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Comment by danilocampos | Hacker News Reader

Digg is boned. Product is at a dead end and users are losing interest in the community.

Meanwhile, they're funded up their ears. $40 million? For what? It's a bunch of user-submitted links and discussions. You need a couple of developers, a sysadmin, a designer, some sales guys. Am I missing any other roles?

100 employees for such a simple product is insane to me. I couldn't believe they topped out at that number. I am biased – I prefer small, lean teams over bloat, but come on, anyone can see this.

And now, yeah, they're boned. You're not going to get any significant multiple of $40 million out of that business. Boy, the investors would have been fortunate to get their money back period.

I guess that's just how the VC game is played.

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I'd love to see

* Number of Employees

* Monthly Active Users

* Server Operating Costs

* Monthly Revenue

for

* Reddit

* Fark

* Slashdot

* Digg

I'd assume the other sites would bury Digg (no pun intended) on at least several of those fronts.

reddit has more daily pageviews than digg by a few tens of millions, reportedly. So, their 6(?) person team is outperforming 100+ digg employees in the most important metric (revenue might be more important, but I'm not so sure...if I could pick a site to own, I'd choose the one that is bigger, growing faster, and has dramatically lower expenses).

Source?

As for reddit's size compared to digg here's the infographic: http://i.imgur.com/jiHka.png you can google around and find other sites that go into greater detail on this.

And they currently have 5 engineers (believe this is their entire staff), this post is them pleading for extra funding for the fifth engineer: http://blog.reddit.com/2010/07/reddit-needs-help.html

Reddit also has a non-technical community manager (though I wouldn't be surprised if they got him programming by now). http://www.reddit.com/user/hueypriest

Hacker News could actually really benefit from one of those.

This once again demonstrates that the Wired folks have moments of sheer brilliance, and then they fail to follow it through to its most logical conclusion. Acquiring reddit (for a rumored few millions) was a stroke of amazing luck for Wired/Conde Nast. But, now that everyone can look at the situation and do apples to apples comparisons with Digg and see that it's a far superior community and technology in pretty much every measurable metric, and worth at least as much as Digg, the reddit guys are struggling to pay for enough engineers and machines to keep the thing running smoothly and fast. Part of that problem is I think that the guys best equipped to grow it (Steve and Alexis) have both moved on; the remaining guys are very smart, but I think they were hired for their engineering abilities rather than entrepreneurial strengths. And, I imagine they left partly because they were dissatisfied with their ability to grow and lead from within the Conde Nast organization.

Another way to think of it is that neither digg nor reddit are actually worth that much -- lots of traffic, yes, but no way to monetize it. Conde Nast might just be doing things right, financially, with regards to reddit.

I can't wrap my head around the idea that 300 million deeply interested eyeballs every day is not "worth that much".

It's at least worth more than a staff of six.

Though, I do think Digg has been pretty much valued out of any reasonable exit by raising too much money, and the lack of vision on the part of leadership as exhibited by the tepid new version of Digg (which caters to marketers and major media to the point of absurdity for a "social" site) pretty much insures there's no way to build to something dramatically more valuable. Even if they were to learn from their mistakes, with a staff and infrastructure that big, they'll run out of money before they find their way.

> 300 million deeply interested eyeballs

In the case of reddit, it's userbase is very difficult to monetize -- they've said as much themselves. I think the less you can monetize something the more likely you'll have a lot of users; once you start doing things to monetize your userbase they get annoyed and simply move on.

I think any one of these sites is bad investment because those 300 million users can come and go in an instant. Digg could simply be over now and just takes a few people a few months to throw out the next big thing.

I agree with you, somewhat, but I will play devil's advocate and point out that for the first half of the Internet age, search was considered "very difficult to monetize". So much so, that all the major players started building portals and other BS to make their search more monetizable. This shift left a huge gaping hole for Google to fill, because there were almost no pure search engines left! Digg has gone down a similar path...building up and out to try to send tentacles out into more monetizable spaces, rather than having a focus on their value to their users. reddit remains extremely valuable to its users.

I don't know how they'll monetize it, but I can't help but think that whenever someone does figure out how to monetize a community of that size, it will be pretty serious cash.

why are pageviews more important than visits, unique visitors or revenue?

User engagement. A visitor that spends hours on the site each day, producing content in the form of discussion, is worth a lot more than a visitor that drops in for two minutes in order to spew some spam into the queue, and then leave. I don't think there's any question that the reddit community is more engaged than the digg community...a brief perusal of the comments at both sites will quickly eliminate any doubt.

As for revenue, I said that more pageviews and much faster growth from a much leaner organization was better. There were several variables in my statements.

