9 ms·

The total price of the Digg acquisition was around $16 million

119 points by antonioevans 14y ago

il 14y ago
So who gets the $12M that was paid for the team?
- LeBen 14y ago
  Probably the investors with preferred stock.
  - jandrewrogers 14y ago
    A team is not worth anything if they all quit the next day. Acquisitions of teams include substantial incentives to individual team members to induce them to stay. Of the people I know who have been acquired in this manner, their payouts just to stay on were in the $500k-1M range. Given the way teams are usually valued, it suggests that the actual team members capture about half of the purchase value for the team.
- jandrewrogers 14y ago
  Any time someone acquires a team, it is not simply a matter of buying a company. Members of that team can quit anytime they like. Acquiring a team means showing them enough money that they are willing to stay after the acquisition. I do not know the terms of this particular deal but the rule of thumb is that acquiring a good engineering team will cost $1-2M per head. Some of that will go to investors but a big chunk of that will also go to the engineers as an incentive to stay on.
  - mjwalshe 14y ago
    But why not recruit them idividualy or as a team the Ex Digg employes are not indentured. This is the way the City (london) works its common for whole teams to be head hunted en block but the ex employers dosn't get anything.
srhngpr 14y ago
The domain name alone is worth more than $500k.
- chime 14y ago
  But the domain was sold for just 500k. That's what surprising to me.
  - blantonl 14y ago
    But the domain name is tied to IP (at this time)
zalew 14y ago
> 15 different Digg patents including the patent on “click a button to vote up a story.” HN is doomed
- joshschreuder 14y ago
  Patent experts - how exactly does this work with Reddit / HN / a million other vote up content sites? Are they infringing?
  - Tuna-Fish 14y ago
    Not really an expert, but they probably are, but the patent would probably also get overturned pretty easily.
    - zakhar 14y ago
      IANAL, but wouldn't websites like bash.org be prior art for a “click a button to vote up a story” functionality? I'd be interested to see the exact wording, if anyone can find a link to the patent in question.
      - sharken 14y ago
        Looks like it is this patent http://www.patentgenius.com/patent/7831928.html http://www.patentgenius.com/patent/7831928.html
        runehol 14y ago
        If that's the patent in question, it's so specific as to be useless. The first claim, which all other claims depend on, only claims the invention when 1) The voting patterns are being displayed in a "swarm interface" 2) The "thickness of a line" is used for visualizing the number of votes I don't believe that any of the modern sites use a swarm interface at all, and if someone wanted to show a swarm interface, by using something other than the thickness of a line for the visualization, you've sidestepped the patent. It's hard to believe someone paid good money for this.
deleted 14y ago
[deleted]
notatoad 14y ago
This story hasn't changed at all - the earlier reports were that the purchase hadn't included any of the staff, it's old news that they were hired by WaPo.
danielpal 14y ago
500K is too low for 100%. What likely happened is betaworks got 50-60% with the agreement they invest on the future of the site. Best deal for current shareholder, who still keep 30-40%. The 500K were not to buy the company, but to pay out some people who didn't want the new deal.
- pbiggar 14y ago
  Very likely. The domain and traffic alone are worth way more than that.
bane 14y ago
So the story is the same: "Digg the Web Property" sold for ~$500k which is tragic, good luck running that without a team. The new info is that the "Digg the Team" was acquired for $12mil (whatever acquiring a "team" means, sounds like stock options executed and hiring packages all around) and bizarrely, "Digg the Technology Patents" were apparently worth about 8 times what the site is worth and went for about $4mil. I'm assuming that "Digg the Web Property" has some perpetual free license to the patents as part of the deal. The Patent deal is probably overvalued as well (since it includes worthless patents like "click to upvote something", but probably represents LinkedIn trying to recoup some of it's massive lost investment. I wouldn't be surprised if the purchase value was an attempt to make the patents look like they are worth more than they are in prep for an eventual second sale to other parties. All told, "Digg" sold for around 35% of its total investment, with 75% of that being the staff acquisition by WaPo, which essentially means that the actual "Digg" properties, patents, code, viewership, business deals, social network reach, ad network etc. was sold for about $4.5mil or less than 10% on the investment. note that in a strange demonstration of why if failed as a social news site, the news of Digg's own sale has yet to show up on Digg's front page
- w1ntermute 14y ago
  > note that in a strange demonstration of why if failed as a social news site, the news of Digg's own sale has yet to show up on Digg's front page What are you talking about? It's on the front page: http://digg.com/news/business/betaworks_is_buying_digg_for_500_000 http://digg.com/news/business/betaworks_is_buying_digg_for_5...
- Danieru 14y ago
  > the news of Digg's own sale has yet to show up on Digg's front page The news is on Digg, about 2/3 down the page now. When I first looked earlier today it was in the top five with less than 100 upvotes. Even now it has only managed 166. Even HN has surpassed Digg.
  - michaelpinto 14y ago
    the irony of that is that digg started as a site just covering tech! in fact one might say that it started to go downhill when it expanded their categories...
chj 14y ago
Used to visit Digg daily. Then less and less after every redesign, now I suddenly I realize it is years now.
- frontier 14y ago
  Yep I used to use Digg before HN, but the experience, especially on mobile, just kept getting worse and worse!
chris123 14y ago
Same diff.
joshryandavis 14y ago
It's still a bit pathetic in comparison to the 200 million Google offered them back in 2008…
antonioevans 14y ago
This number makes much more sense if you are just talking their 7 mil uniques. I think the $500k was perfect "dot-com fail sensationalism".
mikeklaas 14y ago
Still reported as 500k for the domain name, code, and traffic, which seems crazy low.
- ojbyrne 14y ago
  They have to pay licensing fees for the IP, according to that article. Its kind of weirdly phrased - don't know how you own code without owning the IP in that code.
  - mrich 14y ago
    You can hold the copyright on the code but still have no rights for the patents used therein.
    - ojbyrne 14y ago
      Actually now that you phrased it that way, it makes total sense. The fact that the source of the code and the IP is the same made it seem bizarre.
    - kristianc 14y ago
      Think Skype faced a similar scenario to this a few years back.
- rplnt 14y ago
  When compared to other overpriced sites, yes. But I think the price is quite realistic. It's not like, for example, meebo has a value of $100M.
tudorw 14y ago
what's Digg ?
- snorkel 14y ago
  It's a corporate press release aggregator maintained by teenagers with severe short term memory loss.
mmaunder 14y ago
"Rose also pointed out that Digg once got an acquisition offer for close to $80 million ($60 million plus earnout) during the site's heyday. While he was personally willing to take this offer, the Digg board decided to turn it down." http://www.readwriteweb.com/archives/kevin_rose_at_disrupt.php http://www.readwriteweb.com/archives/kevin_rose_at_disrupt.p...
jpdoctor 14y ago
So Reid Hoffman invested his own money and then LinkedIn blows several million in acquisition of IP from a company that is in the deadpool. No conflict of interest there. Can't wait for the lawsuits.
durpleDrank 14y ago
I wonder if all the TechCrunch sock puppetting will kill hacker news ? Not that that is happening in this thread ...

