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Digg To Lay Off 37% Of Staff, Product Refocus Imminent
- endlessvoid94 16y agoIt will be interesting to see if/how they pivot.
- VladRussian 16y agoentering "25 mi/hr" turn at 100mi/hr ... may be it is a pivot if you're driving a Ferrari or Lambo
- mikeryan 16y agoWell that answers this question from yesterdays (Digg: A Cautionary Tale) thread. 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? http://news.ycombinator.com/item?id=1827027 http://news.ycombinator.com/item?id=1827027
- pavs 16y agoLooks like someone with a brain finally took charge of Digg. Also how common is it to offer to find jobs for people being layed off?
- ceejayoz 16y ago> Also how common is it to offer to find jobs for people being layed off? Very. The uncommon thing is that statement being any more than a useless platitude.
- simonsarris 16y agoJust for the record 'useless platitude' is a pleonasm.
- mortenjorck 16y agoUpvoted for causing me to learn about pleonasms.
- corin_ 16y agoYou clearly need to read Stephen Fry's autobiograph (Moab Is My Washpot) :)
- deleted 16y ago[deleted]
- redthrowaway 16y agoNot necessarily. A platitude is a seemingly profound, but trite and unoriginal, even meaningless statement. They aren't necessarily useless. For example, to tell a bereaved widow that their significant other is "in a better place" is a platitude, but it serves its purpose. I do question whether platitude is the correct word, but "useless platitude" is only a pleonasm if "useful platitude" is a contradiction, which I don't believe to be the case.
- ceejayoz 16y ago"This was the most unkindest cut of all." - William Shakespeare, Julius Caesar. If it's good enough for Shakespeare, by God it's good enough for me!
- invisible 16y agoManagement fails utterly in decision making and employees suffer by layoffs. I don't see a bright future for Digg ahead given these actions. Edit: This is on the basis that the layoffs will likely not be management.
- timdorr 16y agoThey just got a new CEO, so this is the new guy coming in and cleaning up the mess, so to speak. He's doing what needs to be done to get back to profitability, so it appears he's doing his job properly.
- invisible 16y agoI'd just like to think that a large subset of Digg's employees thought it was a horrible to launch v4 and another smaller subset thought it was a great idea. My guess is most of the larger subset will suffer.
- jpablo 16y agoI remember an article a few months back were someone argued that layoffs was a tipping point for companies. The argument was that after the first round of layoffs everyone in the company feel a little less secure about their job and as a result the company stooped innovating. Anyone has that link ?
- okaramian 16y agoI don't have the link, but this really depends on the company and how they handle the layoffs. Like if you have a round of layoffs, but you have employees with faith in the management and the product, you're going to have remaining employees that stick around and work hard. Generally people that don't fall in that mold are going to get laid off in a situation like this. If you have employees that are sitting there with an expectation that the cpmpany will fail, however skilled they might be, they're going to start looking at other options. I think what I'm saying is: the initial tipping point in a case like this isn't the layoff, it's the ensuing fallout. One strategy that I've seen fail is using fear to keep people working. A "you're lucky you're still here" attitude has had people (like myself) out the door on the first other offer they find. An attitude of "this sucks, but we have to do it to stay around, no one is to blame" (which Digg seems to be going with) prevents things from going further south. Something like that can even unite the remaining group in difficult times.
- ajg1977 16y agoI've never understood why Digg required so many staff (~80) while competitors such as Reddit have < 10 people. Bringing their numbers down to a level more appropriate for their product (and revenue opportunity) can only be a good thing.
- InclinedPlane 16y agoCompanies model themselves on archetypes people have in their minds. The management at Digg had an idea about the kind of company they wanted Digg to be and they built offices and hired employees to match that idea, even if it didn't quite fit the day-to-day reality of what operations at Digg required. (Companies do this all the time, it's a big reason why newspapers are dying and why so many VC funded dot-coms have gone bust, for example.)
- wensing 16y agocan only be a good thing Not really. What it could mean is a downward spiral, which is what's been happening in the newspaper biz. Fewer people can't do as much work, which means lower revenues, which means fewer people, which ... The deeper problem (in the newspaper example) is very few of the employees have skills that can be leveraged to increase output while reducing headcount. Newspapers are loaded with coal-shovelers. Fewer shovelers, less coal. If you've built your business on coal-shoveling and the value of coal drops, it's very hard to find a profitable kernel to retreat to.
