Thursday, July 12, 2012

Digg got sold for $500K

Digg just got sold for $500K.  It is a disappointing exit for once a rising star of social news sites.  Digg has raised $45 million from who's-who among VC investors, including Reid Hoffman and Marc Andreessen.

Natural question is why.

Circa 2006.  Kevin Rose, the founder of Digg.
Rumor has it that Google once offered $200 for Digg.
There are many articles that analyzed why Digg was suffering from dwindling traffic.  Mike Elgan listed many reasons why Digg was seeing lower visitors, and there is a Quora page that answers why Digg's collective intelligence has largely failed unlike Twitter's.

As with any failure, there are multiple reasons why a startup fails.  But when things go down, user notices and move on other tools to solve their problem.  This is especially true for anything social because social platform without any user contribution is nothing.

If no one made status update on Facebook, people will have no reason to visit Facebook.  That would be an extreme case that's not likely to happen over night, but people do realize they get less value from any social site, and start changing their behavior.  If the site is less valuable, meaning gives you less useful content than you were getting before, users look for alternatives.  This creates an opportunity for a challenger to unseat the champion.

That's exactly what happened with Digg.  Digg got complacent and stopped paying attention to content quality.  Users started to notice this, and look for alternate solution.  They found Reddit.  Most of them moved on.

Social networks must pay attention to quality of their content and conversation.  That's the problem they are solving for users.  If content goes away, then users will soon follow.

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