How Kevin Rose got Digg out of the door
Posted in Deserving Twitter Apps on February 18th, 2010 by 2above – View CommentsRose started Digg with $1,200 and an insight about the changing nature of news. Thanks to cheap broadband and easy-to-use blogging software, there was suddenly an endless stream of news, gossip, and rumor about pretty much any obscure topic — say, new versions of Linux or 9/11 conspiracy theories — spread across millions of blogs and websites. Rose and others like him were spending hours digging through these stories and then passing them around to their friends. What, he wondered, would happen if someone harnessed that energy?
Rose signed up for a cheap hosting service and hired a Canadian programmer he met online. He designed the site himself, giving it a utilitarian — even ugly — look. It had no graphics, but it did offer something special: a way for anyone to get his or her news in front of lots and lots of people. In addition to his promotional efforts on TV, Rose started talking up his venture on his blog, which had nearly 10,000 registered users. In January 2005, he described Digg as “a friend’s site and one of my favorite technology news websites.”
Just a month later, a hacker somehow managed to download and post the contents of Paris Hilton’s cell phone address book, and a link was submitted to Digg. Within a week, the site saw its traffic quadruple as the Hilton story wound up in The Washington Post and The New York Times. Digg had its first major scoop, and Rose realized for the first time that he was onto something. He left television the following month, with a plan to make Web videos for fun and to pay for his life by selling advertising on Digg using Google’s AdSense service. “I’d always liked the idea of being independent and working for myself,” he says. “I was sitting in my room thinking, If I can just make a few hundred dollars a month in ad revenue, I’ll be able to support myself, pay my rent, and have a good time.”
The site grew faster than he could have imagined. Rose rounded up $50,000 in angel funding, hired a real designer, and started getting acquisition offers. That summer, just months after Digg’s founding, Jason Calacanis, the founder of Weblogs, offered Rose $4 million for the site. Rose said no. Instead, he persuaded his mentor, Jay Adelson, the founder of a data center company called Equinix (NASDAQ:EQIX), to join him as an adviser and then as CEO. The pair raised $2.8 million from Greylock Partners and some angels. “Jason could have had it, if he had been cool about it,” says Rose. “But he was pressuring me so much that I kind of stepped back and said something isn’t right.” Calacanis was so taken with Digg that, after he sold Weblogs to AOL, he started a copycat site under AOL’s Netscape.com brand. He even offered Digg’s most active users $1,000 a month to defect. (The effort failed: Traffic was flat, Calacanis quit, and the Digg clone was moved off the Netscape homepage in 2007.) Digg’s traffic, meanwhile, exploded. By late 2006, the site had 11 million users.
ps. This article was originally posted on INC.com back in early 2008.
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