San Francisco-based startup Digg has been in recent acquisition discussions with a number of companies, including News Corp., according to multiple sources close to the negotiations. However, the company was unable to land an offer in the price range they’re looking for – at least $150 million – and will likely close a Series B round of financing instead.
It appears that rumors of the upcoming financing led News Corp. and possibly others to initiate acquisition discussions with Digg, and the discussions were subsequently opened up to other interested parties as well. No formal written offers for Digg were tabled, sources say, because Digg’s minimum sell price was at least $150 million.
One point of controversy was around Digg’s claim of 20 million unique monthly visitors and steep monthly growth, whereas the Comscore’s most recent September report shows only 1.3 million monthly unique visitors and flat growth since April (see chart below). Comscore is notoriously flaky, and these numbers are for U.S. households only. Comscore is almost certainly significantly under-reporting Digg traffic.
If a firm offer isn’t made in the next week or so north of $150 million, look for Digg to close a $5+ million second round of financing later this year, possibly with Greylock Partners. Greylock is already an investor in Digg, leading their $2.8 million Series A round in October 2005 (Omidyar Network and several angel investors also participated in the round).
I could see 20 million visitors a month because of a hyper active userbase. But 20 million uniques is impossible because that would imply they have entered the mainstream in a major major way. I can’t see there being 20 million unique users in the tech industry in the english speaking world… Let alone all of them reading digg.
I think digg is huge, and has a lot of momentum but to justify that kind of valuation I think they need to break into the non tech crowd then the sky is the limit.
We’re in a bubble…
Dude, How in the hell do you manage to scoop all of these stories? Incredible.
It is ONLY a matter of time before Digg gets Acquire…they are the last remaining of the * Innovative Foursome* that changed the modern Web
Craiglist
MySpace
YouTube
>I could see 20 million visitors a month because of a hyper active userbase. >But 20 million uniques is impossible because that would imply they have >entered the mainstream in a major major way. I can’t see there being 20 >million unique users in the tech industry in the english speaking world… Let >alone all of them reading digg.
Actually, people who read digg doesn’t have to be related to the tech industry. I know several people, who know nothing about computers, and they read digg on a daily basis for sports, videos, political news. My friends even go on digg for the videos that are submitted.
Maybe not 20 million uniques a month, I can see at least 10 million uniques a month.
Compete, (www.compete.com), is showing US uniques at over 2.26 million with a nice spike in the last month.
You can see it at our free Snapshot service (just launched today): http://snapshot...e.com/digg.com/
Disclosure: Compete is my Employer
I do not believe that Digg is the last company yet to be acquired who has been an innovator, but it definitely seems that they should strike while the iron is still hot.
While they do have the obvious possibility of further expanding their offering to the non-tech world, it seems like a deplicatable site that could recreated by any of the big boys. I have found several open source versions, and I am not sure what would stop a yahoo or a google from simply adding Digg features to their existing offering.
I might have missed it, did Craiglist get acquired? (other than the piece sold by a former employee to eBay)
So then, how much is Slashdot worth based on this hype?
Oh, and to the idiot that think Digg is a pillar of the modern web…. wow… just wow.
1 to 2 mm uniques and change sounds about right – which ranks it outside the top 100 news sites on the net. Combine that with the fact that they really have no unique technology (netscape and searchmob pretty put up the same site over night) and no real revenue, and $150 mm seems a bit high. Rupert probably can’t help but chuckle remember the pointcast history as the news corp./ digg negotiations go on….
Wow, if 20 million visitors is true – that’s a lot – the entire population of Australia.
“It is ONLY a matter of time before Digg gets Acquire…they are the last remaining of the * Innovative Foursome* that changed the modern Web
Craiglist
MySpace
YouTube ”
Craigslist???? Are you out of your mind? Myspace….an innovator?
Why the hell do they need more funding?
How can they not be making a profit with the traffic they get?
What’s the ‘barrier to entry’ to creating somehting Digg-like? If the ‘competent’ folks at Netscape/AOL can copy it what’s to stop others..
SeaWeeb..i’ll have whatever you’re smokin if you think Digg and Myspace are innovative. As for CL, it started out as a mailing list and grew to it’s online form over ‘years’ of effort. The only reason it is so austere and hasnt been bought out is that Craig never had ambitions to cash out. Although it is the first to successfully develop community without of lot hype.
Lastly, YouTube is innovative not because of ‘community’ as others would believe but bcause they developed a ‘better mousetrap’ using existing tools to serve up immdiate gratification–somehting Google failed to accomplish despite their intellectual horsepower and fat piggy bank.