- jamesteow 16y ago"Fewer people can't do as much work" In most cases that's true. However, it's also a possible and very feasible way to cut away the excesses and keep on-board core pieces that can compensate for the losses. For example, a company I used to work for had a massive layoff when the bubble burst in the early 2000s. They learned their lesson and had very gradual employee growth while they still continued on lucrative projects eventually expanding rapidly today.
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- deleted 16y ago[deleted]
- lkrubner 16y agoI recall in 2006/2007 a lot of my clients were asking if I could build integration with Digg, into their existing sites. Digg was huge back then, and my clients put a lot of thought into how they might get more traffic from Digg. Several of my clients thought it was essential to have a Digg strategy. It is amazing to me that Digg could have fallen this far.
- earl 16y agoI hope that the CEO follows through with this -- if so, it's the best thing that can be done under the circumstances and a nice thing to do. "It’s been an incredibly tough decision. I wish it weren’t necessary. However, I know it’s the right choice for Digg’s future success as a business. I’m personally committed to help find new opportunities for everyone affected by the transition. Digg’s Board members have also offered to help find placements within their portfolio companies."
- siglesias 16y agoThe Digg story just goes to show you that political metaphors don't always translate well into tech. Digg was never able to diversify content (read: expand, scale, grow) because it was never worth it for minority voices--and here I'm referring to non-liberal, non-young, non-male, non-athiest users--to attempt to carve out space and participate. The value proposition of helping diversify Digg's content wasn't worth the time to newcomers. And so those users of other demographics simply went elsewhere to build their communities. The latest Digg was an attempt to push back against the niche that ruled Digg, but then that niche just found another community as well. Real life democracies, in government, exist as a compromise simply because there isn't always the ability to pick up and move to a new nation state if you aren't happy with the local rules. On the web it's all too easy to move somewhere else, so typically all web communities are niches that push away newcomers who are different. On the web democracy does not give rise to real, long-tail diversity; it's just a quality filter.
- DanielBMarkham 16y agoOn the web democracy does not give rise to real, long-tail diversity; it's just a quality filter. I agree with your entire comment. I'd just add the word "currently" before the sentence indicated. Just because it's that way now does not mean it always has to be that way. The web is either going to figure out the problem of dynamically changing due to minority opinion or we're going to have a tremendously huge social problem on our hands in a few decades.
- hugh3 16y agoThe web is either going to figure out the problem of dynamically changing due to minority opinion or we're going to have a tremendously huge social problem on our hands in a few decades. I really don't understand what you're getting at there. Can you clarify?
- DanielBMarkham 16y agoSocial systems run on herd mentality. It's that way here on HN, it's that way everywhere you have some kind of voting system (currently) The problem is very simple: the crowd is often wrong, uniformed, mistaken, prejudiced, emotionally irrational, or misled. Democracies work by giving voice to the minority. The black preacher standing on the corner in 1960 telling the majority whites that Jim Crow laws had to go? He was protected. He was able to work with the majority to promote his opinion and change things. But nobody liked him. At least at first. At least not in the majority. He was considered in the same category as those calling for the immediate liberation of farm animals -- somebody with a strange and odd opinion that would never work in modern society. Perhaps he was a bit of a nut. Minority opinions are frequently wrong, no doubt. And there are lots of weird and crazy people out there. But for a social system to function, people of strange and perhaps offensive opinions must be able to persuade others of their cause. It's the entire basis for change. If this is not replicated on the web, what will happen -- what already is happening -- is that the software will manage to split people into tinier and tinier groups of total conformity. The naive might think this is a good thing: no more trolls to ruin the conversation/group. But actually it's the worst thing imaginable: no more minority/strange opinions persuading others that change is needed. In civic life I can stand on the street corner and talk to passerbys. On the web, if I'm shut out, I'm shut out. There is no voice (or rather, everyone can speak as freely as they like, they are just never heard. Same difference) This change-by-minority-persuasion is a critical part of healthy systems. Without it? I'm not a fortune-teller, but it's not going to be pretty.
- codyguy 16y agoWonder what effect this will have on 1) the existing user base. Will it further accelerate the defection of users or won't matter? 2) the retained employees. What if a few "wanted" players leave voluntarily? It'll be interesting to see how they plug and reverse the leak in traffic.
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- kloncks 16y agoI think the top problem with Digg is that the biggest founder, Kevin Rose, simply has no incentive to follow through and give Digg a good exit. His shares in Digg are too diluted and he's too heavily-invested outside of Digg for that to ever be a possibility. He probably made more off of the sale of ngmoco than he would with Digg. As weird as it might sound, my ideal Digg situation is that Kevin buys back shares from VCs (everyone knows Digg's over-funded) to get some sort of monetary incentive to perform. Digg's potential is so great. It's just sad to see it go down like this.
