Seems kind of sad that they're digging (sigh) such a big hole. If they had kept things light originally they could have sold for $80 million and walked away with more themselves with much less risk of total failure.

Hiring a bunch of people, fancy office, tons of servers. Totally unnecessary. The site could be run with very few resources if they had made that a goal.

They would have 2 routes. Your route: be a $200k p/m. The other is trying to find some other way of profiting from being popular. One that pays better then adsense.

Google does. People look at Google & say: Online advertising is a goldmine, anyone with eyeballs to sell is gonna make a mint. But Google is doing something different.

Eyeballs are worth money. Sure. But the going price for raw eyeballs (eg adsense) is pretty low. Google don't sell eyeballs (on search). Not in that way. They sell a processed eyeballs (eyeball soup?).

You could look at it like manufacturing. There's raw input (oar, coal, etc) that's sitting under someone's field. That go through a value chain from mining to processing to assembling to retail. The market decides where 'value' is created & compensates accourdingly. Sometimes, it's counter intuitive. For example, many manufactured goods that only have a small part (maybe 10%) of their value created in a factory. Retail usually gets a bigger chunk then you'd expect (often %50+). Here's an ipod.

  oil_well----plastics------components----assembly---retail-----ipod  

  eyeballs-----eyeball soup-------ads--------yahoo stores--salesman--sale  

I am surprised they haven't opened the door to premium members to allow the use of off site scripts etc. It would be additional revenue and a way to hook the power users further. If the fees were reasonable and included additional functionality then I can very easily see people using it and paying for it.

I don't think they're hopeless. The ideal for them is to be bought out. Google wasn't a good match I don't think. I think the best bet is an established news source, NYT, Chicago tribune, Murdoch, or somebody. They're not set to be a self sustaining business, the goal is to get juicy enough to be bought and paid for.

Kevin is more interested in Revision3 I think, so he's selling his shares to step back from it. Or maybe he's going to begin to give Pownce some much needs love and affection, who knows.

156.4M monthly US pageviews 224.1M monthly global pageviews

If they're using this money to cover operating costs for another finite period of time, it points to a failure of their business model since they aren't able to sustain their costs based on their revenue.

Digg has a wide reach, but they don't have great engagement of their users. Going off compete.com's data: Digg users hit 4-5 pages per visit and visit the site less than three times per month. So, their monthly uniques are high at 20-25M, but their total visits are low at 70M.

Digg is a decently impressive service, but community is hard. Google deals with hard issues, but nothing is harder to figure out than people.

Or more cynically, management is looking for some way to monetize their current shares without an IPO or buyout in the near future.

I wonder why that is worrying? Advertisers generally want to concentrate their efforts & reach the same person multiple times rather then more people fewer times.

So Digg is controlled by microsoft? No wonder all the xbox love and zero wii or psp news.

Talk about fair and balanced!

The two of them have done a great job, at every turn, of hiding financial information from the minority shareholders. Meaning me most of all. The fact that it's a guess proves my point. I'm still fighting for 2006 financials.

You aren't on the board and you aren't a major shareholder.

Your shareholder agreement or employee agreement probably state that you agree to vote with the majority in all votes which is another way of saying you don't get to vote (or gain access to the financials).