A catch phrase will go here soon.

Why I’m suing Mike Arrington

11/15/2010

Note: I just sent this to the JasonNation.com email list (which you can sign up for on the top right of this blog, or at www.jasonnation.com. I’m reposting it here since I’m getting a lot of press calls. If anyone wants to interview me on this issue I will be at the Web 2.0 conference later today at the Palace Hotel and more than happy to discuss.

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Friends,

As many of you know, I have filed a law suit against Mike Arrington, my former partner on the hugely successful, but now defunct, TechCrunch50 conference. This was a difficult decision for me, as I’ve never had to take legal action against anyone.

Until now.

I created the idea for the TechCrunch50 conference, and pitched Mike to do it. Mike and I created an LLC that TechCrunch and I each owned half of, and for three years we produced the conference together. Aol purchased the conference as part of their deal for Techcrunch, but I never got paid for my half.

The conference took a lof of time. I poured my heart into helping the 140 companies prepare to launch on stage (and many more in the Demo Pit–I didn’t forget you!). And I’m glad I did, it was one of the most rewarding experiences in my life.

Now, things can change, and a business partnership isn’t a lifetime vow. So when things unraveled with Mike I figured we’d work it out like partners, and walk away as friends.

Ending up in court for the first time after over fifteen years as a CEO and founder? When there’s so many ways to part amicably?

It sucks.

Mike took TechCrunch50 and re-branded it as TechCrunch Disrupt, and a valuable property I created and owned half of became part of a sale to Aol. When I work on a business and create lots of value, it’s just simple fairness that I would be recognized when it is sold.

After suggesting a bunch of compromises to Mike, and using mutual friends to try and settle this privately, I’ve I realized I was left with only one choice.

The worst part of all of this, beyond my friendship with Mike imploding, is that I haven’t been able to host my beloved conference in over a year. That’s dozens and dozens of companies that I could be working with to launch on stage, before they go on to change the world like Mint, Powerset, FitBit, Yammer and countless other startups did at TechCrunch50.

Part of being an entrepreneur is being a relentless, and delusional, optimist, so even now I’m still hoping we can resolve this fairly, amicably, and in private, and go back to creating great companies.

I’ve made some mistakes, and I’ve learned some lessons through this process and I thought I’d share them with you.

Now, I’m not going to get into the details of “the case,” as there is little upside in a public discussion of a legal matter. I’m also not going to get into a mud-slinging match with Mike. Frankly I cringe at some of the shots I took at him when I was frustrated about the conference being stolen. That was kids stuff, and I regret it and would take them all back if I could. You live and learn. I’m sure Mike will regret the unfair slams he took at me recently on TechCrunch.

As for the lessons, there are many I plan to share, but for this email I’ll just focus on one: Insist upon a detailed contract.

For over a year I tried to get Mike to do a contract for the TechCrunch50 conference, but other than forming the LLC he would never take the time to do this. As such, we had a bona-fide legal relationship as partners, but we didn’t have an agreement that spelled out all the details of what happened if we broke up.

Mike told me over dinner that he didn’t like to sign contracts, and didn’t do so with his Crunchpad partners or me, because it gave him an advantage since a) nothing was documented and b) he’s a lawyer. I should have known better — but I guess that’s why it’s a “lesson.”

While Mike and I sort out our issues legally, I plan on focusing on the two things I do best: innovating and executing.

Introducing LAUNCH
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As many of you have heard, I’m in the process of planning out a bigger, better and more start-up-centric “LAUNCH conference,” which will take place in the same venue as TechCrunch50 in San Francisco on February 23rd and 24th next year.

Here are the innovative aspects of the competition, which will feature around 50 startups:

1. Dramatically lower ticket prices
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LAUNCH will be the most affordable, high-end technology event in the world. Bootstrapped startups (i.e. ones with less than $1M in investment and less than 10 staff) will be able to attend LAUNCH for only $400 (essentially our cost). Everyone else (lawyers, VC, angels, more-established companies) will pay only $1,000.

Compare that to the $4-7,000 price tags of the excellent, but certainly elite, conferences like TED, The D Conference (by the Wall Street Journal) and Web 2.0.

When I was starting out I couldn’t afford to attend any conferences, but everyone can afford $400 for two days. SXSW Interactive has proven it by charging $450-750 (depending on when you buy), with stunning results. Thousands of internet folks, from designers to coders to founders, attend and contribute because price isn’t an issue.

The $400 tickets mean folks might be on their own for lunch, and we may not have fancy gift bags, but we will have a much more accessible show with more people who do actual work at startups. (And who knows, some hero companies might just step up and sponsor the two lunches!)

