Will digg die the death of 1,000 cuts?

Someone speculates today that digg is going to take a hit from the hundreds of smaller sites that are going vertical in the social news market place. They make a really nice long list of all the social news sites (let’s not call them digg-clones because delicious is really responsible for the current movement). The concept is why would folks go to digg if they could got to a more focused site in a vertical?!

Well, this argument would assume that digg is not already a vertical and we all know digg is a very specific vertical: young, tech males (YTMs). This is an amazing demographic to capture in large part because they’ve left TV. This means advertisers looking to reach young males are totally lost–they need digg, Engadget, videos games, and podcasts to reach these folks. TV ain’t gonna do it.

That is the huge opportunity for digg: they own that vertical.

Now, the hard truth:
digg is never going to go beyond this group on the digg.com domain name. Now, this isn’t a digg to digg, this is just a fact of life and some friendly advice to Jay and Kevin. When you build a huge, passionate community like digg has (and Fark, Slashdot, Engadget, iVillage, and the Well have), you live and die with that group. If digg wants to go big they should start a second digg for women, and one for politics–they shouldn’t do it as part of digg.

Older folks, women, folks interesting in things like politics, travel, or fashion will never live at digg because the community eats them up and spits them out when they try and participate. This same thing happens at the political blogs (think: DailyKos) and other hangouts on the web. Communities gel and you can’t un-gel them–and that’s just fine.

When I was working on Netscape we realized this early on when the political folks took over the homepage and ruined the experience for anyone who didn’t care about politics. We decided to level the playing field and make the homepage have no more than 2-3 stories from each category. It worked like a charm and Netscape is the “general news portal with some funny stuff.” We did this early and that’s why it worked. digg is not going to be able to break the stranglehold the YTM have on the site–they will always be the #1 social news site for tech/YTM.

The real challenge for Kevin and Co. at digg now is that they probably raised their $8.5m round at 60-80M post-money. That means that the latest round of investors are going to look for 10-20x that amount as an exit. That’s a 600M -1.6B exit. That means they have to get to $30-50M in revenue. That means that Kevin is right when he says they have no interest in selling the company–they’ve got 4-5 years of work to get to those revenue numbers… start building the sales for now because to hit those numbers you need a 20-person sales team.

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