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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

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?
      - varaon 16y ago
        Reddit employees receive Conde benefits such as health insurance. Real estate is also taken care of. They've also admitted that they might be able to pull a higher salary at a different company, but they're passionate about reddit.
      - ultrasaurus 16y ago
        I'm with you on HR, but I can very much imagine a 5 person company needing someone in accounting, a lot of staying solvent is keeping the money flowing. So, that brings us up to... 6 :)
anorwell 16y ago
A lot is personnel costs, I think. They had at least 70 people in May [1]. Estimating $200,000 per employee per year, that's 14 million. I'm not really sure how accurate $200,000 is, but between benefits, events, office space (in SF), and other associated expenses, employees cost a lot more than just their salary. Is there any reason digg should have that many employees? Probably not. [1] http://techcrunch.com/2010/05/06/digg-cuts-10-of-staff/ http://techcrunch.com/2010/05/06/digg-cuts-10-of-staff/ edit: Oops, kind of slow on the trigger--other people said the same thing.
ojbyrne 16y ago
When you're a VC-funded company, you're expected to operate at a loss. Otherwise you're not making use of the funds you've been given to grow.
- ceejayoz 16y ago
  You're expected to grow, though. Sounds like Digg has been shrinking.
  - ojbyrne 16y ago
    "Crossing the Chasm" (http://en.wikipedia.org/wiki/Crossing_the_Chasm http://en.wikipedia.org/wiki/Crossing_the_Chasm) is part of the conventional wisdom in Silicon Valley. You're expected to have some struggles as you try and go from the early adopter to the mainstream market.
deleted 16y ago
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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?
    - varaon 16y ago
      Reddit employees receive Conde benefits such as health insurance. Real estate is also taken care of. They've also admitted that they might be able to pull a higher salary at a different company, but they're passionate about reddit.
    - ultrasaurus 16y ago
      I'm with you on HR, but I can very much imagine a 5 person company needing someone in accounting, a lot of staying solvent is keeping the money flowing. So, that brings us up to... 6 :)

anorwell 16y ago

A lot is personnel costs, I think. They had at least 70 people in May [1]. Estimating $200,000 per employee per year, that's 14 million. I'm not really sure how accurate $200,000 is, but between benefits, events, office space (in SF), and other associated expenses, employees cost a lot more than just their salary. Is there any reason digg should have that many employees? Probably not. [1] http://techcrunch.com/2010/05/06/digg-cuts-10-of-staff/ http://techcrunch.com/2010/05/06/digg-cuts-10-of-staff/ edit: Oops, kind of slow on the trigger--other people said the same thing.

ojbyrne 16y ago

When you're a VC-funded company, you're expected to operate at a loss. Otherwise you're not making use of the funds you've been given to grow.

ceejayoz 16y ago
You're expected to grow, though. Sounds like Digg has been shrinking.
- ojbyrne 16y ago
  "Crossing the Chasm" (http://en.wikipedia.org/wiki/Crossing_the_Chasm http://en.wikipedia.org/wiki/Crossing_the_Chasm) is part of the conventional wisdom in Silicon Valley. You're expected to have some struggles as you try and go from the early adopter to the mainstream market.

deleted 16y ago

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