What Digg.com Selling for $500,000 Can Remind Us About Business on the Internet

Written by Zac Johnson

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 anÂ evaluationÂ 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 aÂ measlyÂ $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 aÂ ridiculousÂ 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 Â you sell?

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13 Replies to “What Digg.com Selling for $500,000 Can Remind Us About Business on the Internet”

As you mentioned it's a very hard decision to make but if I were in Kevin's case I would have sold Digg years ago especially for such good money ! I was sure that something will come out to get all the attention again, this is how the Internet world operate.
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BI reported a few days ago that the reason why Google did not buy at the time was because their engineers figured out that Digg's engineering was far from spectacular….so they decided to create Google Buzz.

Funnily Super Affiliates could purchase one of these. Wasn't much of digger but this is huge blow… won't blame it looks scary though:- Check this Alexa Stats – Can you guess what could be the next huge Summer Sale? https://i.imgur.com/YKJXe.png
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It's sad story for Diggs but that's how internet goes. What's more important is we learned a thing or two from their Fall.

I agree with you zac,

I will sell, like you said noting last for ever. For example I think the app called "Draw somthing" should of sold, I think Angry Bird should sell too.. just like every other sucessul game it gets old after a while.

When the app Draw something came out me and all my friends were playing it every day all day… now after a 1 month its old and I even deleted the app.

So I say sell.
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Warren says:

July 16, 2012 at 6:25 am

Draw Something was sold…for $200MM. At it's peak usage. Great sell in hindsight!

In my opinion, digg lost track of effective innovation. In any viable business, competition is tough not to mention wild cards and chance. I believe with the right innovation, digg will have stayed up and about.

hahahahha, i am so sick and tired of all these dynamic gambling of internet businesses. how could Digg have been sold for that less?
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Everything ends but that is a real sad end. Facebook is also heading on the same way until the do something innovating.

Ouch – I can't imagine knowing that my site was worth millions and millions – and then finally only selling it for $500k.
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That is a tough call to know exactly if you want to sell for a big profit, or take your chances and end up like Facebook wirth billions ( or so they say. ) I guess common business sense, and where you want to take your business in terms of profitabilty in the future would be my deciding factors.

But if the offer was good enough I would probably sell, and move onto another business venture.
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