Remember back in the day when Digg.com was the sought after source for so many internet marketers, site owners and bloggers to getting top rankings which would then open up the flood gates to massive traffic? Yes, I remember them too, but those days are long gone. I’ll admit, I never did get into using Digg, but I do remember the stories and success that many of my friends had with it.
What I do remember is the infamous cover of Kevin Rose on the cover of Business Week magazine and the headline “How this Kid Made $60 Million in 18 Months” back in 2006. Digg even had an evaluation of $160-$200 million at one point, and was a potential acquisition from Google… but like many others, they decided not to sell.
Jump ahead six years and Digg.com was sold yesterday for a measly $500,000 compared to what it was once valued at. There is another article out there that breaks down the sale and shows a final value of $16 million, which is much better than $500k, but still 10% of their top evaluation back in the day. The site still receives over 7 million visits per month, but nothing compared to what it used to be. The drop in usage and interest in Digg is mainly due to the massive success of Facebook and Twitter.
Why Didn’t You Sell Earlier Kevin, Why!?
It’s easy to look at the past and say “why didn’t you sell”, but it’s actually one of the toughest decisions you may have to come across. When you are doing well, you feel nothing can touch you and are always looking to do better. However, in the world of the internet, nothing lasts forever and trends go quickly.
I can attest to this as well from personal experience. Right around the same time this magazine cover with Kevin Rose came out, I was in the process of creating one of my first million dollar web site. The site would go on to generate over a million dollars in it’s first year, and continued to make money for quite some time. However just like in Digg’s case, Facebook and Twitter continued to grow and less people were using MySpace, which effected my site’s success.
I also had the opportunity to sell the site for an extra million dollars later on, but the company that wanted to buy the site had a terrible history and was destroying all of the sites that they were purchasing. It was also setup in a performance / compensation plan which would make no sense to sell at all… this lead me to writing a full post called To Sell or Not to Sell, which goes into the full story.
Those Who Sold… and Those Who Missed Out
As mentioned earlier, business and evaluations on the internet are completely out of sync with traditional values and numbers that we are used to. Digg.com has millions of active users still and can continue to make money through their site and sells for $500k, while Instagram has no financial numbers and sells for $1 billion!
Another great example is MySpace.com, which was originally purchased for over $700 million by Rupert Murdoch, then just recently sold at a crazy loss at $35 million. In a completely reverse situation, Marc Cuban sold Broadcast.com to Yahoo for a ridiculous amount of money and became a billionaire off it it, only to have Yahoo scrape the company to nothing over time.
The list goes on and on, but there are some people who decided to sell and some who decided to stick it out. Be sure to check out my other post, Should You Take the Money and Run? to the where the guys from Facebook, MySpace, Groupon and Twitter all ended up.
If you had a hot tech company would you sell?