6 ms·

Digg: A Cautionary Tale

70 points by DevX101 16y ago

michaelchisari 16y ago
Has there been a better example than Digg of how detrimental it is to alienate your users on the social web? I'm surprised the article doesn't mention Reddit, which seems to have been the main reason why Digg's numbers haven't bounced back, despite changing some of the aspects which made users leave.
- ROFISH 16y ago
  > Has there been a better example than Digg of how detrimental it is to alienate your users on the social web? Facebook. It changed the day anybody (ie. parents) was allowed on. Now most people I know either refuse to use the service due to employer paranoia or just play Farmville all day, but it's not the same. At least Facebook rolls with it, I suspect their new features (new Groups, new Photos) seem to cater towards their current audience instead of "getting the old spark back".
  - siglesias 16y ago
    Unlike Digg, Facebook lacks a viable alternative and is deeply reliant on the network effect, meaning you need critical mass to migrate for the alternative to be useful. Because of this Facebook's growth, in the face of customer dissatisfaction in some cases, has been a hockey stick.
    - meric 16y ago
      Facebook is a good tool. I can put my photos on it, and all my friends, my aunt, my uncle, my cousins, will all be able to see it. (Not my grandparents, they don't have computer. :( ) Facebook "implicitly" notifies all those people so I don't have to send a lame spam email "Hey I've posted some photos, check it out". It is similarly good for organizing outings. Just create an event and invite people, no need to send an email with 20 recipients; An forum-like thing in the event lets people asks questions, which stays up and acts like an FAQ.
  - jfarmer 16y ago
    Uhm, the key difference being that between that time and now Facebook has grown 5-6x. By what metric was that a bad decision, exactly?
  - ceejayoz 16y ago
    I think you missed the "alienate your users" bit. People whined when Facebook opened to non-students. People whined for each of the dozen or so major redesigns. Essentially zero of those users left the site as a result.
  - venturebros 16y ago
    Facebook always remained a social network of sorts though. Digg changed the functionality of their site.
- nkassis 16y ago
  The second page of that article was really disappointing. It's as if the guy never heard of Reddit. Calling Twitter digg's true nemesis is so far out of it is not even funny. Twitter and Digg could coexist for ever. how can I get a real discussion of a link of twitter? It would be really hard for me to see the diverse amount of links that digg and reddit give me just by amassing a ton of friends. Most of the best links I've found on digg/reddit aren't even from people I would have know. They are not usually famous or popular outside those sites. Digg's error was shifting away from this and trying to go towards twitter's way of following a select group of people. That obviously is not what people want. Reddit does it by subjects, that seems to be working great.
tgriesser 16y ago
Digg will generate about $15 million in revenue this year and still operates at a loss Maybe my perception of the costs associated with running a high traffic such as this are way off, but doesn't it seem like $15m in revenues should be able to sustain the company... at least to the point where it doesn't operate at a loss? Anyone that has any experiences running a site on the scale of this might be able to advise, I'm just curious where all of that $15m goes in a year - unless the operating loss accounts for other costs that I'm not considering.
- DevX101 16y ago
  A big cost is employees. Last time I checked (months ago) there were about 70 employees at Digg. Each employee will cost about $100,000 when you put employee taxes and benefits into play. That's $7M, half the budget. The execs and top-shot coders will likely push that number up a bit.
- samtp 16y ago
  They have about 70 employees for some reason
  - rbranson 16y ago
    to compare, Reddit has like, 5. Digg is overfunded.
    - kqr2 16y ago
      But to be fair, Reddit is able to leverage the infrastructure of Conde Nast. The 5 employees doesn't count HR, accounting, administration, etc. Of course, that probably doesn't necessitate 65 extra employees either...
      - ryanwaggoner 16y ago
        Come on, you don't need any of those (as departments) when you're 5 people. What 5 person firm has any need for HR, accounting, admin, etc. that they can't get covered by outsourcing for less than the cost of a 6th person, let alone another 65 people?
mrschwabe 16y ago
