Family crisis: Media, Investors and Startups

Photo Credit: Shutterstock
Photo Credit: Shutterstock

This entry is being posted in response to two posts published by Roi Carthy, now a Managing Partner of the Initial fund, formerly a product manager at Soluto (which he later invested in) and blogger for TechCrunch (his last piece for the publication having been featured in May).  It should be noted that I know Carthy personally and this response post was sent to Carthy for review of its accuracy before publication.

To understand the content of the post I suggest we get some context and go back in the event that started it all: Izhar Shay, a General Partner for the firm Canaan Partners, posted on his Facebook page (it was later removed, but the translation of the post can still be found on the business insider) a warning, as it were, that he believes he knows who the perpetrator of a leaked rumor to the Calcalist that disclosed the acquisition (allegedly) of PrimeSense by Apple. PrimeSense is a portfolio company of Canaan Partners to which Shay belongs.

Shay explained that the leak and the subsequent publication of rumors swirling around the leak negatively impact on the purchase to a degree that could lead to the dissolution of the entire deal, badly damaging the entrepreneurs, employees and investment firms involved. In order to make sure we’re all on the same page here, we’ll define a rumor to be a newsworthy piece of information that originates from a single source, or from multiple sources who are all connected to the original source, and unsubstantiated by any known facts.

Another thing; I intentionally refrain from mentioning anything about the leakers themselves – that’s a topic for another discussion, altogether.

Familiarity: The system’s trifecta

To fully grasp the relationship dynamic at play when it comes to Israel’s startup ecosystem it helps to separate out the three primary elements that make up its core. This is in contrast to Carthy who mentions two but neglects to include a critical third party: The first is of course startups, investors are a close second and the third I believe is the media. The role of media in the triangle is to connect the other two sides. It is because of media that startups and investors are able to know about one another, understand the role of the other, and people in the industry and in the world are able read, watch and learn about the relationship between the two. (In some cases, individual elements of the ecosystem may merge in the body of a single entity. We here at Geektime consider ourselves to be very much a startup as well as a news site while Carthy is himself both investor and blogger.)

These three factors are in a very delicate relationship. A form of ‘gentleman’s agreement’ as Carthy puts it in his post, where each member understands the pros and cons of how their actions can help or hurt the other. However any given party will choose to act when faced with sensitive matters, the media will eventually want to know about it, startups and investors will want to tell each other about it – each preferring disclosure at the time of their own choosing. However, there’s often a leaker waiting to throw all those timetables off course.

To beat out the competition that make up the various media outlets and scoop the most interesting stories, the most interesting people, the most important news of the day – that is where the real work in media takes place.

What comes first, competition or family

In Carthy’s first post he raised three points regarding journalistic practices speaking to the issue of leaks and the value of publishing news or rumors. He denounces the first two as misconceptions and transfers all the burden of responsibility of the third, exclusively to Israeli media. He does so under a pretense of distinguishing between the binding moral obligations that separate family from strangers.

Let’s go over the three arguments as they were originally posted:

Argument 1: It’s in our business interest to publish acquisition leaks.

Rebuttal 1: Horsesh*t. Nobody gives a damn who came out with the story first. There is absolutely no financial gain by such stories. Your business interest should be to spotlight young and innovative companies. To tell entrepreneurial stories. To write pieces that enlighten the local readership. Your business interest is to think long-term.

Carthy, who wrote as a blogger himself for one of the more aggressive publications out there (as recognized by those familiar with it) and who knows in many cases there’s no point to writing about certain news, technology or startup items if you’re not going to get there first – wants to tell us that breaking stories doesn’t matter. I want to explain why being first can make all the difference:

Just to enlighten those who are not involved in the worlds of blogging and digital media, or journalism in general: Most readers go to the original source post. Our reputation as bloggers and journalists grows as a result of getting to interesting stories first.

This is not just about pride. Being known as the one to break major stories transforms you into the destination of choice for the rest of the industry: Sources choose you to make their announcements, customers prefer to pay you knowing they’ll get the best exposure to a growing readership. Being first is why a global media arm will quote you and why you are seen as a source for news and real value above other media outlets. To become such a source of value is why we chose this profession. I will say that there are other important additional parameters that go into journalism, like the depth to which an article drills down into a story etc., but to ignore the goal of being first falls somewhere between lacking journalistic responsibility and lacking an understanding of the role of media in general.

Argument 2: If we don’t publish acquisition leaks, our Israeli competitors will.

Rebuttal 2: Not if we have a gentleman’s agreement. Assuming you’re men and women of honor, we can all meet, agree, and shake hands on this.

I’ll start by saying that ‘gentleman’s agreements’ are a wonderful thing. An embargo on a story’s release till an agreed upon hour is a fine thing, and usually stable until one media outlet thinks the other is planning on breaking the embargo (for motivations underlying breaches of trust, I refer you to the previous point) and then the entire house of cards collapses.

For those who do not know, this is a very aggressive industry whose pace is led by what’s being published at the moment. The cost a few hours can mean the difference between breaking ‘just one more article about that trending topic’ in the best of cases, or ‘no longer relevant’ – a far more common price that’s paid.

