From WSJ: "The price was just $500,000, three people familiar with the matter said—a pittance for a company that raised $45 million from prominent investors including LinkedIn founder Reid Hoffman and Marc Andreessen."
It "feels" like a reasonable shorthand for company outcomes is: an outcome is either (a) a categorical success for the investor, or (b) might as well be written off entirely.
With that feeling in mind, the fact that the acquisition was for $500k and not $1MM or $10MM or $40MM is irrelevant: any number falling outside bucket (a) is a loss. And you don't get into venture capital without being able to metabolize a loss.
The people that plowed money into Digg had a charter to put ~$45MM at risk. That was their job: find a place for $45MM to live and, probably, die. One major investment in 10 generates a win that pays for the other 9. So: fuck it, right?
That WSJ article attributes Digg's fall from grace to "rivals like Facebook Inc. and Twitter Inc." and makes no mention of the Digg v4 redesign disaster. That was what did them in more than anything.
EDIT: The story has been updated with a new paragraph, "A series of redesigns..."
"Newer social news website such as Reddit Inc. also stole some of Digg's thunder. Last December, Reddit drew more visitors than Digg for the first time, according to comScore, and since then it has maintained that lead."
"None of Digg's remaining employees will join
Betaworks as part of the acquisition."
what did they acually buy? The know how? The technology? None of that is revolutionary today. And there is no community on digg right now whatsoever (unlike /. which still lives its own life).
Maybe the name is worth something, but I don't really think that it matters that much.
My guess is that you'll find similar people on Digg's and News.me boards. And this was just a way to a) write off Digg as a permanent loss off the books and b) transfer those assets cheaply to the other company, which might boost them from being a loser to being a winner
Noone sells Digg for $500K...not unless they are millions and millions in debt
Digg is ranked 192 on Alexa. Its Google Page Rank is 8. And the name is very popular and it used to have a huge following. Once the media get's a hold of this story (well it already has), tons of people will visit it just to see what they do with it. Plus, they still have a ton of traffic, of course not as much as they used to.
True, I hadn't thought of the domain acquisition, but thats because digg is effectively dead to me.
I can't think of any service that could be built out that will benefit from that domain name though, s even for a four letter domain - I think they threw $500K down the tubes.
$500K is a steal for a well-known brand, and 2M-4M monthly US visitors (funny how Compete reports higher traffic vs. Reddit while Quantcast reports 1/4x the traffic of Reddit)
I'd wager they spent it. Crunchbase reports they had 60 employees at some update in the past, so it was probably higher than that at the peak. 60 employees alone probably cost them $6 to $8 million per year depending on all the perks. You could easily vaporize $25 to $35 million over four years in San Francisco on 60 employees.
But keep in mind that $45 million wasn't raised in the past four years.
On 9/08 they raised $28.7 million, and then another $5 million on 7/11. So they've raised $33.7m over the last four years.
http://online.wsj.com/article/SB1000142405270230437380457752...