The fail free fall the site has fallen victim too is a direct result of corporate media influence IMO. It wasn't too long after Kevin's Forbe's cover shot and the bigtime acquisition talk that suddenly the algorithms started to favor mainstream shit and those hard hitting bombshell articles that made the site so great were burried or non-existent. I was Digging since the early days. Even had a page of mine hit the front page. It WAS a good site at one time. Before it got infected with mainstream fluff.
jedwhite 16y ago
Lyons is looking through the lens of old media (as he often does). He sees the failure of Digg as being about the failure of hanging on to an audience. But it's not an audience, it's a community - an involved community that felt betrayed.
jasonfried 16y ago
Our take on the infamous cover in 2006: http://37signals.com/svn/archives2/dont_believe_businessweeks_bubblemath.php http://37signals.com/svn/archives2/dont_believe_businessweek...
- bobfunk 16y ago
  Sounds a bit like what you guys have been saying about Facebook recently ;)
- michaelchisari 16y ago
  It's good to know, in the midst of an unending hype machine around tech startups, that there are people out there who act as a solid reality-based counter-balance. My first programming job was in '97 in southern California, at the height of the dot-com bubble, and it's amazing that the industry and the associated media reports still give me déjà vu thirteen years later.
- zaidf 16y ago
  They are rumored to have turned down 130M acquisition. Assuming that was true, then sure he wasn't worth 60M but he would have gotten 15-30M, no? I like how you guys think and am def. more excited by revenue than the other path to riches(getting acquired due to the potential in your company as seen by the acquirer). And yet, while you may have been "right" in this case, you could have easily been "wrong". What if Digg had been acquired for 130M or 200M? What do you have to say about YouTube which was bleeding dollars until recently but seems like it will go down as one of the better acquisitions of the decade? They had very little rev; lots of investment riding; and far from profitability. And yet Google acquired them for a buncha money. May be it is not as clear cut as simply taking the revenue just as it isn't as clear cut as taking the valuation from the last round?
  - staunch 16y ago
    Their recipe is simple. Claim every new major web company is bullshit. If they fail say "I told you so". If they succeed say "They were just lucky."
marcamillion 16y ago
As an original Digg user, i.e. pre the HD-DVD crack code debacle, I don't think Twitter was the cause of the demise. It was HN, for me. At first, I went to digg for the wonderful tech/startup stories that would surface - then it evolved into meaningless crap. I languished for a little, with no where to go, then found HN. People complain about how HN is getting so bad, but it's nothing as bad as when Digg started to get diluted by mainstream interests. The truth is that Digg definitely had to cater to a broader audience to sustain growth, and I have always been a Rose fan, but it's kinda sad to see it go by the wayside like this. At least Kevin tried something with v4, but it was too little too late.
- kprobst 16y ago
  For many people it seems Reddit's the post-Digg destination. Certainly Reddit has been growing by leaps and bounds and trying to keep up.
  - marcamillion 16y ago
    I know...it seems that they might be the antithesis, but Reddit just never struck a cord for me.
    - kprobst 16y ago
      I like Reddit. It feels like a community, unlike Digg.
      - mtrimpe 16y ago
        As far as I'm concerned it's been going downhill fast since Digg collapsed though. I stopped visiting the main reddit page a few years ago and stuck to proggit since then, but that also seems to have suffered a lot recently. Does anyone know if the ex-proggit folks just moved somewhere else?
        sprout 16y ago
flipp 16y ago
So Digg is officially a cautionary tale now.. Newsweek is wrong though. Digg wasn't beaten by Twitter, or even by its own redesign. It was beaten because instead of building a great community they focused on being the best place to share links. And over time those links started to suck. Digg was really beaten by itself, and by Reddit.
- marcamillion 16y ago
  Competitors don't kill companies, companies kill companies. Editor's note: By companies kill companies, I mean the company kills itself :)
  - mahmud 16y ago
    And sometimes companies are killed by the Libyan government. Just ask diggly.
StavrosK 16y ago
> if someone offers you a ridiculous amount of money for a company that wasn’t that hard to build, don’t think twice. Take the money and run. You hear that, Google? You should have sold!
- jonknee 16y ago
