10 ms·

Kevin Rose: Digg Turned Down $80 Million Acquisition Offer

83 points by thiele 16y ago

noodle 16y ago
can't say i'd blame him, in digg's heyday, it was likely worth a good bit more.
- justin 16y ago
  Clearly not, considering the price should reflect the future revenue opportunities.
  - noodle 16y ago
    fair enough, although i think most people thought they would do better than they have.
- wriq 16y ago
  "While he was personally willing to take this offer, the Digg board decided to turn it down." He wanted to accept it.
  - deleted 16y ago
    [deleted]
  - bond 16y ago
    They had $40million invested so i guess that's a little low to accept... On the other hand this raises some questions for founders on getting funding and what to expect down the road...
TamDenholm 16y ago
I bet the digg board are regretting the decision since the launch of v4.
- deleted 16y ago
  [deleted]
- rishi 16y ago
  The board probably wasn't making any money with a $80M offer. It is a top 100 site... why not go for it? They could have built a ton of other revenue models... and they still can. They just need to start believing in it themselves.
kqr2 16y ago
Any estimates on the current valuation?
- mahmud 16y ago
  Not to start a bidding war, but I am willing pay $250 for the domain.
dchs 16y ago
I think the real story here is that he is "burned out" at Digg but excited by his angel investing. Where might that lead?
RBr 16y ago
I'm shocked that the Digg board turned down $80 Million. Unless it was an overly complicated deal, that sounds like a lot more then it was / is worth. The real value in Digg was always the unpaid community that powered it. Programming, I.P. and tangible assets are worth a fraction of what Digg is worth. In essence, someone offered $80m for the opportunity to put their hands on the steering wheel of the once powerful group of people who contributed, dugg and evangelized everything Kevin and crew did. As Digg has proven, communities are fickle and without proper management, motivation and reward, they fail. In retrospect, neither the Digg community nor the assets it has are worth that much money. However, with a carefully crafted goal, properly motivated community and importantly a plan that includes a way to monetize the community, community based services could very well be worth $80 Million or more.
- ojbyrne 16y ago
  I don't see why you would be shocked. The digg board is made up of VCs playing with other people's money. Their compensation is based on hitting home runs. It would have been roughly $3.5 million dollars for me (without the earnout).
  - RBr 16y ago
    That makes a lot of sense. However, a home run would be the highest value possible. With an aging service so deeply rooted in an online community (which are inherently fickle), a 2x value price would seem reasonable if not generous. I have to think that investing in community centered services is a fast game where smart investors get in early and out while the community is still engaged. Then again, everyone needs more yachts to water ski behind.
    - ojbyrne 16y ago
      If it was the offer I think it was, it was significantly higher than 2x, because it was before the Series B (so roughly 5 million invested thus far).
    - johnrob 16y ago
aresant 16y ago
"Rose wouldn't go into details, but said that he was getting "burned out" Nail in the coffin statement there, uncommitted leadership during crisis mode is when all is lost. I don't blame Rose from being burned out, bringing him back was more terrible decision making from board.
- troymc 16y ago
  Amber MacArthur and Sarah Lane interviewed Kevin Rose during net@night for August 11, and he said he misses the days when Digg was small and they could come up with an idea, and have it live by that night. Now Digg has 40-50 full-time engineers, two data centers, and hundreds of servers. Rose: "It's a big operation. To be honest it's bigger than I'm comfortable with... and I'm very excited to hire a new CEO very soon ... I'm not cut out to be a CEO of this size of company." Inspired by 37signals, he wants his next company to be a small group of 10-15 people "based out of Portland or something... Chillin' in the woods, drinking tea, chopping wood..." Sarah Lane: "Are you still on that Portland thing? ... I've been hearing about that for 10 years." http://twit.tv/natn163 http://twit.tv/natn163
  - pyre 16y ago
    I'm in Portland, and I don't think that "chillin in the woods, driking tea, chopping wood" accurately describes it.
    - zacharyz 16y ago
      Hey fellow Portlander, I agree I don't think Rose has seriously been to here if that is what he thinks this place is like. There are certainly places in Oregon like that and you can get to them within an hours drive from Portland. That is one of the things that makes this place so awesome.
      - yesimahuman 16y ago
        Last time I was in Oregon I was shocked at the deforestation along the coast. It was really sad.
jdp23 16y ago
with good investors, entrepreneurs usually have a lot of leverage in sitautions like this as long as the board sees them as crucial to the company's success going forward. so i wonder how much kevin pushed it. my 1990s startup got an early acquisition offer for $30M when their was only $400K in; the VC left it up to us, and we decided we wanted to build a company. a few years later we hit the wall and the board could have forced us to take a lowball offer but we decided to see it through and managed to turn things around. in the end with $16M invested, we sold to Microsoft for around $60M ... the investors were split, but the executive staff (including me) wanted to do the deal so after some discussion we did. we had great investors, of course; not sure what digg's board is like.
- aaronbrethorst 16y ago
  This was PREfix, right? (Hi Jon, haven't seen you in a while :)
  - jdp23 16y ago
    yep, it was -- good to see you too, Aaron, and apologies for the belated response!
DevX101 16y ago