119 points by antonioevans 14y ago

il 14y ago

So who gets the $12M that was paid for the team?

LeBen 14y ago
Probably the investors with preferred stock.
- jandrewrogers 14y ago
  A team is not worth anything if they all quit the next day. Acquisitions of teams include substantial incentives to individual team members to induce them to stay. Of the people I know who have been acquired in this manner, their payouts just to stay on were in the $500k-1M range. Given the way teams are usually valued, it suggests that the actual team members capture about half of the purchase value for the team.
jandrewrogers 14y ago
Any time someone acquires a team, it is not simply a matter of buying a company. Members of that team can quit anytime they like. Acquiring a team means showing them enough money that they are willing to stay after the acquisition. I do not know the terms of this particular deal but the rule of thumb is that acquiring a good engineering team will cost $1-2M per head. Some of that will go to investors but a big chunk of that will also go to the engineers as an incentive to stay on.
- mjwalshe 14y ago
  But why not recruit them idividualy or as a team the Ex Digg employes are not indentured. This is the way the City (london) works its common for whole teams to be head hunted en block but the ex employers dosn't get anything.

srhngpr 14y ago

The domain name alone is worth more than $500k.

chime 14y ago
But the domain was sold for just 500k. That's what surprising to me.
- blantonl 14y ago
  But the domain name is tied to IP (at this time)

zalew 14y ago

> 15 different Digg patents including the patent on “click a button to vote up a story.” HN is doomed

joshschreuder 14y ago
Patent experts - how exactly does this work with Reddit / HN / a million other vote up content sites? Are they infringing?
- Tuna-Fish 14y ago
  Not really an expert, but they probably are, but the patent would probably also get overturned pretty easily.
  - zakhar 14y ago
    IANAL, but wouldn't websites like bash.org be prior art for a “click a button to vote up a story” functionality? I'd be interested to see the exact wording, if anyone can find a link to the patent in question.
    - sharken 14y ago
      Looks like it is this patent http://www.patentgenius.com/patent/7831928.html http://www.patentgenius.com/patent/7831928.html
      - runehol 14y ago
        If that's the patent in question, it's so specific as to be useless. The first claim, which all other claims depend on, only claims the invention when 1) The voting patterns are being displayed in a "swarm interface" 2) The "thickness of a line" is used for visualizing the number of votes I don't believe that any of the modern sites use a swarm interface at all, and if someone wanted to show a swarm interface, by using something other than the thickness of a line for the visualization, you've sidestepped the patent. It's hard to believe someone paid good money for this.

