Friday, 13 July 2012

Digg was sold for $500,000

"Digg confirmed Thursday it sold its brand, website and technology to Betaworks. The price is a pittance for a company that raised $45 million from prominent investors including Facebook investor Greylock Partners, LinkedIn Inc. founder Reid Hoffman, and venture capitalist Marc Andreessen.
Digg received higher offers from bidders that included technology and publishing companies and start-ups but ultimately decided Betaworks had the best plan for reviving its brand, these people said. In May, Washington Post Co. hired 15 members of Digg's engineering team—more than half of the company's overall staff—for its SocialCode digital media subsidiary.
Betaworks is acquiring a website that still has a well known brand and sizable audience of more than 7 million visitors per month as of May, according to comScore.
Digg was once one of the most promising start-ups in Silicon Valley. The website was founded in 2004 as a way for consumers to put together their own collections of news and other Internet content, rather than relying on the choices made by newspaper editors.
Digg users would post links on the site's home page, then others would vote on their choices, determining the prominence of the stories they posted.
"They were one of the first social media sites," says Kristina Lerman, an assistant research professor at the University of Southern California who has studied Digg and other social-news sharing sites. "They introduced social components like having friends and followers."
The site quickly rose to prominence, in part due to telegenic founder Kevin Rose, a former cable television talk show host. In 2006, Mr. Rose landed on the cover of BusinessWeek with the now infamous cover line, "How This Kid Made $60 Million in 18 Months," referring to the company's valuation at the time.
In the fall of 2008, Digg raised nearly $29 million in venture capital from Greylock Partners, Highland Capital Partners and other financiers in an investment valuing the company at around $164 million, according to Dow Jones VentureSource.
Over the years, the company was rumored to be in negotiations to sell itself several times, including to Google Inc. in 2008 for a reported $200 million. The deal was never completed.
For early employees with equity stakes in the company like Owen Byrne, the site's first lead engineer, the failure to sell the company was a huge disappointment. Mr. Byrne, who left the company in 2007, said in an interview he never got to "cash out and go live on the Riviera.""
Source:  Wall Street Journal, 12th July 2012

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