A lot of people are here laughing at digg for turning this down, but hindsight is 20-20. Zuckerberg turned down $1Billion from Yahoo, and at least on paper is worth an order of magnitude more now. At the time, digg was a leader in a new take on publishing distribution. If executed well, it could have very feasibly been worth more than $80M.
- gnaritas 16y ago
  > Zuckerberg turned down $1Billion from Yahoo, and at least on paper is worth an order of magnitude more now. Just because you won the lottery doesn't mean it wasn't stupid to not take the cash. Zuck should have took the billion as a first time entrepreneur. It was the better bet. Playing against the odds might be exciting, and you might even win, but it's still not smart.
  - rewind 16y ago
    Depends whether or not you believe Zuckerberg genuinely wanted to build a world-changing business. If that's his main goal (and the more I hear him talk, the more I start to believe it), and he genuinely believes he can do it, then taking the money isn't necessarily what's most important to him. I read a lot about entrepreneurs getting shit on for not swinging for the fences, but then they get shit if they turn down a billion dollar offer when they only see that as a triple. It remains to see how this all plays out, but when you turn down a billion dollars, I think there's a good chance you're doing it for more than the money.
    - gnaritas 16y ago
      Still doesn't matter. Your first shot out of the gate, you take the money because it enables you get money out of the way. Everyone needs money. You swing for the fences the second time out, after you've got cash in the bank and don't need the money. That's the smart thing to do, play the odds. Zuck went against the odds, that wasn't smart, it was immature; he seems to have beat the odds so it worked out, but it was much more likely to go the other way, and it still could. Something could wipe out Facebook just like Facebook wiped out MySpace.
danilocampos 16y ago
Digg is boned. Product is at a dead end and users are losing interest in the community. Meanwhile, they're funded up their ears. $40 million? For what? It's a bunch of user-submitted links and discussions. You need a couple of developers, a sysadmin, a designer, some sales guys. Am I missing any other roles? 100 employees for such a simple product is insane to me. I couldn't believe they topped out at that number. I am biased – I prefer small, lean teams over bloat, but come on, anyone can see this. And now, yeah, they're boned. You're not going to get any significant multiple of $40 million out of that business. Boy, the investors would have been fortunate to get their money back period. I guess that's just how the VC game is played.
- mey 16y ago
  I'd love to see * Number of Employees * Monthly Active Users * Server Operating Costs * Monthly Revenue for * Reddit * Fark * Slashdot * Digg I'd assume the other sites would bury Digg (no pun intended) on at least several of those fronts.
  - SwellJoe 16y ago
    reddit has more daily pageviews than digg by a few tens of millions, reportedly. So, their 6(?) person team is outperforming 100+ digg employees in the most important metric (revenue might be more important, but I'm not so sure...if I could pick a site to own, I'd choose the one that is bigger, growing faster, and has dramatically lower expenses).
    - jack7890 16y ago
      Source?
      - Homunculiheaded 16y ago
        As for reddit's size compared to digg here's the infographic: http://i.imgur.com/jiHka.png http://i.imgur.com/jiHka.png you can google around and find other sites that go into greater detail on this. And they currently have 5 engineers (believe this is their entire staff), this post is them pleading for extra funding for the fifth engineer: http://blog.reddit.com/2010/07/reddit-needs-help.html http://blog.reddit.com/2010/07/reddit-needs-help.html
wiks 16y ago
they need to work more on their own concept and should stop being inspired from reddit.
fletchowns 16y ago
This article on digg claims it has 293 comments: http://digg.com/news/technology/digg_redesign_tanks_traffic_down_26 http://digg.com/news/technology/digg_redesign_tanks_traffic_... After clicking "Load More" a couple times until it says there are no more comments to load, $(".comment-body").length in the firebug console says there are 104 comments. Am I missing something here or are they lying about comment counts to make the site seem more active than it actually is?
- thinkalone 16y ago
  Did you count the replies and hidden comments?
  - fletchowns 16y ago
    As far as I can tell, they are all being counted with that jQuery selector.
  - trustfundbaby 16y ago
    You needed to click load more for the comments right? Stands to reason that you'd probably have to do the same thing for hidden comments etc.
    - fletchowns 16y ago
      So try it and prove me wrong. As I said before, that jQuery selector appears to be counting all the comments, including the hidden ones.
      - trustfundbaby 16y ago
        I hate to break it to you ... but the burden of proof is on you :D
pigbucket 16y ago
Discussion about whether the board should have accepted the offer would benefit from knowing when it was made. In Digg's "heyday" is a bit vague. 80m is a biggish bird in the hand but 20m of that was earn out and given that Google were reportedly on the verge of a 200m offer in 2008, it's not clear that whoever thought 80m was lowball was altogether insane.
deleted 16y ago
[deleted]
code_duck 16y ago
This reminds me of Yahoo on one hand (should have taken the money before they started tanking!) and Etsy on the other hand (70 employees was already far too many, next they went on a VC fueled hiring spree and now have about 130). In another similar move, Etsy recently brought back their old CEO/founder, to the horror of many members who were around for the first three years.
bhjodokast 16y ago
Seems like destroying all of the historical data killed Digg. Everything else people can get over, but why destroy data? It wasn't Twitter.
Mrdev4 16y ago
So i guess the BW cover was bullshit. http://en.wikipedia.org/wiki/File:BusinessWeek_cover_14_Aug_2006.png http://en.wikipedia.org/wiki/File:BusinessWeek_cover_14_Aug_...