deleted 14y ago

[deleted]

notatoad 14y ago

This story hasn't changed at all - the earlier reports were that the purchase hadn't included any of the staff, it's old news that they were hired by WaPo.

danielpal 14y ago

500K is too low for 100%. What likely happened is betaworks got 50-60% with the agreement they invest on the future of the site. Best deal for current shareholder, who still keep 30-40%. The 500K were not to buy the company, but to pay out some people who didn't want the new deal.

pbiggar 14y ago
Very likely. The domain and traffic alone are worth way more than that.

bane 14y ago

So the story is the same: "Digg the Web Property" sold for ~$500k which is tragic, good luck running that without a team. The new info is that the "Digg the Team" was acquired for $12mil (whatever acquiring a "team" means, sounds like stock options executed and hiring packages all around) and bizarrely, "Digg the Technology Patents" were apparently worth about 8 times what the site is worth and went for about $4mil. I'm assuming that "Digg the Web Property" has some perpetual free license to the patents as part of the deal. The Patent deal is probably overvalued as well (since it includes worthless patents like "click to upvote something", but probably represents LinkedIn trying to recoup some of it's massive lost investment. I wouldn't be surprised if the purchase value was an attempt to make the patents look like they are worth more than they are in prep for an eventual second sale to other parties. All told, "Digg" sold for around 35% of its total investment, with 75% of that being the staff acquisition by WaPo, which essentially means that the actual "Digg" properties, patents, code, viewership, business deals, social network reach, ad network etc. was sold for about $4.5mil or less than 10% on the investment. note that in a strange demonstration of why if failed as a social news site, the news of Digg's own sale has yet to show up on Digg's front page

w1ntermute 14y ago
> note that in a strange demonstration of why if failed as a social news site, the news of Digg's own sale has yet to show up on Digg's front page What are you talking about? It's on the front page: http://digg.com/news/business/betaworks_is_buying_digg_for_500_000 http://digg.com/news/business/betaworks_is_buying_digg_for_5...
Danieru 14y ago
> the news of Digg's own sale has yet to show up on Digg's front page The news is on Digg, about 2/3 down the page now. When I first looked earlier today it was in the top five with less than 100 upvotes. Even now it has only managed 166. Even HN has surpassed Digg.
- michaelpinto 14y ago
  the irony of that is that digg started as a site just covering tech! in fact one might say that it started to go downhill when it expanded their categories...

chj 14y ago

Used to visit Digg daily. Then less and less after every redesign, now I suddenly I realize it is years now.

frontier 14y ago
Yep I used to use Digg before HN, but the experience, especially on mobile, just kept getting worse and worse!

chris123 14y ago

Same diff.

joshryandavis 14y ago

It's still a bit pathetic in comparison to the 200 million Google offered them back in 2008…

antonioevans 14y ago

This number makes much more sense if you are just talking their 7 mil uniques. I think the $500k was perfect "dot-com fail sensationalism".

mikeklaas 14y ago

Still reported as 500k for the domain name, code, and traffic, which seems crazy low.

ojbyrne 14y ago
They have to pay licensing fees for the IP, according to that article. Its kind of weirdly phrased - don't know how you own code without owning the IP in that code.
- mrich 14y ago
  You can hold the copyright on the code but still have no rights for the patents used therein.
  - ojbyrne 14y ago
    Actually now that you phrased it that way, it makes total sense. The fact that the source of the code and the IP is the same made it seem bizarre.
  - kristianc 14y ago
    Think Skype faced a similar scenario to this a few years back.
rplnt 14y ago
When compared to other overpriced sites, yes. But I think the price is quite realistic. It's not like, for example, meebo has a value of $100M.

tudorw 14y ago

what's Digg ?

snorkel 14y ago
It's a corporate press release aggregator maintained by teenagers with severe short term memory loss.

mmaunder 14y ago

"Rose also pointed out that Digg once got an acquisition offer for close to $80 million ($60 million plus earnout) during the site's heyday. While he was personally willing to take this offer, the Digg board decided to turn it down." http://www.readwriteweb.com/archives/kevin_rose_at_disrupt.php http://www.readwriteweb.com/archives/kevin_rose_at_disrupt.p...

jpdoctor 14y ago

So Reid Hoffman invested his own money and then LinkedIn blows several million in acquisition of IP from a company that is in the deadpool. No conflict of interest there. Can't wait for the lawsuits.

durpleDrank 14y ago

I wonder if all the TechCrunch sock puppetting will kill hacker news ? Not that that is happening in this thread ...