t be a lack of potential suitors ready to fund them from the media, finance and tech worlds. They have amazing pedigrees and influence. It’s just a matter of who. AllThingsD’s team is looking at media companies as investors, but others have suggested that Swisher and Mossberg should be looking at the cash-rich world of venture capitalists and technology investors for funding.

I disagree. It would be a terrible idea that would cripple the credibility of AllThingsD. I also think Jessica Lessin should be careful when it comes time to select investors.

If there’s anything that can damage the credibility of a publication, it’s conflicts of interest. I only recently came to this conclusion after watching the beating that Sarah Lacy and PandoDaily has received from other members of the press.

PandoDaily, started by Lacy in 2012 after she left TechCrunch, counts an enormous slew of technology luminaries as investors. Marc Andreessen, Peter Thiel, Chris Dixon, Ron Conway, Menlo Ventures, CrunchFund and many others hold some form of equity in the company. At the time, I thought it was a good thing — she needed cash to start PandoDaily, and she was deepening her relationships with some of the biggest movers and shakers in Silicon Valley.

It has turned out to be a bigger liability than I expected, however. I call this the PandoDaily Problem. Lacy’s publication has been a punching bag due to the inherent conflicts of interest that arise when you raise money from the people you cover. Valleywag has been especially brutal, but they’re not the only ones to voice concern about conflicts of interest.

While you can argue all day about whether PandoDaily’s coverage is influenced by its investors or not, the mere fact that its credibility is debated due to those investors is a problem that PandoDaily can never shed. It makes PandoDaily a target.

To be clear, PandoDaily isn’t the only one with lots of conflicts of interest. It’s well known that Swisher’s wife Megan Smith is a senior level Google executive. That’s why you almost never see her write about Google, and she always discloses her relationship when she does. TechCrunch’s founder, Michael Arrington, invests in startups now via CrunchFund, but I don’t believe his investments influence the editorial decisions of editors Eric Eldon, Alexia Tsotsis or their team. (seriously, Arrington hasn’t called the shots at TechCrunch for a very long time). My point is that conflicts of interest are everywhere in journalism, and the best practices are to 1) be upfront about them and even better 2) to avoid them completely.

Publications and reporters can’t avoid conflicts of interests — the people you report on are your friends, enemies and significant others. But I do believe that it’s in the best interest of any publication to minimize its potential conflicts of interest. That means, when possible, avoiding investors that a publication might be covering fairly often. In my opinion, PandoDaily would’ve been better served raising money from other sources OR raising it from just 1-2 tech investors instead of 10-20 to minimize its conflicts.

So my advice to Swisher, Mossberg and Lessin would be this: avoid tech investors if you can. And if you do raise money from tech investors, raise that money from as few firms as possible to minimize your conflicts of interest.

~ Ben

P.S. I want to be clear that, if I had been in Sarah Lacy’s position, I might have done the same thing and raised from the investors who knew me best. Dealing with tech investors and venture capitalists is far, far, far easier than dealing with giant media conglomerates or private equity firms. Lacy knew that PandoDaily would be attacked for conflicts of interest, and she made the judgment that taking money from tech was a better option than taking months or years to wrangle one of the media giants into investing.

Top image: Kara Swisher (middle) and Walt Mossberg (right) with Meredith Perry of uBeam, a DominateFund portfolio company.