How did Silicon Valleys bigwigs react when their favorite trade publication adopted strict new conflicts of interest policies? They banded together to pay someone else to cover them.

Former TechCrunch reporter Sarah Lacy today launched PandoDaily, and it has quite an impressive roster of investors, including, well, everyone: "Marc Andreessen, Peter Thiel, Tony Hseih, Zach Nelson, Andrew Anker, Chris Dixon, Saul Klein, Josh Kopelman, Jeff Jordan and Matt Cohler... funds including the CrunchFund, Greylock Discovery Fund, Accel's Seed Fund, Menlo Ventures Talent Fund, Lerer Ventures, SV Angels and Ooga Labs." OK, not quite every address on Sand Hill Road, but a whole crapload of checkbooks for a wee $2.5 million round.

"It's a long list," Lacy conceded in the announcement. "And there is a simple reason we spread the syndicate widely: This is a news site built for the startup community, so the more of them that are a part of it, the better."

In other words, when all the people financing startups also finance coverage of the financing of startups, that's not a conflict of interest so much as an awesome inside track on scoops. Just ask Lacy's investor, contributor and ex-boss Mike Arrington, the TechCrunch co-founder forced out of his own publication when AOL's editorial director took very public umbrage at his plan to invest in the companies TechCrunch covered.

"It's certainly messy," Lacy wrote of her investor-subjects. But of course the hustling, gold-rush culture of Silicon Valley loves "messy." To have a conflict is to have some tenuous membership in tech's pseudo-egalitarian club of venture capitalists, angel investors, favored journalists and, oh right, favored technical geniuses and entrepreneurs. That's why TechCrunch became the industry's bible when its conflicts were most glaring. That's how banker turned Red Herring publisher Tony Perkins leveraged boozy chats with VC pals like Tim Draper into the fattest, most celebrated journal of the first dot-com boom.

The tech industry wants comically frenzied coverage of its products and features and deals, and credulous, faux-needling coverage of its leaders, not unsanctioned stories about privacy breaches, violence cover-ups, palace coups, or messy affairs. Deeply integrated journalists are much more likely to keep their coverage within those bounds.

Now TechCrunch did know how to rile the industry when it wanted to, often quite well, and almost always under Arrington's byline. But then, for all of Arrington's conflicts, he'd bootstrapped TechCrunch; he had the autonomy that comes from not having to answer to a who's who of VCs holding his equity.

Lacy, in contrast, will spend a lot more time covering her owners. At least she's "unashamed" about that, as she put it. And points to the longtime Valley reporter for knowing how to appeal to tech titans' vanity. Ever since the changing of the guard at TechCrunch, they've longed for a more deeply intertwined publication that will cover the Valley with the fervor of a supplicant. Lacy just sold them one. It's not clear if the seventeen different stakeholders will be able to effectively block stories they don't like. But then it's not clear they'll even need to.

[Image of Lacy via Shashi Bellamkonda/Flickr]