After reading about Digg’s 2007 and 2008 financials in Businessweek & TechCrunch and I wrote not just one but two scathing articles HERE and HERE on Digg because I found it absurd that a 40-million-monthly-visitor top 100 website couldn’t pull in more than a few million bucks in revenue and worse lose a few million each year too. (Especially since my #41,276 website of 3,000 daily visitors has been pulling in roughly $1.3 million/year)
The other day while I was filming my weekly Friday live show LiveStock, my web designer Pallian let me know from the chatroom that Digg’s CEO Jay Adelson wanted to talk with me (watch the video on demand, it’s funny to see my reaction). At first I thought I would have to remove the posts or Digg would sue me, but I was pleasantly surprised to find Jay just wanted to update me as to their recent developments. Very cool!
So, after chatting with CEO Jay and Chief Strategy Officer Mike Maser for nearly an hour the other day, I have to say I was dead wrong about Digg. They may have had losses in the past, but they’ve always been working towards a longer term goal, a popular internet strategy successfully adopted by social network darlings Twitter & Facebook.
The big news was Jay confirmed that Digg has finally turned the corner financially and was EBITDA profitable in 2009. While they are not yet full on cash flow positive, this is very meaningful, much like when the world discovered Facebook was EBITDA profitable in early 2009.
Telling me “we can turn on profitability anytime we want”, Jay explained Digg is preparing for a wide-ranging overhaul and instead of rushing, their investors have agreed that the focus should be on building a robust real-time-based platform before any large rollout. Jay hinted this new platform would be unveiled in the coming months, but wouldn’t be pinned down on any deadlines (probably a result of Kevin Rose saying it would be 6 months max…in THIS interview 10 months ago.)
More importantly, Jay and Mike talked in great detail about Digg Ads which were just recently introduced in the fall of 2009 saying these ads tripled the forecast models with click through rates in the 4-5% range, representing a quantum leap over the industry norm of under 1% and are currently sold out due to solid demand.
When asked why Digg needs 85+ employees, Jay and Mike said the new hires went directly to the engineering and sales teams who are focusing on building out and monetizing the new platform and Digg ads. Not just “to keep the servers humming” as some (like me) mistakenly believed.
Now don’t get me wrong, this isn’t a business lovefest—I’m still cynical and Digg has a long way to go before I give them my respect, especially if articles like this about how Twitter and Facebook will always be crappy companies holds any weight, but I am impressed how quickly Digg has stemmed their losses basically through the introduction of one new advertising product.
So to the entire Digg team, especially Kevin, Jay, Mike and all of my readers who have become accustomed to me ripping apart frauds and penny stock pump and dumps—I apologize for the nasty, adolescent things I wrote. Digg HAS built something impressive and obviously well loved and it’s exciting to report on this seemingly key inflection point.
Digg has the momentum and plenty of resources to ramp their early monetization initiatives. Especially if their ads catch on with their nearly 40 million monthly visitors….now let’s all guess the month they actually introduce all these new features!
(C’mon Diggnation, show the love that your company is finally nearing profitability!!!…I don’t think I’ve ever gotten anything more than like 5 Diggs before, this could get interesting)