83 points by thiele 16y ago

noodle 16y ago

can't say i'd blame him, in digg's heyday, it was likely worth a good bit more.

justin 16y ago
Clearly not, considering the price should reflect the future revenue opportunities.
- noodle 16y ago
  fair enough, although i think most people thought they would do better than they have.
wriq 16y ago
"While he was personally willing to take this offer, the Digg board decided to turn it down." He wanted to accept it.
- deleted 16y ago
  [deleted]
- bond 16y ago
  They had $40million invested so i guess that's a little low to accept... On the other hand this raises some questions for founders on getting funding and what to expect down the road...

TamDenholm 16y ago

I bet the digg board are regretting the decision since the launch of v4.

deleted 16y ago
[deleted]
rishi 16y ago
The board probably wasn't making any money with a $80M offer. It is a top 100 site... why not go for it? They could have built a ton of other revenue models... and they still can. They just need to start believing in it themselves.

kqr2 16y ago

Any estimates on the current valuation?

mahmud 16y ago
Not to start a bidding war, but I am willing pay $250 for the domain.

dchs 16y ago

I think the real story here is that he is "burned out" at Digg but excited by his angel investing. Where might that lead?

RBr 16y ago

I'm shocked that the Digg board turned down $80 Million. Unless it was an overly complicated deal, that sounds like a lot more then it was / is worth. The real value in Digg was always the unpaid community that powered it. Programming, I.P. and tangible assets are worth a fraction of what Digg is worth. In essence, someone offered $80m for the opportunity to put their hands on the steering wheel of the once powerful group of people who contributed, dugg and evangelized everything Kevin and crew did. As Digg has proven, communities are fickle and without proper management, motivation and reward, they fail. In retrospect, neither the Digg community nor the assets it has are worth that much money. However, with a carefully crafted goal, properly motivated community and importantly a plan that includes a way to monetize the community, community based services could very well be worth $80 Million or more.

