Well claiming complete non-awareness of the popular competitor just seems a little odd. It would be kind of like Mozilla saying they weren't aware of IE - sure execution is all that matters, but it's curious why you'd say that.
http://techcrunch.com/2005/06/18/profile-digg/
So is it that absurd that they started on Reddit without knowing about Digg? For that matter, TechCrunch wasn't that popular either in 2005.