How the mighty fall. Digg, once the envy of the Silicon Valley technorati, has just been flogged to New York technology development company Betaworks for a meagre $0.5m. Less than 0.3% of its 2008 valuation.
Founder Kevin Rose must be kicking himself. Like Facebook's Mark Zuckerberg (Digg was founded within a few months of the the social network), he was dead set on growing the business, spurning an early exit. But unlike Facebook, perhaps indeed because of it, Digg has been steadily declining in popularity, shedding 28 million users in two years.
Kevin Rose's anguish will be nothing campared to the resentment felt by Digg's investors, however. The news sharing site has received $45m in venture capital to date. For a return of a few thousand dollars. Ouch.
So, why is Betaworks taking a punt on the struggling site?
Well, Digg's brand still carries a fair amount of weight online: it attracts around 16 million unique users a month. And Betaworks is undertaking a full-scale overhaul of the business operations to prevent Digg from burning through any more of its cash. 'We are turning Digg back into a startup. Low budget, small team, fast cycles,' it has announced. 'The News.me team will take Digg back to its essence: the best place to find, read and share the stories the internet is talking about. Right now.'
Whether this will be a turnaround of Myspace proportions remains to be seen. But one thing's for sure: Kevin Rose won't be enjoying the spoils.