ojbyrne 16y ago
I don't see why you would be shocked. The digg board is made up of VCs playing with other people's money. Their compensation is based on hitting home runs. It would have been roughly $3.5 million dollars for me (without the earnout).
- RBr 16y ago
  That makes a lot of sense. However, a home run would be the highest value possible. With an aging service so deeply rooted in an online community (which are inherently fickle), a 2x value price would seem reasonable if not generous. I have to think that investing in community centered services is a fast game where smart investors get in early and out while the community is still engaged. Then again, everyone needs more yachts to water ski behind.
  - ojbyrne 16y ago
    If it was the offer I think it was, it was significantly higher than 2x, because it was before the Series B (so roughly 5 million invested thus far).
  - johnrob 16y ago

aresant 16y ago

"Rose wouldn't go into details, but said that he was getting "burned out" Nail in the coffin statement there, uncommitted leadership during crisis mode is when all is lost. I don't blame Rose from being burned out, bringing him back was more terrible decision making from board.

troymc 16y ago
Amber MacArthur and Sarah Lane interviewed Kevin Rose during net@night for August 11, and he said he misses the days when Digg was small and they could come up with an idea, and have it live by that night. Now Digg has 40-50 full-time engineers, two data centers, and hundreds of servers. Rose: "It's a big operation. To be honest it's bigger than I'm comfortable with... and I'm very excited to hire a new CEO very soon ... I'm not cut out to be a CEO of this size of company." Inspired by 37signals, he wants his next company to be a small group of 10-15 people "based out of Portland or something... Chillin' in the woods, drinking tea, chopping wood..." Sarah Lane: "Are you still on that Portland thing? ... I've been hearing about that for 10 years." http://twit.tv/natn163 http://twit.tv/natn163
- pyre 16y ago
  I'm in Portland, and I don't think that "chillin in the woods, driking tea, chopping wood" accurately describes it.
  - zacharyz 16y ago
    Hey fellow Portlander, I agree I don't think Rose has seriously been to here if that is what he thinks this place is like. There are certainly places in Oregon like that and you can get to them within an hours drive from Portland. That is one of the things that makes this place so awesome.
    - yesimahuman 16y ago
      Last time I was in Oregon I was shocked at the deforestation along the coast. It was really sad.

jdp23 16y ago

with good investors, entrepreneurs usually have a lot of leverage in sitautions like this as long as the board sees them as crucial to the company's success going forward. so i wonder how much kevin pushed it. my 1990s startup got an early acquisition offer for $30M when their was only $400K in; the VC left it up to us, and we decided we wanted to build a company. a few years later we hit the wall and the board could have forced us to take a lowball offer but we decided to see it through and managed to turn things around. in the end with $16M invested, we sold to Microsoft for around $60M ... the investors were split, but the executive staff (including me) wanted to do the deal so after some discussion we did. we had great investors, of course; not sure what digg's board is like.

aaronbrethorst 16y ago
This was PREfix, right? (Hi Jon, haven't seen you in a while :)
- jdp23 16y ago
  yep, it was -- good to see you too, Aaron, and apologies for the belated response!

DevX101 16y ago

A lot of people are here laughing at digg for turning this down, but hindsight is 20-20. Zuckerberg turned down $1Billion from Yahoo, and at least on paper is worth an order of magnitude more now. At the time, digg was a leader in a new take on publishing distribution. If executed well, it could have very feasibly been worth more than $80M.

gnaritas 16y ago
> Zuckerberg turned down $1Billion from Yahoo, and at least on paper is worth an order of magnitude more now. Just because you won the lottery doesn't mean it wasn't stupid to not take the cash. Zuck should have took the billion as a first time entrepreneur. It was the better bet. Playing against the odds might be exciting, and you might even win, but it's still not smart.
- rewind 16y ago
  Depends whether or not you believe Zuckerberg genuinely wanted to build a world-changing business. If that's his main goal (and the more I hear him talk, the more I start to believe it), and he genuinely believes he can do it, then taking the money isn't necessarily what's most important to him. I read a lot about entrepreneurs getting shit on for not swinging for the fences, but then they get shit if they turn down a billion dollar offer when they only see that as a triple. It remains to see how this all plays out, but when you turn down a billion dollars, I think there's a good chance you're doing it for more than the money.
  - gnaritas 16y ago
    Still doesn't matter. Your first shot out of the gate, you take the money because it enables you get money out of the way. Everyone needs money. You swing for the fences the second time out, after you've got cash in the bank and don't need the money. That's the smart thing to do, play the odds. Zuck went against the odds, that wasn't smart, it was immature; he seems to have beat the odds so it worked out, but it was much more likely to go the other way, and it still could. Something could wipe out Facebook just like Facebook wiped out MySpace.