  But Google was hard to build, it was revolutionary search technology that demonstrably better than the alternatives. Digg was more akin to a hot new bar. The value is mostly whoever else is hanging out, not the mechanics of running a bar. Like what haooens with bars, Digg is no longer the new hotness.
  - StavrosK 16y ago
    My issue with that quote is that, sometimes, it's worth holding on to what you have, even if people offer you a good deal at the time. Substitute "Google" with "Facebook", "Twitter", etc.
    - jonknee 16y ago
      Sure, hindsight is 20/20 after all. But sometimes it's good to take the money and run when you can (Friendster, Digg, MySpace). Taking the money is especially tempting when dealing with value through audience and not technology. Your audience can leave you as quickly as it came to you. If you're real slick you can even sell at a crazy valuation and then buy it back for cheap like Skype or Stumble Upon. Facebook is an example of it "working out", but I don't think Zuck would be feeling too terrible if he sold out and had hundreds of millions of real dollars to do whatever he wanted with instead of billions of on paper dollars to try and maintain. I'd be too busy sailing my boat to even know what Facebook was doing, but that's me.
      - StavrosK 16y ago
        Hmm, true, you may have a point.
marcamillion 16y ago
With all due respect to Mr. Lyons this paragraph insulted me - as a hacker/entrepreneur: Can anyone create an enduring business on the Web, where it’s easy to build new companies, and when survival depends on the whims of fickle users? The big lesson of Digg may be simply this: if someone offers you a ridiculous amount of money for a company that wasn’t that hard to build, don’t think twice. Take the money and run. where it's easy to build new companies? A company that wasn't that hard to build? How does he know that? Has he ever built a company? I think that's quite contemptuous. This sentiment is exactly what Steve Jobs was referring to when he told that Gizmodo/Engadget blogger (can't remember which it was) that they should stop criticizing other people's work and create something of their own. Goddammit this pissed me off.
- mynameishere 16y ago
  Consider the possibility that business writers might have some insight into the operation of telecoms, financial companies, manufacturing companies, accounting companies, law firms, consumer product companies, restaurants, etc, etc, and not just tech companies, which is where the expertise around here lies. I could make a passable Digg clone in a weeknend. A weekend. I couldn't run a single McDonalds franchise if you put a revolver to my head. That's what he's talking about.
  - staunch 16y ago
    You could run a McDonald's franchise. You would attend the classes where they teach you how. You would find it remarkably simple. They would give you a big handbook that explains how to do everything. You could not fail except through a lack of effort. Now if someone had said to you in 2004: "Create a new fantastically popular way to consume news" you would likely not have an idea as good as Digg. Even if you did you would likely fail to market it effectively.
  - kyro 16y ago
    And by that same token, you lack the insight of what's really behind Digg. I doubt with the years of work they've put into it, tweaking algorithms, etc, that you'd be able to duplicate it in one weekend.
uurayan 16y ago
<em>The basic problem is that these new-media companies don’t really have customers; they have audiences. Starting a company like Digg is less like building a traditional tech company (think Apple or HP) and more like launching a TV show. </em> This is always the risk in creating community based platforms that don't monetize directly. One day you're the hot chick at the party, the next you're that creepy old guy who keeps coming back to said party.
dennisgorelik 16y ago
--- The big lesson of Digg may be simply this: if someone offers you a ridiculous amount of money for a company that wasn’t that hard to build, don’t think twice. Take the money and run. --- The problem with that "lesson" is that you never know what is "ridiculous amount of money for a company". Google might sell itself for couple hundred million too, but it would obviously be a wrong decision.
kloncks 16y ago
I really detest his writing. Daniel Lyons writes about technology as an expert explaining the tech world to a common non-techie. The problem is that he explains things in a way that don't make sense, are false, or in this case just a bunch of mumbo-jumbo.
- mikebike 16y ago
  Lyons is much more fun to read when he writes as his alter-ego, Fake Steve Jobs.
curtisspope 16y ago
and Kevin left money on the table. Hood Business Rule #1 get your money then get out

