And, via NMATV

First, my initial reaction when I first heard about the deal: Ugh. Sigh. Hopelessly corrupt. Now 100 percent more icky! A giant, greedy, Silicon Valley pig pile….

In fact, the creation of a $20 million investment kitty that Arrington has dubbed CrunchFund is simply the formalization of a long-standing arrangement that has already been going on since he founded his popular tech blog.

That is to say, in which the basic standards of journalism are first warped by calling it newfangled truth-telling and then endlessly corroded by using a wily and unusually aggressive combination of favors and threats to extract, from start-ups and VCs in need of press, both exclusive access and information.

Kara also lists the investors: “Sequoia Capital, Redpoint Ventures, Kleiner Perkins, Greylock Partners, Austin Ventures and Accel Partners, as well as individual investments from partners at Benchmark Capital and Andreessen Horowitz, entrepreneur Kevin Rose and DST Global’s Yuri Milner. And, of course, the inevitable Arrington BFF Ron Conway.”

Of course! Looks like collusion’s still hot.

David Carr has more In the New York Times.

To punctuate his demand, he posted a still from the film “300″ showing Spartan warriors with their backs against the wall, shields and swords at the ready to defend their position.

In the end, it looks like Arrington forgot those Spartans, uh, all died in a rain of arrows.

The message, according to this source, was: “We’ll make you look good. All I ask in return is that you call us first when you do any corporate development.’”

– Nicholas Carlson, Michael Arrington Browbeats Entrepreneurs At Ron Conway’s CEO Summit, Business Insider

The rest of Monday was kinda “meh” until rumors started swirling about a potential acquisition. Sure enough, Tuesday morning AOL bought TechCrunch — signing the contract on stage. The estimates I’ve seen are $25M up front with a three-year earnout that could take it to $40M or $50M, depending on who you believe.

In MC Hammer Rocks A Perfect Day At TechCrunch Disrupt, Michael basks in the afterglow:

I thought things started off pretty well today at TechCrunch Disrupt with surprise visitor Tim Armstrong, AOL’s CEO.

But the day ended on a perfect, perfect note: MC Hammer, who most definitely still has it, did a full performance at 1015 Folsom in San Francisco. 2,000 people packed in to the club and were immediately rewarded with MC Hammer and his dancers doing things that made every single person wildly happy. Not one person wasn’t dancing. It was, as I occasionally say, awesomeness in a bottle.

Hammer’s on a roll right now, and it’s great to see him get a gig like this. As Zennie Abraham brings up in TechCrunch Disrupt SF Women In Tech Panel: @digitalsista’s view, he could have been a good choice as a conference speaker. Imagine a panel with him, Leila C. Janah of SamaSource (who instead was dragged into the women in technology panel), and somebody from a community technology center or other non-profit joining Peter Thiel to talk about Peter’s plan to pay students to “stop out” of school and other ways the tech startup crowd and their investors could help the Bay Area community. Now that’d be awesome. But I digress …

There was a rumor late last week that the FBI was looking into Michael’s allegations. The timing was remarkably convenient for TechCrunch, and it’d be interesting to find out what influence if any it had on the price. In any case, Angelgate’s helped given a lot of VCs and angel investors to lay out their pro-entrepeneurial philosophies and spotlighted the range of their personalities as well as current alliances. As I said in my original post

Some people may have crossed the line and done something illegal, and if so hopefully they’ll be caught. Other kinds of collusion are as old as the hills, legal, and unlikely to go away.

Or as Rashmi Sinha of Slideshare and Sasha Pasulka of EB Media and Seattle 2.0 said on Twitter.

Diversity didn’t come up on the next panel either, a love-fest with eight guys including Michael. Highlights included blatantly promoting Quora and angel investor Yossi Vardi’s insights that “The difference between a ‘super angel’ and a VC is like making love with a lover versus making love with the government.” Yes, Disrupt really is the kind of a place where an investor says “we will fuck you over” and the crowd is expected to go wild.

