Raw Sugar is Toast; Is Digg Next?

From Haaretz, via Micropersuasions: Raw Sugar, an Israeli Del.icio.us clone, shut down.  The company was privately funded. RIP.

This comes a few days after Conde Nast-owned Wired totally violated any speck of ethical disclosure policy and called for Digg to become the Friendster of 2007 without mentioning that its own parent company had bought Digg competitor Reddit.

Then again, they also called for Google’s (GOOG) stock to hit $1,000, so who knows if they were being serious. Is Google on pace to be worth more than Microsoft (MSFT) and on its way to becoming the world’s first trillion dollar market cap company. Not sure, but Google $1,000? Crazier things have happened… like Google $500, $400 etc.

Will Digg pull a Raw Sugar and shut down next year? Any time? Probably not. Will it crash to earth? Well, not crash. Will it become a Friendster? Maybe.

There seem to be many resemblances to Friendster, and Steve Rubel does a good job showing how the Web’s fickle audiences change tastes makes this a reasonable comparison. Of course, Digg has a lot more money raised than most companies in social bookmarking, but that adds to the pressure because they’ll have to expand their business quite a bit to satisfy the lofty VC money and what not.

Suddenly, the sale of Reddit and Delicious do not seem like bad ideas. Of course, many people said the same thing about MySpace (NWS), and look at its post-acquisition growth.

In the end, it all boils down to people and personalities.  To folks like Mark Zuckerberg and Kevin Rose, maybe it’s best not to sell. For others (and I’ve worked with and for the type), selling is the only real option cause they won’t be able to handle the ensuing growth and larger company.

People are human; business is secondary to that basic premise.

Comments

[Michael Eis...:]

from your last two posts, you don't seem to have a warm place in your heart for digg....

2007 Jan 01 10:19 AM

[Ashkan Karb...:]

hey Michael, happy new year.

I actually think Digg was quite novel when it launched, though I always felt that the commenting aspect created more noise than value.

On a somewhat philosophical value: things come full circle, and Digg is no different. How does the fact that, say, the top 20 Diggers determine what goes on Digg's main page any different than the editors who choose what goes on CNN's main page? Digg has become exactly what it sought to "replace" or "improve."

I think my comments represent my thoughts on the social bookmarking space in general, which is getting out of control. I also think the user-generated content / user-attributed space has gotten ahead of itself. Mind you, I should disclose that I am in the business of creating and aggregating content, so seeing financiers get so psyched about user-attributed content (which to me is akin to building a house on quicksand) is surprising.

In the offline world, we do not expect others to do our work and us walk away from the value created. Yet investors are banking on this phenomena in the online world? That seems dangerous.

I have nothing against Digg per se, but seeing a social bookmarking site raise $8.5 million in Series B financing raises some questions about the giddy level of the market - especially when the founders think that $150 million is fair price to sell.

You can see my thoughts on what to expect in the space under #2, and #3 mainly, here:

Top 10 Trends of 2007
www.watchmojo.com/web/...

Regards

2007 Jan 01 11:31 AM

[Sal Cangeloso:]

I think some anti-Digg sentiment is warranted. I mean, it is an amazing site which I think will do well in 2007, but it is very easy for a bookmarking-style site to fall out of favor. What must be remembered though is that when something new comes along, the older ones don't completely fall apart and lose all their value. For example Digg took a lot of readers from Slashdot, but Slashdot still does well. Reddit might take users from Digg, or Delicious, but neither will loose much value. When dealing with the web, being second place can still be very profitable (though the founders may not be able to sell at the point of a site's highest value).

2007 Jan 01 12:13 PM