I want to keep leveling the playing field, and fighting for the little guy.

In fact, that was my original motivation for creating TC50: to stop the payola virus where startups paid $18,500 to get on stage. Open Angel Forum is another effort to empower the entrepreneur, and with eight cities and 17 events in year one–and 30% of companies getting funded–I think we’re off to a great start!

2. LAUNCH 1.0 and LAUNCH 2.0 competitions
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I noticed at other demo and launch-style conferences, that founders at existing companies were frustrated because they couldn’t participated.

So, as I move forward with LAUNCH we will have two competitions occurring on the same stage: 1.0 for new companies and 2.0 for existing companies with epic new products. This means folks like Twitter, Mint or Zynga could launch something new (i.e. the new version of Twitter, a new game from Zynga), but they won’t take away from the generally less-funded startups competing in the 1.0 competition.

3. The Angel Grand Jury
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We’re inviting 12 high-profile angel investors to form the $1M angel grand jury. This jury will mentor and coach the companies before and after the event, and potentially invest in the companies presenting at the end of each day–live on stage!

Each angel will commit on the spot (pending due diligence and negotiating deal terms) to investing between $50-250k in the companies they love most at LAUNCH.

At the end of each day, the Jury will host a round table where they talk about the companies that presented that day, and which ones they were most interested in investing in–and why. This 75 minute session at the end of each day will set the stage for these great companies to not only launch, but close their next round of funding!

Think about how revolutionary this will be for a moment: not only do companies not have to pay to get on stage, and not only will they get free mentoring, but they might also get funded ON THE SPOT!!!

4. All Profits to the Startups
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Instead of raking the proceeds from the event, I’ve decided that I will personally invest profits from the event into the startups. Of course, those startups don’t have to take the money, but I’m long on the startups we’ve chosen and mentored in the past, and I’d love to see my angel portfolio grow by a dozen or two LAUNCH startups each year.

My entire motivation is to help founders grow their business, their skills and, ultimately, kick ass and take names. I’m in it for the long term, not to make a quick buck from the conference.

So, there will be THREE possible ways to get funded at LAUNCH:

a) The Grand Jury of Angels
b) From me personally
c) From the hundreds of investors in the audience

5. No Boring Panels, No Immature Distractions
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One of the big problems at conferences today is that nascent companies are put up against huge successful ones. So, you’ve got the CEO of a promising new startup against the CEOs of Yahoo or Aol.

Or worse yet, manufactured stories like “angel gate” sucking all air out of the room (how tacky).

Which story do you think the press will write about: angel gate, the CEO of public company or a three person startup? Exactly, they’re going for the story that will get picked up the most, and that’s the one with the ticker symbol or the supposed Justice Department and FBI investigation.

I’ve always take myself, and my company, out of the conversation when running events. The event is dedicated to the company’s that are launching. 100% of the attention should be focused on them, not the conference host.

6. Rolling Admissions
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Our team will start meeting with people who want to premier at LAUNCH immediately, and with a very light application process. This means if your product is more developed and you deserve to get accepted early we can do that.

If your product is new, but no one has seen it and it has no press and you want to show it to me now, well, you know how to do that: jason@calacanis.com. I will actually take the time to meet with you, look at your product and give you founder-to-founder feedback.

My goal is to give you honest and blunt advice in as much time as I can space–please use me!

In Summary
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I’ve gone from seriously bummed about the demise of TC50, to infuriated (and a little hot headed, which I regret) and now inspired. I’m stoked about preparing for the first LAUNCH event over the next 100 days, and I’m hoping you guys can all make it!

Conference details can be found at www.launch.is, and if you signup this week with the code JasonNation you’ll get 10% off any ticket.

It is your giri to be at the event, and it is mine to make sure it is an amazing–perhaps even life changing–experience for you.

What we do in life echos in eternity!

Best regards,

Jason

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English Bulldog

Hello, my name is Jason. Welcome to my blog on the interwebs. You can reach me on twitter @jason and by email at jason@inside.com. My Skype is jasoncalacanis, and my mobile phone is 310-456-4900.

I only pick up numbers I recognize, and in terms of emailing me, the best strategy is to write short, blunt and to the point requests. I can quickly respond to short messages, and many times I simply don't have the time to read five page pitches. In terms of taking meetings, I only do that after reviewing an actual product (not a business plan). So, the best time to ping me is when you have mockups or an alpha site. I don't read business plans, and I've never written one.

Other twitter accounts you can follow: Inside.com, Ticker, This Week in Startups and LAUNCH Festival

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