On leaks and family matters


My friend and former TechCrunch-accomplice Roi Carthy (now a managing partner at VC firm Initial) has published an interesting blog post to lament a recent report in the Israeli business press about Apple’s supposed acquisition of PrimeSense.

The problem is that, apparently, the deal was/is not yet signed and done, leading Roi to suggest whoever leaked the news was being irresponsible and possibly impacting “hundreds of people’s livelihoods”:

“People’s livelihood in jeopardy because of a leak, is a state of being I have a problem accepting.”

I think it’s a bit ridiculous to state that this sort of leaks can people’s livelihood in ‘jeopardy’ – it’s not like it’s literally putting folks in a life-or-death situation. Too strong a word any way you slice it.

But as a journalist that has also dabbled in entrepreneurial ventures, I understand his position. Leaks can spike business deals and ‘rob’ people (not just founders, but their employees and investors) of financial reward, job security, and more. That sucks, and I totally get why that makes people ticked off at the leaker(s), whoever they may be or regardless of their agenda(s).

It may not to be the wisest thing to say as a journalist, but I do agree that leakers should sometimes be more thoughtful and careful when passing on crucial business information to the press or peers.

What I vehemently disagree with, however, is Roi’s stance on how the Israeli business press should have handled the leak.

Roi pleas for them to make a ‘gentleman’s agreement’ between them and “do the right thing”, which is apparently to stop publishing reports based on leaks. That is not how an independent media is supposed to work, of course, and the reality is that it would only take one rotten apple to ruin the whole thing. And if everyone miraculously sticks to the gentleman’s agreement, a new apple will fall from the tree and start publishing reports based on leaks anyway. It wouldn’t, and I argue shouldn’t, ever work.

Referring to the Israeli ecosystem’s journalists and startups as a “family”, as Roi does in his post, is dangerous and detracts from his stronger point, which is that the leaker is acting irresponsibly.

Coincidentally, I’ve had this conversation before, also with a well-known member of the Israeli startup community, who argued that leaks about the Facebook-Google bidding war for Waze would kill the deal and (there we go again) deprive a lot of Israelis of substantial financial reward for their hard work over the past few years. Except, of course, the rumours didn’t kill the deal at all.

If I were running a business like PrimeSense and a leak happened before the dotted line gets signed, I’d be pissed too. But I’d be angry at the leaker(s), not the press whose duty it is to report on business happenings, whether they’re ongoing or finalized.

Leaks have occurred for ages, across industries and the world (try reporting politics instead of tech for a real taste of behind-the-scenes ‘information sharing’). They’re not going away. Deal with it, basically.

Attempting to dictate when a journalist can report something is a very slippery slope, and pulling the ‘family’ card has a averse effect in my mind. An independent media should decide for themselves what and when to publish, and the public will choose to pay attention or ignore it on the basis of its authenticity, accuracy and accountability.

They shouldn’t be put in a position where they would have to defend their way of working because they are ‘part of the ecosystem’. They don’t have to go on the defensive and argue what they have to gain from publishing reports based on leaks – it’s not just about being first or beating the competition, it’s about doing their jobs to the best of their abilities. Blaming them for botched business deals is wrong.

The media’s role is to stay as neutral as possible, and journalists should stay on the sidelines to the extent where they can report on business deals without having to consider “people’s livelihoods”.

That’s on the leaker(s).

They are typically part of the ‘family’ Roi refers to – not the journalists, in my opinion.


11 thoughts on “On leaks and family matters

  1. What I think you’re confused about is the fact that the journalist who published this leak were doing it to sell “papers” and nothing more. They were not being “the watchguard of democracy” nor were they serving “the public’s right to know”. There was nothing ethical about insisting to publish the rumors. It’s all about rating, and making a name for yourself as the first to report something. This is where “being responsible” comes in play, and those journalists should have made a conscious decision to publish the story *after* the deal is done (or not done, whichever it may have ended up being), in order not to sabotage it. Publishing it when they did could not do anyone any good (it could only cause bad things), so why do it.

    I fully agree that whoever leaked this IS the main problem, of course. But when a company has more than a few employees, it is very hard to contain these types of rumors. You have one slightly unhappy employee, and a lot of sh*t can stir, for no good reason. From the buyer side (apple), they CAN walk away from a deal based on the fact that a company is not able to control its own employees.

  2. I think one thing that’s underestimated is the personal motive of the leaker. He doesn’t usually leak because s/he wants to cause harm, much more because s/he a) is unaware that s/he’s leaking or the impact of doing so, or because b) s/he’s trying to aggrandise him/herself in the eye of the journalist or other people they’re giving the information to. This private motivation is very tough to manage. The most obvious way is to keep it quiet and only known to the absolute core group of people who _need to know_. But since even (or maybe especially) founders and investors like to read good things about themselves in the press (or be well regarded within the “family”), this becomes tougher the more people are involved in a company.

  3. I think Roi’s approach in pleading to the press is misguided. I should know, I did it. At the end of the day, the sad truth is that acquisition exclusives are what the (at least Israeli) editors look for.

    The leakers are the one to blame. Each might have their own unjust reasons, be it quid-pro-quo, glory or needing good news for the closing of a fund – all of which are actual cases.

    If anything (and I don’t argue for it), the one thing that the community can do is refuse to cooperate with any reporter that hurts the community at large. Unlike a lot reporting, this is value-less to the community at large – it’s none actionable, doesn’t promote the truth or provides other kind of values at the core of journalism.

  4. In many cases, “leaks” are intentional, because saying something is a “leak” gets more press than saying it’s an official announcement. As mentioned, with Waze, it seems to have brought the bidding even higher. That’s a risky game to play, and Waze was lucky. Not everyone has that luxury. I have worked with many companies in many phases of their development. It is fairly simple to avoid leaks, and it’s the fault of the company’s executive management if they cannot keep their traps shut.

    • Rebecca — couldn’t disagree with you more. As the acquisition process advances, more and more consultants & service providers are exposed to the information. It actually becomes close to impossible to contain the information. Just think of how many legal, accounting and even governmental bodies (tax) are involved, representing the buyer, seller and investors of the seller.

      In my experience, at least in Israel, the “can’t keep their mouth shut” is more prominent than “lets get a bidding war going”.

      • Maybe, but there have been plenty of large acquisitions of Israeli companies that you didn’t hear about until the day they happened. A recent example was Trusteer. Huge acquisition, but nobody leaked anything. Oh, that was a security company. Exactly. Some companies know how to control information and others don’t.

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