AOL buys tech news blog TechCrunch for US$25m

29 Sep 2010

TechCrunch, the highly influential news blog founded by Silicon Valley entrepreneur Michael Arrington, has been sold to AOL. Arrington, who is staying on at TechCrunch, said that after five years he was exhausted not by the writing but by engineering problems.

Arrington formally signed the agreement on stage at TechCrunch Disrupt, a major conference that attracted all the key Silicon Valley influencers, including Eric Schmidt of Google and Peter Thiel, the PayPal co-founder and Facebook board member.

He started TechCrunch in 2005 and as of February the site had more than 4.5 million RSS subscribers and was ranked No 2 in Technorati and No 1 in the info/tech category.

From early on, TechCrunch became the source of choice in terms of venture capital deals and new technology developments emanating from the Valley. Arrington would often enter his office in the morning and discover tech start-up executives sleeping on the stairs hoping to get an article published on his site.

In a blog about the acquisition, Arrington said discussions began after a TechCrunch Disrupt conference in New York where he met with AOL CEO Tim Armstrong, who hinted he’d be interested in buying the company. Arrington laughed it off but Armstrong was serious and the conversation resumed in July.

“Most of the conversations were about our commitment to keep doing what we do.

“The truth is, I was tired. But I wasn’t tired of writing, or speaking at events. I was tired of our endless tech problems, our inability to find enough talented engineers who wanted to work, ultimately, on blog and CrunchBase software.

Tech issues

“And when we did find those engineers, as we so often did, how to keep them happy. Unlike most start-ups in Silicon Valley, the centre of attention at TechCrunch is squarely on the writers. It’s certainly not an engineering-driven company.

“AOL of course fixes that problem perfectly. They run the largest blogging network in the world and if we sold to them we’d never have to worry about tech issues again.

“The more we spoke with AOL, the more we saw a perfect fit. They already own many of the top technology blogs. They already have a huge sales team in place (although our own sales team kicks ass and is staying on). And they have an internal events group that we will be able to leverage. From a product and business standpoint, it’s a perfect fit,” Arrington said.

TechCrunch, which is the second most popular blog in the US, has a turnover in excess of US$10m and is expected to generate a profit of about US$3.5m this year.

The site has 40 staff and had 3.8 million unique users last month, according to ComScore.

Arrington said he intends to stay with TechCrunch and AOL for “a very long time” and that the existing board members of TechCrunch have incentives to stay around for at least another three years.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years