March 19, 2011

For Digg and Other Web Services, 5 Years Can Be a Lifetime

TechCrunch's Sarah Lacy practically writes an epitaph today for Digg following news that the company's cofounder Kevin Rose, the face of the company since its inception, had resigned to pursue a new and unannounced startup. The backdrop of her story is a detailed article she wrote on Rose and the Digg phenomenon back in 2006, when she, then writing for BusinessWeek, placed Kevin on the cover with a youthful grin and headline blaring how he was worth $60 million.

Almost five years later, Digg is an also ran in the Web news influence space, outpaced by real-time social media tools, and traffic was noted to be trending downward for years. The story, whether it has a happy ending or a crash, epitomizes the short-term paths to success or failure for many Web startups, who expect to launch loud, grow fast, and make it big - often in less time than a single presidential term.

That Kevin had shifted priorities away from Digg some time ago was no secret to those who watched. His investments in a wide array of leading Web companies, from Foursquare and Gowalla to Dailybooth, SimpleGeo, Square, Facebook, Twitter and more must have other angels salivating. His Twitter profile was recently reprioritized to read, "Tech angel investor. Founder of," And one can't fault him. As any startup veteran can tell you, years of pushing at a breakneck pace with an insatiable audience can be draining. That he diversified is a smart personal business strategy.

So what of the five years between the $60 million cover and the similarly bold headline of "RIP Digg"? Same people. Same Web site. (Give or take) But a much different story.

Of note, this blog has been running for more than five years, so I can go back to my own reaction to the original story when it broke in August of 2006. At the time, in an article titled, "Digg The Man a Pit To Hide His $60 Million", I picked apart BusinessWeek's assumptions of Digg's valuation, Rose's liquidity and how Rose had become the posterboy for the Web 2.0 movement. I added, "Digg, scarcely known a year ago, in the shadows of Web giants like Slashdot and CNet, has developed organically to be a real kingmaker for all media... But Kevin's not worth $60 million yet. He has a lot of work to do yet to achieve what is a tremendous potential."

What happened after 2006? Twitter launched and Facebook opened up beyond colleges. With Digg seemingly run by an elite group of early adopters who could reach the front page with ease, the common Web user found faster venues to reach many at once, while stories reaching the front page of Digg would take hours. The site seemingly became as hyped for its ability to drive traffic downstream as to provide real value to Web visitors. By 2008, in an article titled "On the Web, If You're Not Growing, You're Dying", I showed how Digg was in a rut after hitting a peak in 2007, placing the site's traffic alongside other floaters, like Technorati and MySpace.

Reaction to the initial BusinessWeek piece was varied, of course. Jason Calacanis complained that the users of Digg would not share from the financial windfall. Om Malik called the headline "Vapor". Meanwhile Steve Rubel compared the cover story to one of Marc Andreesen in Web 1.0 days. Of note, it's interesting that Om, Steve and Jason also are continuing to be visible five years later.

So what else were we talking about back in August 2006? Issues with Microsoft Zune -- check. Topix -- practically invisible these days. The battle for Web privacy. Apple and Google shooting down rumors. Microsoft's Web strategy stumbling. Google launching Apps for your domain. The entrenched retailers trying to stop Apple from adding movies to iTunes. Much of that era sounds familiar, but also quaint.

Five years after the article, Slashdot scarcely comes up any more (though they can still push downstream traffic). Reddit and Hacker News are the hip news submission sites for geeks. Twitter and Facebook are dominant, worth billions. Topix and Technorati are floaters. The time for Digg to make it big seems to have passed, and the only great reason Kevin would have had to stay would be sheer loyalty or inertia. But the Web moves too fast to stay still, and it's obvious the future held more promise than the past, and it was time for him to move.

Five years down the road, I expect this blog to still be publishing. It's probable that Om and Jason and Steve will still be prominent commentators as well. But how we perceive Kevin could be dramatically changed - be it through the value of his next idea or wherever he may pivot next. But think about the other startups out there that have seen well more than their 5th birthday. Are they fading to black or are they ready to lead? Time takes its toll.

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