Digg was once a media darling as one of the primary faces of the hypersuccess that could theoretically be attained by the most pedantic online startup. From the prototypical nowhere, founder Kevin Rose parlayed his site to a valuation in the stratospheric heights above $200 million just a few years ago. This makes the recent news even more astounding that the one time leading social news aggregator is selling whatever assets that remain to Betaworks, a technology studio based in New York, for the relative pittance of $500,000. This is not a case of how the mighty have fallen but more how the untenable collided with reality.
Digg Was a Train Crash in Slow Motion
Everything about the Digg collapse seems foreseeable. In the past couple of years it was a train crash in slow motion. Rose had already jumped ship for Google, leaving the site in the hands of Matt Williams whose previous experience was in consumer payments at Amazon, not exactly the ultimate place where news aggregate stars are nurtured. His appointment corresponded with a fundamental site redesign that was widely lambasted as being clumsy and dysfunctional and is generally seen as the beginning of the end for the once predominant site. Since he did such a “stellar” job with Digg, Williams will now be joining Andreessen Horowitz as Entrepreneur in Residence. John Borthwick, the current CEO of Betaworks, will join Digg as its new CEO.
$45 Million in Venture Capital Flushed
Reports from the Wall Street Journal reveal that this mere $500,000 deal was a substantial decline of value especially bearing in mind that Digg raised approximately $45 million in venture cash that would now be essentially flushed. This figure was disputed by current CEO Williams, who stated that this number would be noticeably larger considering the overall value of the combined equity and cash, which in the venture capital world is code for “you’re as buried as a bad news story in Digg’s heyday.”
Each Visitor Is Valued at About 3 Cents
Not that Digg was completely worthless; the once influential and massive company still holds over sixteen million visitors on a monthly basis. At the sale price each of these monthly visitors is valued at about three cents. Reportedly, it will join Betaworks social news summary email service and app while Digg’s current staff will not accompany the sale, with the exception of some transitional roles. Blog posts for Betaworks state that the intention is to turn Digg around and get back to the roots of a low budget, fast cycle, small team, startup company. The plan for Betaworks seems to be to create a fully revised version of Digg starting with Rose’s foundational ideas. Teams have been working for nearly six months in an attempt to reformulate the new direction for Digg, while remaining true to the unique undertaking of assisting users in locating pertinent content through browsing sessions.
Digg’s Power Users Were a “Cancer that Had to Be Removed”
Writing on Venture Beat, Tom Cheredar accurately reflected that while other social sites celebrated and encouraged their Power Users, Digg was in a position of trying to eliminate them because they were monopolizing the site. Digg “had a history of treating these power users as if they were a cancer that needed to be physically removed to avoid death” according to Cheredar, and there was some justification. About 200 individuals so totally controlled what landed on Digg’s front pages that if someone else was first to post a momentous breaking story it would be sure to attract a bare handful of Diggs and never be seen again, while the “top 200’s” choices of kitten in a tree stories would get 10,000 Diggs and be at the very top of the site.
While chief competitor Reddit worked hard to build a community of news junkies, Digg ended up building a mercurial mob, and that was the primary cause for its downfall. While Rose was busy gallivanting around in interviews portraying himself as Bozo-Wunderkind in Chief, his site was immolating around him… and now it’s gone.
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