Digg gets bags of cash, but for what?

by Mathew on September 24, 2008 · 6 comments

So Digg has raised an additional $28.7-million from its various financial backers, according to a blog post by co-founder Jay Adelson, a press release from the company, and numerous reports from the blogosphere. That’s almost three times as much as Digg has raised so far, in two previous rounds of financing. Why so much? That’s not really clear. Jay says the company wants to focus on growing internationally — but is it really going to cost that much to translate Digg into Spanish or French or Kazakh or whatever? (Erick Schonfeld at TechCrunch says that Digg wants to focus on growing internationally because its traffic in the U.S. is flattening out).

The other thing Kevin mentions, along with “new features,” is infrastructure. I have no doubt that Digg pushes a lot of bandwidth, and no doubt uses a few boatloads of server space as well — but almost $30-million? Does it cost that much just to develop some analytics for partners like the New York Times? Of course, Digg also says it’s going to hire another 75 people and move into a new office, which will definitely crank up the old “burn rate” a little bit, as Valleywag notes. Om says he has it on good authority that Kevin Rose pocketed some of that money by selling some shares, and I’d agree with Om that if he did then he should be congratulated for taking the opportunity to make that old BusinessWeek cover a little more true.

  • Pingback: VC’s Are Livid With Digg: Wanted Cash For Digg “BlackMarket”, Not “More Bongs and Beer”. | TekPopuli

  • Thusenth

    The concept of Digg is a powerful one, much like Facebook – but both are hard to monetize and I treat both as a commodity personally. I jump on Digg to see the most dugg stories in the categories I care about sans the goofy photos which are always the most dugg, then I get out of there. Digg tries to be everything to everyone when it comes to news aggregation which is a long-term project, but I'd rather just hang out on TechMeme, Autoblog, and Gizmodo and get what I care about now rather than let Digg guess for me. To give them credit, the recommendation engine isn't half bad.

  • http://techfold.com rod / techfold.com

    For What? is exactly what I thought when I read the press release/blog entry from Adelson too. Their answer to their inability to break out of their community imposed niche in the states is to…. try again in different countries. Huh.

    I suppose its the founder's imperative to always imagine that their property has the potential to be something more than another iteration of its current state, but in the case of Digg, I can't help but think that it is already what it will ever be: a center for a small, passionate community that will sustain a nicely sized small business, possibly getting acquired as an quick ad inventory grab.

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    Everyone wants to get on the first-page of the site and many are willing to pay for it or take extreme measures to do it. But the exposure you get from Digg is not for everyone.

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    It might not make as much sense, or be as effective, but it still makes sense to try to get on Digg.

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    in two previous rounds of financing. Why so much? That’s not really clear. Jay says the company wants to focus on growing internationally — but is it really going to cost that much to translate Digg into Spanish or French or Kazakh or whatever? (Erick Schonfeld at TechCrunch says that Digg wants to focus on growing

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