It’s always fascinating to see how startups are growing. In San Francisco, there are a lot of technology companies being created practically every week or every month. Some fail and others succeed. But it’s pretty astonishing to see how one company has ballooned to such success over the course of the past few years only to really hit the wall hard and then start plummeting downward. One instance that comes to mind is the social bookmarking tool Digg. For the past few years, Digg has become a great resource for people to find out interesting pieces of information based on popularity vote – in fact, it almost made it seem like we were all back in high school and had to vote for student council president. But the most popular stories were always interesting and that helped make the site succeed. The overall feature provided by this service was sound and really had potential, but then over the past couple of years, there have been some turmoil that has occurred that has slowed the growth of Digg that may have some pretty concerned.
Were the signs all there? I’m not entirely sure, but there are at least a couple things that were good indications that something was amiss at the company:
- CEO Jay Adelson was fired from Digg in April 2010
- Digg announces new version of its software which gets panned by critics and users leading to some leaving for Reddit
- Layoffs start to occur and then hits the company again leading to a workforce of about a little more than 40 people
- Recent news about Digg supposedly “gaming the system” with multiple accounts
Amid speculation about the growing disservice and tragic misdirection of the company, is there some silver lining that awaits people at Digg? Will they be able to once again reclaim that glory that they once had when they were about 100 people strong and were (rumored) almost acquired by either Current or Google? Or has this ship sailed too far off-course to really salvage itself? In the midst of the top social networks and web 2.0 companies in the Silicon Valley, it seems that Digg has befallen the same fate of Yahoo and is struggling for redemption…has its time passed?
Let me further clarify what I’m talking about…I’m not suggesting that Digg is in trouble, but rather that they are in a position in their life cycle where they’ll have to look back and determine whether or not their growth was rather aggressive – meaning, did Digg decide to run at full steam before they learned how to walk and if so, did they run way too fast that resulted in them hitting a glacier like the Titanic which now has them spiraling out of control? It does seem like Digg has managed to get themselves into a quandary by moving forward with innovation a bit slowly and then having all this negative PR hit the airwaves. From posts about founder Kevin Rose’s news about how he wanted to see more innovation for the company to insights about how he wanted to have the company be acquired but became upset when it wasn’t, there’s a lot going on within the company and to say that there’s been turmoil and unrest within the company is probably an understatement.
Dozens of smart engineers and product people at Digg are being let go this year and many have wound up being eagerly picked up by other companies – established or startups, and this also applies to the executives as well. From numerous CEOs being turned over every few months to CFOs leaving, the question that might want to be on everyone’s mind is who’s running the show? Kevin Rose has been reportedly interested in leaving Digg by the end of this year and from Jay Adelson’s recent departure to Rose retaking the helm only to relinquish it to Matt Williams months later, the internal turmoil is too much and I wonder whether something will happen that will boost the business back to a point where they can rebuild and achieve their former glory.
In a tweet I posted after Digg’s recent layoff news, I wanted to know when a company stopped being considered a “startup” and when it began being an actual business. Is there a real distinguishing mark that people can use to determine whether a company has really been a startup and when it’s now a real company? In the case of Digg, which is it? A startup or a business? If it’s the latter, then it might have grown way too fast and now with all its cost-cutting measures and recent press “failures”, it should resign itself to being designated as a startup once again and then follow the examples of Eric Ries and trim the business model to become more lean. Clearly with the failed redesign of its version 4.0 edition to it now being all about not being able to monetize the site enough, Digg is in a struggle to save itself and it needs a way to move itself forward without having its ship be cast off into the sunset set adrift without any direction.
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