Here’s panelist’s Mark Suster’s summary in What I *Would Have* Said:

What do you get when you combine 7 panelist plus one moderator on to a stage for 30 minutes to talk about a serious topic? Answer: Not much. And that was evident on today’s Angel vs. VC panel.

Jessica Guynn covers it for the LA Times in ‘AngelGate’ disrupts TechCrunch conference but no ‘Jerry Springer’ moment, Ryan Singel in Wired, and there are two posts on TechCrunch.

Ah, there’s nothing like a manly hissy fit amongst a passel of white dudes in Silicon Valley to open the fall television viewing season!

Wow! Somebody mentioned gender — and race too!

Kara’s also some great translations of Ron Conway’s first email, including

I was not there, but this does not stop me from completely going all Judge Judy–indicting, trying and convicting you, and despite the fact that one of my own partners was at the faux-controversial dinner.

I do this with a sense of righteous indignation that shall endear me to the entrepreneurs I would so dearly love to steal right out from under you.

She’s got a much shorter followup, covering Ron’s “clarification” to his earlier “leaked” email.

Speaking of Ron, Chris Sacca’s long email to him, is now up on TechCrunch. Chris CC’s Josh, Steve, Jeff, Mike, Dave, and David. Michael’s also helpfully provided an index to what he, Ron, and David have said so far.

Meanwhile on Twitter, Julie Lerner (of “organic robotics” fame) and Stephanie Robesky of Grows Up say some very sensible things as well. In fact I’m going to take their advice, wrap up this thread, and get towork on my preview for the Tuesday morning TechCrunch Disrupt panel on women in technology.

Working title: TechCrunch, disrupted: the third wave meets the agenda of awesome.

Ryan Singel’s Showdown! Angels, Arrington to Go Mano a Mano on Wired’s Epicenter looks forward to tomorrow’s TechCrunch Disrupt panel:

Oddly enough, the three are scheduled to take the stage simultaneously Monday morning on a panel discussing venture-capital and angel investors. The conference, as you can undoubtedly guess, is Arrington’s own Techcrunch Disrupt.

It’s so perfectly timed one might even think that HeavensGate InvestiGate AngelGate* might be scripted.

No! Say it ain’t so!

Ryan concludes

even if this is all a setup and the venom isn’t as real as it feels, Monday morning’s panel promises to be full of Silicon Valley drama, and somebody’s Tesla might get keyed.

We’ll be ringside, sipping a latte, blogging on a Macbook and noting for you which contender’s got the best phone

Can’t wait!

* Anil Dash’s alternate names for the “scandal”

Photos: left to right, Michael Arrington, Ron Conway, Dave McClure; Credit for all three, Joi Ito.

And from the Borasky Research Journal:

It’s hard to find anything good in this story, and it’s even harder to find anything good on Techcrunch these days. We’ve been treated to a post by Sarah Lacy blaming teachers’ unions for the “Why Our Schools Suck” and another one saying, “But from where I sit, it never felt much like a recession at all.” We’ve heard from Vivek Wadhwa about “Silicon Valley’s Dark Secret: It’s All About Age,” and Arrington saying “Too Few Women In Tech? Stop Blaming The Men.” There was a strange post from Arrington: “Blogging and Mass Psychomanipulation.” And finally, Arrington posted that “AngelGate won’t take over the TechCrunch Disrupt agenda.”

Great going, Arrington – throw out an allegation of Federal criminal behavior, get two Silicon Valley legends publicly at each other’s throats, post a private email from one and a deleted tweet from the other, threaten to post more private emails and then have the expectation that they’ll be on your stage at your conference bright and early Monday morning all unicorns and rainbows to “talk about how venture capitalists and angel investors can help entrepreneurs succeed.”

If angel investor Ron Conway wants us to post something here on TechCrunch, we’re going to post it.

Oh, maybe that’s the kind of collusion everybody’s talking about?

Tough break for investors who don’t have their own personal “news” site.

It was, according to the federal complaint, the chummiest of secret clubs among Silicon Valley’s corporate elite. The membership rules were simple: Don’t cold-call any of our employees with job offers and we won’t cold-call any of yours.

