Seems like major congratulations are in order for my friends Jay and Kevin at digg.com. According to TechCrunch, and months of speculation after they hired Allen & Co. to conduct a sale, it seems that digg is going to sell for $200M to Microsoft, Google, or Newscorp. Folks put digg at around 200m page views from what I understand, so that makes me believe digg is making $1700k-1M a month in revenue. So, for a $10-12M a year business to do a $200M exit is amazing (20x top-line revenue). My guess is a buyer would think they could launch in 5-10 other markets and double the current market size in order to build the site out.
I remember meeting with Kevin Rose when the site was less than six month old to try and get him to sell it to Weblogs, Inc. for a couple of million bucks. Looks like he made the right move huh!? (Something Kevin reminds me of all the time, and I'm sure he will continue to do for some time :-).
Should they sell to Microsoft, Google, or Newscorp if all the offers were the same? Frankly, any three of those options would work well as each of those companies is getting better are running multiple brands. Newscorp has given MySpace the room to grow, Google's done an amazing job with YouTube, and Microsoft's Zune and XBOX groups show they can be hands off.
The biggest surprise in all of this is that Yahoo and AOL didn't make a strong play for digg a year ago. Those two companies have amazing display advertising businesses that would have been amazing when coupled with digg.
congrats again to Kevin, Jay, and the team... lots of hard work and what looks like an amazing outcome.
1. Microsoft and Newscorp are most likely to screw things up. I can't imagine what Microsoft is thinking other than denying Google. The average Digg user is anti-Microsoft and anti-Fox/Myspace/Newscorp. Buying the site will only increase their fury. Google would benefit the most. Digg would be a great asset if they went down the Portal strategy.
Posted at 3:05PM on Mar 7th 2008 by magnusdopus