70 points by DevX101 16y ago

Has there been a better example than Digg of how detrimental it is to alienate your users on the social web? I'm surprised the article doesn't mention Reddit, which seems to have been the main reason why Digg's numbers haven't bounced back, despite changing some of the aspects which made users leave.

ROFISH 16y ago
> Has there been a better example than Digg of how detrimental it is to alienate your users on the social web? Facebook. It changed the day anybody (ie. parents) was allowed on. Now most people I know either refuse to use the service due to employer paranoia or just play Farmville all day, but it's not the same. At least Facebook rolls with it, I suspect their new features (new Groups, new Photos) seem to cater towards their current audience instead of "getting the old spark back".
- siglesias 16y ago
  Unlike Digg, Facebook lacks a viable alternative and is deeply reliant on the network effect, meaning you need critical mass to migrate for the alternative to be useful. Because of this Facebook's growth, in the face of customer dissatisfaction in some cases, has been a hockey stick.
  - meric 16y ago
    Facebook is a good tool. I can put my photos on it, and all my friends, my aunt, my uncle, my cousins, will all be able to see it. (Not my grandparents, they don't have computer. :( ) Facebook "implicitly" notifies all those people so I don't have to send a lame spam email "Hey I've posted some photos, check it out". It is similarly good for organizing outings. Just create an event and invite people, no need to send an email with 20 recipients; An forum-like thing in the event lets people asks questions, which stays up and acts like an FAQ.
- jfarmer 16y ago
  Uhm, the key difference being that between that time and now Facebook has grown 5-6x. By what metric was that a bad decision, exactly?
- ceejayoz 16y ago
  I think you missed the "alienate your users" bit. People whined when Facebook opened to non-students. People whined for each of the dozen or so major redesigns. Essentially zero of those users left the site as a result.
- venturebros 16y ago
  Facebook always remained a social network of sorts though. Digg changed the functionality of their site.
nkassis 16y ago
The second page of that article was really disappointing. It's as if the guy never heard of Reddit. Calling Twitter digg's true nemesis is so far out of it is not even funny. Twitter and Digg could coexist for ever. how can I get a real discussion of a link of twitter? It would be really hard for me to see the diverse amount of links that digg and reddit give me just by amassing a ton of friends. Most of the best links I've found on digg/reddit aren't even from people I would have know. They are not usually famous or popular outside those sites. Digg's error was shifting away from this and trying to go towards twitter's way of following a select group of people. That obviously is not what people want. Reddit does it by subjects, that seems to be working great.

tgriesser 16y ago

Digg will generate about $15 million in revenue this year and still operates at a loss Maybe my perception of the costs associated with running a high traffic such as this are way off, but doesn't it seem like $15m in revenues should be able to sustain the company... at least to the point where it doesn't operate at a loss? Anyone that has any experiences running a site on the scale of this might be able to advise, I'm just curious where all of that $15m goes in a year - unless the operating loss accounts for other costs that I'm not considering.

DevX101 16y ago
A big cost is employees. Last time I checked (months ago) there were about 70 employees at Digg. Each employee will cost about $100,000 when you put employee taxes and benefits into play. That's $7M, half the budget. The execs and top-shot coders will likely push that number up a bit.
samtp 16y ago
They have about 70 employees for some reason
- rbranson 16y ago
  to compare, Reddit has like, 5. Digg is overfunded.
  - kqr2 16y ago
    But to be fair, Reddit is able to leverage the infrastructure of Conde Nast. The 5 employees doesn't count HR, accounting, administration, etc. Of course, that probably doesn't necessitate 65 extra employees either...
    - ryanwaggoner 16y ago
      Come on, you don't need any of those (as departments) when you're 5 people. What 5 person firm has any need for HR, accounting, admin, etc. that they can't get covered by outsourcing for less than the cost of a 6th person, let alone another 65 people?