Unstoppable growth, best news site around and most fresh brains of the Silicon Valley. This would be a perfect fit for the new media empire of News Corp, hope to see this acquisition really taking place.
Netscape and Newsvine showed that Digg has a natural “Aspirin” barrier to entry and I think it deserves even much more than $150M.
You spelt “source” wrong.. Sorry it was just really irritating me.
“This would be a perfect fit for the new media empire of News Corp”
I don’t think News Corp is interested in paying $150M for a million or so geek visitors, they wouldn’t know what to do with them for a start..
I suspect they’ll just make a myspace digg-clone targeted at the other 99% of the population. It would dwarf digg overnight.
Why do you think Comscore is significantly under-reporting Digg’s numbers yet you rely on Comscore for reliable numbers for all other sites? Digg’s users are 100% tech geeks, which is a terrible market for advertising, which makes Digg significantly worth less than $150M.
And Slashdot’s are what ? 98% tech geeks ?
News Corp would be a disaster and they would lose their entire original base of users if they sold to them.
Now *this* is a stretch. I wouldn’t value Digg any more than Flickr or Delicious (ie, $20-50m). Facebook at $1.5b is a better buy.
Definitely not the time to sell. Give it another year guys.
@21: pwb says
“I wouldn’t value Digg any more than Flickr or Delicious (ie, $20-50m). Facebook at $1.5b is a better buy.”
Are you kidding, I wonder your arguments for this..
Facebook at $1.5b is a better buy cause it’s a marketers wet dream. Peoples info all over the place, trends, likes, dislikes, etc. (MySpace is infiltrated with garbage, fake accounts, and more)
Digg = people clicking boxes for stories/comments they like. Marketers don’t really care about that since most of the stories are predictable.
Hence why Facebook is worth the money.
“One point of controversy was around Digg’s claim of 20 million unique monthly visitors and steep monthly growth, whereas the Comscore’s most recent September report shows only 1.3 million monthly unique visitors and flat growth since April (see chart below).”
Is it *that* hard to understand that Comscore reports US numbers only, and that there the United States, as important as it is, is but one of about 200 countries in the world?
Comparing 20 million to 1.3 million in the same context, and claiming “controversy” is like saying “One point of controversy was around Babe Ruth’s claim that he hit 60 home runs, when the Tigers report that he only hit 2 home runs in Tiger’s stadium.”
THEY ARE TWO DIFFERENT NUMBERS. Why compare them at all? To do so is misleading at best; irresponsible at worst.
“I have found several open source versions, and I am not sure what would stop a yahoo or a google from simply adding Digg features to their existing offering.”
LOL, so ture. I was bored over the weekend, so in about 2 hours, I created this: http://www.lexroll.com
If I can do it, I bet google or yahoo can do it a million times better
I can’t help thinking these big corporations are shooting themselves in the leg when they’re trying to keep up with the buzz. The surfers today are mobile – this day they’re interested in one service and tomorrow it’s something else. I think there’s not much of brand faithfulness here, users go where the best service is and the blogs are spreading the information fast.
On the other side, this way the continuity of these services is secured (at least more than without acquisition). I think in YouTube’s case it’s a good thing. I can’t find any big value in Digg, though – maybe it’s because I’m not using it that regularly anymore to find stuff to read.
Vik,
Did you make that site just from the SourceForge source?
Pretty impressive for 2 hours!
If news corp cant buy digg than these are the most likey player to buy digg.
http://vashistv...igg-buyers.html
Vishal: there are only these players on the pitch, and you say these are the most likely players.. C’mon.. Why would Yahoo! buy Digg, they don’t need any more traffic, they’re already no 1. But they just got sure that their new media kingdom dream lost against Google’s tech-intensive approach, that’s why they’re buying more tech and money making internet-ads companies. Google goes more media, Yahoo goes more techy.
Grrr I hope NewsCorp don’t buy it and turn it into a piece of garbage like they did with MySpace
I’m not suprised they didn’t get the deal , it is run by a bunch of crooks and control freaks, its not really a user driven community, it is more like run bye dicator editors and power hungry top diggers all kevins freinds. I hope reddit kicks there arse they are a true user driven site, anyway my two cents. you diggers can get lost
I heard Mark Curban was interested in buying digg, anybody else here that? Nice one Vik i didn’t know it was that easy to do
Jeff, this is not a matter of loving or hating Digg. I love reddit too, but all in all Digg is very very successful, and now even mainstream users also becoming a part of their userbase. Having geekish userbase is a very good signal for the future; don’t expect to have mainstream userbase just from the beginning, this is not web 1.0 anymore, markets are not so wide now and there’s high competition.
jeff yes digg is controled by editors and reddit will probably beat them in the end, but do you have to be so mean
Digg is a pyramid scheme for information. 150 million dollars?