Mathew starts with Jon’s post from True Ventures (an investor in GigaOm) saying “Founders come first”. As well as Chris, Micah, Dave, Jon, Mike, Ron, and Chris, he also links to a different Dave, a different Chris, Aydin, Paul, Fred, and Clay.

At the risk of sounding like a broken record: this is a good example of the circle-jerk behavior that Julie’s talking about and Shelley Powers describe so memorably years ago in Guys don’t link. A bunch of insider guys are shamelessly promoting each other.

And on top of that, one of the main stresses on angels and VCs is that the pattern of investment, where overwelmingly-male firms primarily give money to guys, is going to have to change. And none of the people writing about Angelgate are talking about it. From a strategy perspective, it reveals a collective blindspot. And from a media perspective, it’s laughable.

Robert Scoble weighs in!

Robert has some good things to say about the competitive pressures on angels (my first point above). He doesn’t mention gender though.

In the comments, neither do Joshua, Adam, Ken, Jake, Dan, Mark, Gerald, Dave, Andy, Michael, sinzone, Nathan, Richard, Kevin, Ward, David, Gregory, Alessandro, James, or EtotheZ.

PS: Just in case anybody’s wondering, In a comment Robert confirms “Of course I’ll be at Disrupt. I’ll be on stage on Monday afternoon and will be there all three days. ” Awesome.

My love affair with Quora continues. I simply can’t think of another site where so much useful information is being organized so rapidly in one place. You’ve got experts fielding anonymous questions. You’ve got high-profile people answering questions about themselves or their companies. And you’ve got juicy speculation.

The bulk of the article is a screenshot and cut-and-paste of an anonymous poster on Quora claiming that Carol Bartz (who TechCrunch has been attacking roughly forever) is getting fired from Yahoo!

Journalists using anonymous sources to attack their enemies and drive traffic and attention to companies they support …

Is that the kind of “collusion” everybody’s talking about?

I wish the Angel community could have the same integrity and values of the entrepenuer community, but unfortunately I now believe that is hopeless and your actions prove that….

This is despicable and embarrassing for the tech community in my opinion.

Please keep this confidential even though I know that will be hard since two of you let your egos take over and show Arrington how important you are by telling him you were headed to a “secret” angel gathering.

Oh and he calls out Dave. Pass the popcorn.

Felix’ original post takes Michael’s accusations very seriously. In an update after he discovered that Ron denied being there, though, he sees it as a lot less malign.

Meanwhile, Mr. McClure is scheduled to speak onstage with Mr. Arrington at the TechCrunch Disrupt conference on Monday in San Francisco, which should draw a crowd for an anticipated confrontation.

In the Columbia Journalism Review, Ryan Chittum links Michael’s article with Pui-Wing Tam’s Web Start-Up Values Soar in the Wall Street Journal. Pui-Wing reports

Venture-capital investors and others have been bidding up the valuations of consumer Web start-ups this year, particularly of the firms that show the most user traction. In an echo of the 1990s dot-com boom, some investors also are giving lofty valuations to Web firms that have no revenue and that barely have a product out.

Among them: question-and-answer website Quora Inc. in March raised around $14 million in a financing round that inputs a value for the whole company of about $87.5 million, people familiar with the matter have said. The Palo Alto, Calif., firm didn’t publicly launch its service until June and hasn’t said how it will make money.

Hmm, dunno, maybe the discussions went something liket his:

Quora guys: we used to work at Facebook so we know how to make great software and we’ll have an all-blue user interface.

funders: great!

Quora guys: we’ll still haven’t figured out the business model but one of us used to do data mining and ad targeting at Facebook so we’ll have no problem ‘monetizing’ them.

funders: great!

Quora guys: and our go-to-market plan is great:

1. get the guys we know, including lots of ‘influential’ bloggers, to hang out on the site and bring traffic our way
2. ???
3. profit!

Matt from Benchmark and the other funders: cool! here’s $14 million.

Is that the kind of collusion everybody’s talking about?