Besides, it is not a small difference in pageviews. It's ~40%! Which pretty much certainly equates to more visits and more unique visitors than digg.

No matter how you slice it, though, digg is a 100+ person operation that is generating less value to consumers than a 6 person operation. Value to consumers is a reasonable proxy for the kind of revenue you can generate from a site. They just haven't found the formula for monetizing it yet. It doesn't mean the value isn't there.

There were several variables in my statements.

Just a friendly reminder, you referred to pageviews as "the most important metric", thus my question.

User engagement...

While pageviews can be used as a mediocre proxy for user engagement, I don't think it proves your thesis at all. Which is more valuable, 5x the uniques, or a smaller group who loads more pages? Depend on additional variables, no?

Which pretty much certainly equates to more visits and more unique visitors than digg.

As far as I can tell (using compete pro), pageviews is the only metric where reddit wins, with digg winning handily in the others. Digg seems to have 5x the uniques, and 50% more visits. This strikes me as accurate, since reddit is focused on comments, and digg seems to focus more on links.

that is generating less value to consumers

How are you measuring that?

Are you asserting that reddit creates more value than digg, but they fail to effectively monetize and capture it? Or are you asserting that reddit's value is non-monetary, but still worth paying for?

I'd bet money that a Digg user is far more monetizable than a Reddit user.

So I'd say Revenue is the best metric to compare, but I'm skeptical Reddit will ever make much money - their users are spending all their cash on weed.

also for HN

You need a couple of developers, a sysadmin, a designer, some sales guys. Am I missing any other roles?

Don't get sucked into the fallacy of thinking something has little value just because the core idea is very simple.

I don't think he was saying that. He was saying that a simple idea didn't need dozens of people.

The absolute best ideas are simple ones.

Complexity is often a mask for bullshit. Value from simplicity is huge – easy to pitch to anyone from investors to press to new hires to your family. It also makes the success conditions clear – "Am I accomplishing the simple thing I set out to do? No? Let's fix that."

The ultimate merit of simplicity means that roles are very, very clear and you don't need many people to make magic happen. The more people you add to a system, the larger the chance for complexity to creep in and ruin everything.

Which, incidentally, is what seems to have struck Digg.

If they'd stayed small and nimble, the size Kevin liked, they'd not be stuck in quicksand right now.

At what valuation were these VC's putting $40M into Digg? If it was around $100M, then they would only have 40% of the company and 40% of an $80M buyout is $32M. And I can surely see why they wouldn't want to do that.

Liquidity preferences give investors first dig at any cash with a multiple (ie. we get 2 or 3x what we put in before you get your first dollar).

Digg had raised a little over $10M at the time of the acquisition offer - which would have been a decent return. The $30M round was raised in lieu of the acquisition.

They placated Kevin by partly cashing him out as part of the $30M round.

With that additional investment, the de facto decision by the board and management was that Digg is a billion dollar business, not a hundred-million dollar business.

Maybe that is a lesson learned for investors if the founder wants to be bought out early. I bet things would have turned out better if he had all his eggs in the basket still.

It's not uncommon to partially cash out the founder in funding rounds. If the founder gets some cash, ey is less likely to push for an earlier exit. Eir goals are more aligned with the VCs, looking for a larger exit.

This doesn't make any sense.

If you want your founder to swing for a long ball, you have to free him to do so. A partial payout means his utility curve looks a lot more like yours, which is a good thing.

Reddit had quite a bit more downtime and lag problems (frequently 12+ hours) than Digg before Digg went to v4.

So while 100 employees for Digg might be overkill, 6 employees is too few.

I don't think you can draw that conclusion. The Reddit guys (IMHO) have made some bad decisions (Using Amazon for a start), but that doesn't necessarily mean there are too few of them.

What should they use instead of EC2?

broadcast.com?

Boned? We're adults here; you can say fucked.

I curse pretty freely on HN. Boned is just such a great word.

Say it out loud. That deep "own" sound. It's rich, like a chocolate bar. You use "fuck" when your pacing places you in a real hurry, like a using an unstable old log for balance while you cross a brook.

So if you say "Digg is fucked" you end on this gaspy note, waiting for more, which sucks. The quick "kt" sound at the end is most suitable for connection, maybe to say "up its own ass." But that's just crass, and not what I was going for.

On the other hand, if you say "Digg is boned" you can just let it sit there for a moment, sinking in. You've planted the sound of the word firmly. Fuck is for urgency. I wished to convey finality.

It's a Twain thing - "The difference between the right word and almost the right word is the difference between lightning and a lightning bug."

Thank you, that was splendid!

Boned = sex. Never seen it used successfully in any other context; certainly not here.

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