Should Kevin Rose have sold digg.com to Jason Calacanis?
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M$2 Answers
The founder of MySpace, Tom, was very wise to sell MySpace to NewsCorp while it was still popular. Now MySpace is strongly for survival!
For better or for worse, people have short attention spans (especially online) and fads come and go. Remember when AOL and Yahoo were popular? Dare I say, remember when Microsoft was the industry giant? Now that torch has been passed on to Google.
If Jason owned digg, would he have taken it to unparalleled heights and brought it to profit in 2 years? I'm not sure what Jason (or anyone) could have done to bring Digg to "unparalleled heights." Though I think the digg.com homepage could be made a lot more attractive and easier.
Ultimately, I think Digg is in big trouble because people are sharing and spreading information now via Twitter and YouTube.
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M$
However, I do know two things:
1)
Jason is a savvy investor. He has "early adoption dna" meaning that he has the ability to spot trends and has enough money and kahunas to take risks.
2)
Rose is a smart dude. I don't say this lightly. He's wicked smart in a bunch of different areas, he knows how to apply his talents and when he doesn't have the skills to complete a task, he asks for help.
Based on these things, I think that Rose did make the correct decision. I have seen my fair share of "funky" deals and sometimes the first funky deal is the best. Sometimes however, your intuition tells you not to take a deal and sometimes that works out. Rose has done well with Digg since Jason's offer and rejecting it has played a part in making Digg what it is today.
Would Digg be better under Jason's control? There is no way to tell. Jason's success is attributed to the people that work with him. He would have attracted different people to that project and those people along with Jason's direction could have either made better or worse decisions.
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M$
Thanks!
Typo in my answer, it should be "Now MySpace is struggling* for survival!"
Very thoughtful answers. Let me give you my answer, which should come as no surprise since the question was loaded. Kevin should have absolutely sold digg when Jason Calacanis offered to buy it; he would have actually been paid twice if he had. How? He would have been paid for the initial sale, and if he wisely retained a sliver of ownership after he sold it to Jason, he would have been paid again when Jason sold Weblogs Inc. Remember, Jason wanted to incorporate it into Weblogs Inc., which would have done 2 things. It would have been used to drive a shitload of more traffic to Autoblog, Engadget etc., and it would have jacked the sale price of Weblogs Inc. to 40 million or higher.
Kevin was a kid at the time with no real concept of how the site was going to make money other than an incorrect belief that lots of pageviews automatically equals profit. He might claim to enjoy trying to dig digg out of its hole right now, but if I had started the site, I would have just gotten rid of the thing in its very early days and counted my money from my 2 paydays. AOL would presumably own digg right now if this sale to Jason had gone through, and it would probably be on its last legs.
I'm really curious to know what these so-called "funky" terms were. Enough time has passed since Jason offered to buy it from Kevin. Can this term sheet be made public, please, Kevin and Jason? Techcrunch would love that, and the final goal in everyone's life should be to please Techcrunch.
Very interesting response and BRILLIANT research. The graph you have highlights your comments above it 100%.