Digg's Tech Team Heads for the Washington Post, and Digg Looks for a Lifeline
Digg isn't done. Yet. — But it's looking pretty close. The Washington Post is in the process of buying/hiring the news aggregator's technology team, but isn't purchasing the business itself …
Context & Ripple Effects
Digg had spent years pursuing a sale, from its 2007 effort to find a $300 million-plus buyer through reported interest from larger technology companies. Its 2011 relaunch and Newswire experiment were attempts to restore relevance after a documented decline in user interest.
The Washington Post is taking Digg’s technology team without buying the business, separating the asset it values—engineering capability—from the consumer-news brand. Reports of a full Post acquisition remain unconfirmed.
First-order effects
- The Washington Post gains Digg’s technology staff, while Digg loses the team responsible for maintaining and developing its product.
- Digg must seek a lifeline for the standalone business even as its most transferable asset is absorbed by a media company.
Second-order effects
- The arrangement gives the Post a faster route to add social-news product capability than building an equivalent team internally.
- For Digg, any buyer or operator evaluating the remaining business must value its audience and brand apart from the departing engineering organization.
Third-order effects
- The deal points to a quasi-exit model in which distressed consumer-web companies can be broken apart: established publishers acquire talent and know-how while the original service seeks a separate future.
- If repeated, capability acquisitions would make engineering teams a more liquid asset than the consumer brands they built, especially after failed efforts to sell whole companies.
The trend: Digital publishers are treating acqui-hires as a way to acquire product capability without assuming ownership of a struggling consumer-web business.