But it was pretty obvious much earlier on that Digg had zero respect for its users. In many ways, Digg had a very old school broadcast attitude: the users were merely part of the product, only the advertisers mattered.
Digg were apparently sustainable at their prior valuation, and with their existing userbase.
Icarus problem.
Digg was viable previously. Hence the Icarus problem. They tried to fly too high.
Most startups are stillborn. That's a different Greek myth.
Don't get me wrong, I think they'd have been far better off taking far less money and simply being a profitable property. I think nearly all startups would be better off doing this. I just don't believe that digg did anything abnormal for a typical startup.
This is the same problem Facebook is facing having promised investors astronomical per-user revenue. They continue pissing off their users and if they aren't careful the next ad-based redesign could be the turning point.