mrschwabe 16y ago

The fail free fall the site has fallen victim too is a direct result of corporate media influence IMO. It wasn't too long after Kevin's Forbe's cover shot and the bigtime acquisition talk that suddenly the algorithms started to favor mainstream shit and those hard hitting bombshell articles that made the site so great were burried or non-existent. I was Digging since the early days. Even had a page of mine hit the front page. It WAS a good site at one time. Before it got infected with mainstream fluff.

jedwhite 16y ago

Lyons is looking through the lens of old media (as he often does). He sees the failure of Digg as being about the failure of hanging on to an audience. But it's not an audience, it's a community - an involved community that felt betrayed.

jasonfried 16y ago

Our take on the infamous cover in 2006: http://37signals.com/svn/archives2/dont_believe_businessweeks_bubblemath.php http://37signals.com/svn/archives2/dont_believe_businessweek...

bobfunk 16y ago
Sounds a bit like what you guys have been saying about Facebook recently ;)
michaelchisari 16y ago
It's good to know, in the midst of an unending hype machine around tech startups, that there are people out there who act as a solid reality-based counter-balance. My first programming job was in '97 in southern California, at the height of the dot-com bubble, and it's amazing that the industry and the associated media reports still give me déjà vu thirteen years later.
zaidf 16y ago
They are rumored to have turned down 130M acquisition. Assuming that was true, then sure he wasn't worth 60M but he would have gotten 15-30M, no? I like how you guys think and am def. more excited by revenue than the other path to riches(getting acquired due to the potential in your company as seen by the acquirer). And yet, while you may have been "right" in this case, you could have easily been "wrong". What if Digg had been acquired for 130M or 200M? What do you have to say about YouTube which was bleeding dollars until recently but seems like it will go down as one of the better acquisitions of the decade? They had very little rev; lots of investment riding; and far from profitability. And yet Google acquired them for a buncha money. May be it is not as clear cut as simply taking the revenue just as it isn't as clear cut as taking the valuation from the last round?
- staunch 16y ago
  Their recipe is simple. Claim every new major web company is bullshit. If they fail say "I told you so". If they succeed say "They were just lucky."

marcamillion 16y ago

As an original Digg user, i.e. pre the HD-DVD crack code debacle, I don't think Twitter was the cause of the demise. It was HN, for me. At first, I went to digg for the wonderful tech/startup stories that would surface - then it evolved into meaningless crap. I languished for a little, with no where to go, then found HN. People complain about how HN is getting so bad, but it's nothing as bad as when Digg started to get diluted by mainstream interests. The truth is that Digg definitely had to cater to a broader audience to sustain growth, and I have always been a Rose fan, but it's kinda sad to see it go by the wayside like this. At least Kevin tried something with v4, but it was too little too late.

kprobst 16y ago
For many people it seems Reddit's the post-Digg destination. Certainly Reddit has been growing by leaps and bounds and trying to keep up.
- marcamillion 16y ago
  I know...it seems that they might be the antithesis, but Reddit just never struck a cord for me.
  - kprobst 16y ago
    I like Reddit. It feels like a community, unlike Digg.
    - mtrimpe 16y ago
      As far as I'm concerned it's been going downhill fast since Digg collapsed though. I stopped visiting the main reddit page a few years ago and stuck to proggit since then, but that also seems to have suffered a lot recently. Does anyone know if the ex-proggit folks just moved somewhere else?
      - sprout 16y ago

flipp 16y ago

So Digg is officially a cautionary tale now.. Newsweek is wrong though. Digg wasn't beaten by Twitter, or even by its own redesign. It was beaten because instead of building a great community they focused on being the best place to share links. And over time those links started to suck. Digg was really beaten by itself, and by Reddit.

marcamillion 16y ago
Competitors don't kill companies, companies kill companies. Editor's note: By companies kill companies, I mean the company kills itself :)
- mahmud 16y ago
  And sometimes companies are killed by the Libyan government. Just ask diggly.