- frou_dh 16y agoIf I were Rose, I think I'd have been bored with digg even before the v4 fiasco. The site might have been bringing in good money but it was still a den of tedium.
- ojbyrne 16y agoMy ideal Digg situation would be this poor neglected founder who has plenty of incentive to perform being given an opportunity.
- neworbit 16y agoNot going to happen. Kevin is bored and on to other things.
- nailer 16y agoNice that Joe Stump, who IIRC was CTO during Diggs peak, but left some time ago, just updated his Twitter to help any of his Digg friends who got laid off find something.
- dennisgorelik 16y agoNote the comment from Michael Arrington: --- you'd be amazed at how people start adding up. We have something around 40 people at TechCrunch, 20 full time. --- and the replies to that comment, such as: "How may of them were hired to boost your ego?" "Yes, in the absence of efficient cost control and good management, expenses always rise to meet income."
- deleted 16y ago[deleted]
- mjfern 16y agoDigg is facing issues on two fronts. First, it’s struggling with delivering unique value to its customers. When Digg launched in December 2004, it faced limited direct competition in the market of social media aggregation. Since its launch, Digg now competes with a myriad of services, such as Reddit (launched in 2005), Techmeme (2005), Huffington Post (2005), Newsvine (2006), and Hacker News (2007), just to name a few. There are now a huge variety of media aggregation websites targeting general and niche audiences. In addition to increased direct competition, Digg is now also facing a substitution threat posed by companies such as Facebook (2004), Twitter (2006), and Google Buzz (2010). An increasing number of consumers are turning to these services for their daily fill of news. Second, Digg is struggling with an untenable cost structure. With about 72 employees before its reduction in staff, Digg has about 9x the number of employees of Reddit, a key competitor. Consider another competitor, the Huffingpost. It attracts about twice the number of visitors per month, employing a full-time staff of just 60. Commentators have also noted that Digg had unusually high infrastructure costs, although I suspect they have remedied some of these issues since these reports. With revenue of just $15 million, and a unsustainable cost structure, Digg is currently operating at a loss. For Digg to survive and prosper into the future, it must refocus and develop a service that delivers unique value relative to the many competing services that are currently available. Given the range of competition, it’s not clear what Digg can change to deliver unique value. Next, Digg must continue to reduce its cost structure by reducing its human resource and infrastructure costs. Needless to say, increasing value for customers while reducing costs is a difficult challenge.
- pg 16y agoHN doesn't seem a significant threat: http://traffic.alexa.com/graph?&w=400&h=220&o=f&c=1&y=p&b=ffffff&n=666666&r=3m&u=digg.com&&u=ycombinator.com& http://traffic.alexa.com/graph?&w=400&h=220&o=f&...;
- mjfern 16y agoPerhaps HN isn't a significant threat, but it still poses a threat; each new service likely eats away at Digg's share of the market, assuming that people have limited time to use social media. As an anecdote, I was using Digg substantially up until the 2008 elections. I haven't used the service since then. Instead, I'm spending time on Hacker News (+ Techmeme, Twitter, Facebook).
- cletus 16y agoWhen the boat is sinking the solution is to: 1. Throw stuff off the boat (including passengers); 2. Bail water off the boat; and 3. Fix the hole in the boat. Kevin Rose tried (2). The new CEO is trying (1). Both of these delay the I editable. The hole in the boat in his case is the $40m in funding Digg has received. I'm not sure there's any recovering for that. The crux of Digg's problems is that it went the way of most online communities: it became extreme, exclusive and inbred. That's hard to recover from. Ultimately Digg is now largely irrelevant. Twitter and facebook have supplanted it as the sites for discovery for most people.
- neworbit 16y agoLike a lot of people, I used to use Digg, and don't anymore. I think the hole in the boat is much more that the committed userbase has moved on leaving it to become a LOLCAT paradise.
- jacquesm 16y ago2010 has seen the end of diggs growth and it has also seen the beginning of its decline. It went up a lot faster than it went down though, so they have some time to correct course. That's much harder than it seems though, attracting visitors to your site is one thing, getting them to come back after they've soured on you is a completely different one. Digg always had a very large number of employees for a site in that segment, but just throwing people out is not going to make things better in the short term (likely worse). At least they'll stop burning money while they figure out what the next steps are.
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