

Google Walks Away From Digg Deal - terpua
http://www.techcrunch.com/2008/07/26/google-walks-away-from-digg-deal/

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ojbyrne
My personal opinion is that given that they have roughly the same traffic
levels with 60+ people that they had with 10 people, and are somewhat close to
breakeven, is that it's time for layoffs, not another round of financing.

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merrick33
Owen, you built it - don't you have some pull still. You have the right idea,
layoff the excess to get cash flow positive.

My 2 cents - quit trying to be something to everyone - because those of us who
visited in the early years left long ago.

btw it's Merrick - had lunch with you at Pubcon in '06

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ojbyrne
Very little pull. Reason #400 why I left - basically because I felt that
whenever I suggested a good idea, it was shot down just because I was the
source.

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falsestprophet
Did you get any equity?

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ojbyrne
Obviously, or I wouldn't be so eager to see them sell, but equity without
liquidity is useless. Digg management has already demonstrated their
willingness to treat my shares differently from the other founder's shares
(see my comment above about Kevin cashing in shares).

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marijn
> We’re hearing they’ll just push through with a new round of financing.

I may be a bit clueless about the whole web-entrepreneurship thing, but I'm
amazed that after three and a half year and zillions of users, Digg is still
not making money. How would such a thing be worth 200 million dollars, anyway?

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babul
With "zillions" of users they will find a way to make money eventually.

It is a pattern used by many others (both online and offline) and it is easier
to create leverage once you have a large established userbase (especially if
you are able to determine their demographics), though often it may seem a lot
like gambling.

Many of the other big social sites have also yet to make money/profit.

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nir
>With "zillions" of users they will find a way to make money eventually

Either that or the next thing comes along and they move on. See Slashdot
before and after Digg.

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william42
An uptick in quality?

(Seriously, what digg did was to pull all the people stupid enough to install
Alexa.)

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nir
Yeah, maybe there's two periods when a site like Slashdot or Digg is good -
before the masses arrive and after they leave.. It's the bell curve upside
down :)

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brandonkm
I think the main reason google walked away from this deal was that $200
million is simply too much money to spend on a acquisition that dosn't have a
net positive effect throughout the company and the web. The fact that they
walked away at the time they did shows you that there was were red flags that
were raised somewhere and a serious reconsideration was in order. Theres also
the issue of digg's technology...

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mtw
i find suspicious that they backed away when doing due diligence.

just recently, techcrunch reported about google trying to introduce digg-like
features in its user interface. seems to me that either google wanted to
either buy or have a close look at digg's algorithm.

(this is just speculation by the way)

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nir
I'd bet Google's Ph.D collection could could come up with an algorithm that
performs as well as Digg's (that is, not very) on their own... The UI is of
course no problem either.

The whole deal seems pointless. Some would claim it's for the userbase, but
Digg/Reddit by now have self-selected themselves down to a notoriously bad
userbase. Would you pay $200m for those guys?

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mattmaroon
Bad user base from what perspective? From the eyes of someone who likes the
conversations on Hacker News, sure. From the perspective of a company that
makes their business selling ads, probably not so much.

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alaskamiller
Another angle: <http://valleywag.com/5029423/google-nixing-digg-deal>

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obelix
Man, I really wish Jay Adelson gets his big pay day soon. [And Sean Parker
too].

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kobs
Jay Adelson founded Equinix: <http://en.wikipedia.org/wiki/Equinix>. It
doesn't seem like he'd be hurting for cash.

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obelix
Equinix went through a 32:1 reverse stock split. The founders pretty much got
wiped out of its stock.

[http://sec.edgar-
online.com/2003/05/15/0001012870-03-002591/...](http://sec.edgar-
online.com/2003/05/15/0001012870-03-002591/Section15.asp)

In his own words:

"Well, to clarify, I still provide consulting to Equinix. As for the money I
made from that venture, suffice to say the reverse split nuked my founder's
wealth for morbid. There was enough to secure my kids' college education (if
they need money from me, who knows), and enough to buy me a new minivan.
Anything left is for my parents who deserve every penny. I never said I had a
desire to be a VC..."

<http://blog.adelson.org/2006/09/im_going_to_try.html>

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kobs
Ah, well that's unfortunate.

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malekov
My personal opinion is that Arrington just made up this 'acquisition'...

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joop
Another angle: [http://thenextweb.org/2008/07/26/google-does-not-digg-it-
wal...](http://thenextweb.org/2008/07/26/google-does-not-digg-it-walks-away-
from-the-deal/)