StavrosK 16y ago

> if someone offers you a ridiculous amount of money for a company that wasn’t that hard to build, don’t think twice. Take the money and run. You hear that, Google? You should have sold!

jonknee 16y ago
But Google was hard to build, it was revolutionary search technology that demonstrably better than the alternatives. Digg was more akin to a hot new bar. The value is mostly whoever else is hanging out, not the mechanics of running a bar. Like what haooens with bars, Digg is no longer the new hotness.
- StavrosK 16y ago
  My issue with that quote is that, sometimes, it's worth holding on to what you have, even if people offer you a good deal at the time. Substitute "Google" with "Facebook", "Twitter", etc.
  - jonknee 16y ago
    Sure, hindsight is 20/20 after all. But sometimes it's good to take the money and run when you can (Friendster, Digg, MySpace). Taking the money is especially tempting when dealing with value through audience and not technology. Your audience can leave you as quickly as it came to you. If you're real slick you can even sell at a crazy valuation and then buy it back for cheap like Skype or Stumble Upon. Facebook is an example of it "working out", but I don't think Zuck would be feeling too terrible if he sold out and had hundreds of millions of real dollars to do whatever he wanted with instead of billions of on paper dollars to try and maintain. I'd be too busy sailing my boat to even know what Facebook was doing, but that's me.
    - StavrosK 16y ago
      Hmm, true, you may have a point.

marcamillion 16y ago

With all due respect to Mr. Lyons this paragraph insulted me - as a hacker/entrepreneur: Can anyone create an enduring business on the Web, where it’s easy to build new companies, and when survival depends on the whims of fickle users? The big lesson of Digg may be simply this: if someone offers you a ridiculous amount of money for a company that wasn’t that hard to build, don’t think twice. Take the money and run. where it's easy to build new companies? A company that wasn't that hard to build? How does he know that? Has he ever built a company? I think that's quite contemptuous. This sentiment is exactly what Steve Jobs was referring to when he told that Gizmodo/Engadget blogger (can't remember which it was) that they should stop criticizing other people's work and create something of their own. Goddammit this pissed me off.

mynameishere 16y ago
Consider the possibility that business writers might have some insight into the operation of telecoms, financial companies, manufacturing companies, accounting companies, law firms, consumer product companies, restaurants, etc, etc, and not just tech companies, which is where the expertise around here lies. I could make a passable Digg clone in a weeknend. A weekend. I couldn't run a single McDonalds franchise if you put a revolver to my head. That's what he's talking about.
- staunch 16y ago
  You could run a McDonald's franchise. You would attend the classes where they teach you how. You would find it remarkably simple. They would give you a big handbook that explains how to do everything. You could not fail except through a lack of effort. Now if someone had said to you in 2004: "Create a new fantastically popular way to consume news" you would likely not have an idea as good as Digg. Even if you did you would likely fail to market it effectively.
- kyro 16y ago
  And by that same token, you lack the insight of what's really behind Digg. I doubt with the years of work they've put into it, tweaking algorithms, etc, that you'd be able to duplicate it in one weekend.

uurayan 16y ago

<em>The basic problem is that these new-media companies don’t really have customers; they have audiences. Starting a company like Digg is less like building a traditional tech company (think Apple or HP) and more like launching a TV show. </em> This is always the risk in creating community based platforms that don't monetize directly. One day you're the hot chick at the party, the next you're that creepy old guy who keeps coming back to said party.

dennisgorelik 16y ago

--- The big lesson of Digg may be simply this: if someone offers you a ridiculous amount of money for a company that wasn’t that hard to build, don’t think twice. Take the money and run. --- The problem with that "lesson" is that you never know what is "ridiculous amount of money for a company". Google might sell itself for couple hundred million too, but it would obviously be a wrong decision.

kloncks 16y ago

I really detest his writing. Daniel Lyons writes about technology as an expert explaining the tech world to a common non-techie. The problem is that he explains things in a way that don't make sense, are false, or in this case just a bunch of mumbo-jumbo.

mikebike 16y ago
Lyons is much more fun to read when he writes as his alter-ego, Fake Steve Jobs.

curtisspope 16y ago

and Kevin left money on the table. Hood Business Rule #1 get your money then get out