Digg, deep in the hole, sells self for $500K
All that's left is to shovel in the dirt and plant the daisy
Social news- and link-sharing site Digg has sold itself to New York technology incubator Betaworks for the paltry sum of $500,000.
The Wall Street Journal reports that Betaworks does not plan to retain any of Digg's current employees.
"Over the last few months, we've considered many options of where Digg could go," writes Digg CEO Matt Williams, "and frankly many of them could not live up to the reason Digg was invented in the first place – to discover the best stuff on the web. We wanted to find a way to take Digg back to its startup roots."
To put the jaw-dropping sale price into perspective, $500,000 is the bare minimum needed to open a McDonald's franchise. It's less than the average price of a one-bedroom starter home in San Francisco, where Digg is currently headquartered. It's what Facebook's Mark Zuckerberg earns in annual salary – but that's not including bonuses and equity grants.
It's also just 0.2 per cent of the $300m Digg was reportedly shopping itself for in 2007.
But those were headier days. Digg was once considered one of the most promising social media sites on the web, but its popularity waned with the rise of such competitors as Facebook, Reddit, and Twitter.
It had come close to being acquired several times over the years, and it made no secret that it was actively seeking a buyer – but it never found one. In 2008, Google reportedly walked away from a deal that would have valued Digg at $200m.
Along the way, the company has hemorrhaged money, and cost-cutting measures haven't been enough. In October 2010 it cut a third of its staff, leaving it with just 47 employees. By then it had already lost both cofounders.
In May of this year, 15 members of Digg's engineering team jumped ship to join SocialCode, a social media advertising agency owned by the Washington Post, leaving Digg with less than half its former staff.
This week, TechCrunch reported that Digg had raised a new round of funding from one of its existing investors. If it hadn't, sources speculated that it might have run out of cash in six months.
Following Thursday's merger, Betaworks plans to merge Digg with News.me, a Betaworks-funded startup that markets an app for iOS devices that aggregates news links from social media websites.
"We are turning Digg back into a startup," writes Betaworks founder John Borthwick, who will be taking over as Digg CEO. "Low budget, small team, fast cycles."
We'll see if it works this time. ®