Today the media has been going crazy because they believed that Digg sold for $500,000, which is a lot lesser than the $200 million acquisition negotiation that was happening back in 2008. The company that acquired Digg was Betaworks, which is known as the company that Bitly spun out from.
Betaworks founder John Borthwick will become the new CEO of Digg and the website’s current CEO Matt Williams will become an Entrepreneur in Residence at Andreessen Horowitz. Digg founder Kevin Rose now works at Google for their venture capital subsidiary firm Google Ventures. Google acquired Rose’s newest company Milk Inc. in March.
The $500,000 acquisition does not make much sense because the website still gets a lot of traffic and they make more than that in a year by selling ads. Digg CEO said that “the overall consideration is significantly larger” and includes a combination of cash and equity.
Betaworks said that they will turn Digg “back into a startup” with a low budget. They will have a small team and will have fast update cycles. That is great news because the current version of Digg is clunky.
None of Digg’s employees will work for Betaworks. The News.me will take over the management team at Digg. Betaworks said that the “cloud-based version of Digg” will complement News.me’s iPhone and iPad apps.
Digg CEO Matt Williams said that his team ?considered many options of where Digg could go, and frankly many of them could not live up to the reason Digg was invented in the first place ? to discover the best stuff on the web. We wanted to find a way to take Digg back to its startup roots.?
In May, The Washington Post hired 15 of Digg’s technical employees. Digg raised $45 million in funding total and the last funding round was $5 million exactly one year ago. When Digg raised that round, the company was valued at $35 million.