Argument 3: If we don’t publish acquisition leaks, our international competitors will.

Rebuttal 3: True. But they’re not family. We are.

In truth, at first I wasn’t going to write a response post at all, thinking I would just sit on the sidelines like I usually do whenever there’s a little too much drama involved. But when I read Carthy’s above point I felt it was he who was choosing to go against the family.

Carthy suggests we, the Israeli media, forfeit our livelihood in favor of the international press, who aren’t quite up to snuff on the local market, allow them to ask us what they need to know to get a handle on things, and then wait for them to publish – at which point it would be fair game to report on our local stories using the international press as our “sources”. Such a suggestion completely undermines the value of the Israeli media in general. His words call for unity and togetherness but in reality he’s inadvertently sacrificing the “family” in favor of the international media.

The most important elements of our ecosystem are balance, reason, and  a consideration of consequence before action. The dynamic between the various players in our industry, as it stands, is a delicate one. Statements like these threaten to disrupt the balance and can harm those journalists and bloggers who are out there trying to do their job and fulfill their role as part of the larger picture.

It’s not only Meir Orbach – reporter for the Calcalist – who lectured Carthy on facebook about the role of freedom of expression for the reporter/blogger – not to mention a very surprising supporting comment by Izhar Shay (Remember him? He’s the investor who threatened to out the leaker and basically got this whole story rolling), it’s also Robin Waters (former  reporter for TheNextWeb and now author of his own blog) who posted a response to Carthy which further doused the flames of Carthy’s argument. However, Carthy decided to stoke them some more, taking upon himself the role of blogger/legislator and proposing a new set of Prime Directives. Let’s talk about them:

Israeli media v.s global media

Carthy’s directive reads as follows:

Israeli startup acquisition rumors should be published only after having been corroborated by three independent sources.

Investors and startups get a free pass while the Israeli media (which apparently Carthy considers a non entity as far as the startup ecosystem goes) has to take its shots for the team – as Carthy himself writes:

Commercially, yes, the downside is that non-Israeli journalists and publications will reap the benefits of breaking acquisition rumor stories. That’s simply the price you pay for family.

I can’t even begin to describe how disappointed I was to read this. He sacrifices the Israeli media without any qualms about it.

Carthy basically asks Israeli media to give up the only advantage it has over international media outlets (the fact that we’re here, and we know what’s happening in Israel before anyone else does) but never for a moment does he consider what effect such a compromise will have on the Israeli media and the profession of journalism in general; i.e. protections of freedom of the press and freedom of speech.

Make no mistake, the international media feed off leakers at a far higher rate than the Israeli media does. Still, Israeli media professionals work extremely hard to cultivate reliable sources and validate information. This is the essence of our leg work. It’s hard but we enjoy it and we expect to reap the rewards.

If we give up this element of our job we might as well pack up our desks, lock up the office, return the keys and go home.

Food for thought: There always were, are and will be leaks. Nonetheless, responsible media outlets seek comments from companies in question to corroborate, elaborate or refute the information received, usually having to settle for a “no comment” or just being outright ignored. Yet we still try to give companies a chance to respond instead of taking the attitude that we’ll publish based on what we’ve got and companies will just have to deal. Perhaps its time to ask whether some of the responsibility shouldn’t fall back on the companies themselves? Maybe they should work with the media rather than against it? Maybe the ‘New Directive’ should be directed at them and not the media? If we’re really a family, everyone should be held responsible, right?

The point: Think before writing

It was not easy for me to write this post, and I thought a lot before publishing it. I have no desire to undermine anyone in the startup scene given my appreciation for all the players involved, most of whom are familiar with each other on a personal level. In no small way do I try to understand the needs of each party and the value that each one brings to the other, and writing this post was a difficult decision for me.

This issue relates to all of us; to Carthy, to those who justify his words without considering the consequences, and especially to us the media, who do not, and should not, need to stop doing what we do in a responsible manner.

But if I have to choose between editorial/media work that in time morphs into the lazy reliance on others to do the job for me; if I have to choose between taking an attitude of, “we’re loading up on items that others wrote to make life easier on us”, or doing the the leg work myself – I prefer to continue with the leg work. To investigate, explore, innovate, and find things out for myself. And to do so with balance – not by knocking out one of the three pillars of Israel’s startup ecosystem in favor of another.

Photo Credit: Shutterstock/ freedom of speech


Before the weekend Carthy and I corresponded over email Wednesday night and over the phone for about an hour Thursday morning. Carthy chose to respond to this publication with the following post:

I agree the leakers are where the problem originates, but I’m approaching the media outlets because I believe it they who can institute a different, more responsible (in my opinion, and that of others as well), journalistic policy as it relates to jeopardizing startup acquisition deals.

The issue at hand is not ‘Freedom of Press’, but the balance between the commercial interest of media outlets vs. the commercial ramifications of a startup acquisition blown because of a published leak.

I lean far more to the startup interest side, and would prefer a more ‘over-protective’ policy at the cost of the price media outlets will have to pay commercially.

I am speaking on my own behalf alone. My interest is the well-being of startups. Full stop.




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