danilocampos 16y ago

Digg is boned. Product is at a dead end and users are losing interest in the community. Meanwhile, they're funded up their ears. $40 million? For what? It's a bunch of user-submitted links and discussions. You need a couple of developers, a sysadmin, a designer, some sales guys. Am I missing any other roles? 100 employees for such a simple product is insane to me. I couldn't believe they topped out at that number. I am biased – I prefer small, lean teams over bloat, but come on, anyone can see this. And now, yeah, they're boned. You're not going to get any significant multiple of $40 million out of that business. Boy, the investors would have been fortunate to get their money back period. I guess that's just how the VC game is played.

mey 16y ago
I'd love to see * Number of Employees * Monthly Active Users * Server Operating Costs * Monthly Revenue for * Reddit * Fark * Slashdot * Digg I'd assume the other sites would bury Digg (no pun intended) on at least several of those fronts.
- SwellJoe 16y ago
  reddit has more daily pageviews than digg by a few tens of millions, reportedly. So, their 6(?) person team is outperforming 100+ digg employees in the most important metric (revenue might be more important, but I'm not so sure...if I could pick a site to own, I'd choose the one that is bigger, growing faster, and has dramatically lower expenses).
  - jack7890 16y ago
    Source?
    - Homunculiheaded 16y ago
      As for reddit's size compared to digg here's the infographic: http://i.imgur.com/jiHka.png http://i.imgur.com/jiHka.png you can google around and find other sites that go into greater detail on this. And they currently have 5 engineers (believe this is their entire staff), this post is them pleading for extra funding for the fifth engineer: http://blog.reddit.com/2010/07/reddit-needs-help.html http://blog.reddit.com/2010/07/reddit-needs-help.html

wiks 16y ago

they need to work more on their own concept and should stop being inspired from reddit.

fletchowns 16y ago

This article on digg claims it has 293 comments: http://digg.com/news/technology/digg_redesign_tanks_traffic_down_26 http://digg.com/news/technology/digg_redesign_tanks_traffic_... After clicking "Load More" a couple times until it says there are no more comments to load, $(".comment-body").length in the firebug console says there are 104 comments. Am I missing something here or are they lying about comment counts to make the site seem more active than it actually is?

thinkalone 16y ago
Did you count the replies and hidden comments?
- fletchowns 16y ago
  As far as I can tell, they are all being counted with that jQuery selector.
- trustfundbaby 16y ago
  You needed to click load more for the comments right? Stands to reason that you'd probably have to do the same thing for hidden comments etc.
  - fletchowns 16y ago
    So try it and prove me wrong. As I said before, that jQuery selector appears to be counting all the comments, including the hidden ones.
    - trustfundbaby 16y ago
      I hate to break it to you ... but the burden of proof is on you :D

pigbucket 16y ago

Discussion about whether the board should have accepted the offer would benefit from knowing when it was made. In Digg's "heyday" is a bit vague. 80m is a biggish bird in the hand but 20m of that was earn out and given that Google were reportedly on the verge of a 200m offer in 2008, it's not clear that whoever thought 80m was lowball was altogether insane.

deleted 16y ago

[deleted]

code_duck 16y ago

This reminds me of Yahoo on one hand (should have taken the money before they started tanking!) and Etsy on the other hand (70 employees was already far too many, next they went on a VC fueled hiring spree and now have about 130). In another similar move, Etsy recently brought back their old CEO/founder, to the horror of many members who were around for the first three years.

bhjodokast 16y ago

Seems like destroying all of the historical data killed Digg. Everything else people can get over, but why destroy data? It wasn't Twitter.

Mrdev4 16y ago

So i guess the BW cover was bullshit. http://en.wikipedia.org/wiki/File:BusinessWeek_cover_14_Aug_2006.png http://en.wikipedia.org/wiki/File:BusinessWeek_cover_14_Aug_...