For a so-called news link site that includes a “spy” feature where you can watch the top 50 users in real time digging submissions at the rate of one per second?
150 million for that?
I don’t see that happening now or in the future.
I read 5-8 tech blogs a day and I don’t use Digg, know how to use Digg or care to use Digg. There are probably only 300k “real” users of the website, but they come back so often that the #’s are inflated. In a way it mirrors SocNet behavior.
I’m guessing that b/c of the series B they are still not profitable? I love how a company that isn’t profitable can command 9 figures. God help us when a website comes out that is actually making a million dollar profit, what would THAT sell for?
Alaska slashdot they would probably go for 1 million, thoughs bastards they just slashdot all theirs buddys they never slashdot real decent sites. If you go to digg and slashdot you will always see the same bloody sites you would think there is only 100 websites in the whole world if you visit them, but theres millions of great sites that never get a chance. But I think reddit will save the they they list anyone that has got a good story they got a good sysytem going there. you submit a story if alot of people pres sonit bingo you on the homepage that is what i call a fair system. Newscorp have a quite look at reddit and maybe you will just find a gem amongst a bunch of stones. ok out of here, I hope this comment rocks your world people.
hey Jeff have you ever heard of spell check
I’m a busy guy i don’t have time for stuff like that
Jeff, no time for spell check, just surfing and posting comments? LOL! Reminds me of someone I know.
I don’t think News Corp cares at all about advertising to this medium.. digg can be used a huge promotional machine. You want a website to get instant notice? Get it to the top of digg. What better way to control this fact, than to control the site.
Digg is worth it, because it’s become a cornerstone of internet culture. And while it may be 100% internet geeks.. that’a alot of “geeks” and more and more “geeks” are normal people, and business owners. This site is read by the very same “geeks”
It’s definitely interesting to watch these acquisitions play out. Thanks for making it easy to be a fly on the wall!
Laura
Digg shouldn’t do this. They should hold out.
comScore numbers are “flaky” BUT they are consistent. I have tracked 000’s of sites over the past years, looking at comScore numbers, Nielsen Net Ratings, my our tracking pixels and actual logs. The comScore numbers are always off, but the discrepancy is very consistent. Based on what I’ve seen, I would estimate the actual DIGG traffic to about 4-5 million unique visitors a month. And based on that, a price of $150mm is ludicrous; there are literally thousands of sites with better traffic. But DIGG, while a great site, is really over-hyped, so the valuation inflation is thriving.
^ did you read last week’s business week on analytics and how none of the sites really pull accurate info, many factors play into what constitutes as traffic, etc? you should. it’s very insightful.
When reporting on Digg, “Comscore is notoriously flaky,” yet when it comes to CNET, Mr. Arrington is content to rely on the Comscore numbers without equivocation. Solid work.
Given that Comscore can’t even spell “source” correctly (see Graph), I doubt that their data is reliable.
150 sounds cheap. I.e., non-bubble-esque.
Can we tone down the bubble-hysteria, please? Let’s wait for actual symptoms of a bubble, rather than look for reasons there is one.
So let’s see. I run a company that’s apparently not even at break even yet that I started with a guy on eLance who got paid $10/hour. I have the opportunity to sell this and come out a millionaire. Considering that (according to BusinessWeek) my total life savings before Digg was around $10,000, it’s only obvious that I should take my chances and turn down the offer and ignore that the market is telling me it’s worth $x. I don’t see any problem letting some VC take even more equity in the company at a valuation that’s probably higher than the amount acquirers are currently willing to pay. Give us a few months and I’m confident we’ll hit break even and grow our eyeballs dramatically.
If any of this sounds absurd, that’s because it is. Could Digg grow its value and eventually get the money it’s looking for? Sure, but what’s the risk and time-cost? Why sell even more equity to a VC and possibly further drive your valuation out of the range buyers are telling you they’re willing to pay when you can walk away with a nice chunk of change? Given the recent demonstration of Digg’s vulnerabilities and the fact that it has absolutely no defensible technology, it seems like taking the money and running would be the smart move. It’s never a bad thing to get out a little early. It’s the people that fall in love with their companies and wait too long that always end up regretting it.
I’m buying Digg for whatever I can find under the couch cushions.