August 04, 2006

Digg The Man a Pit To Hide His $60 Million

By a significant margin, the story demanding the largest amount of buzz on the Web in the last 24 hours has been BusinessWeek's cover story on the latest generation of Web 2.0 leaders who have developed some of the Web's biggest brands in a short amount of time. This week's cover boy is Digg founder Kevin Rose, smiling giddily, with two thumbs up, and a headline saying he made $60 million in only 18 months. If only that were true. It's a great headline, one that has drawn a lot of attention, but it just isn't true.

BusinessWeek makes a number of critical errors in its jump to a monetary stat. It first assumes that Digg is worth a valuation north of several hundred million dollars. It then assumes that this valuation is liquid, and that Kevin can access his share of the large pie, netting him what they approximate as $60 million. Truth is that Digg is only netting the single-digit millions yearly in revenue, let alone profits, and it remains a very small company, run by a determined young entrepreneur, verging on the edge of becoming an Internet media powerhouse.

Those who remember the first wave of Web worship no doubt remain skeptical over BusinessWeek's adoration of Kevin and others who have made tremendous Web products and not yet made the connection from leading brand to leading profits. And now BusinessWeek has made Kevin, a good guy from all we can tell, the posterboy for the latest wave, for better or for worse.

Digg, scarcely known a year ago, in the shadows of Web giants like Slashdot and CNet, has developed organically to be a real kingmaker for all media. The brightest of old-school newspapers like the Washington Post, Wall Street Journal and the LA Times have incorporated new tech tools like Digg and Technorati into their Web coverage to assist with linking and the word of mouth that can springboard a story to the next level. But Kevin's not worth $60 million yet. He has a lot of work to do yet to achieve what is a tremendous potential.

All that aside, nearly all the leading publications have taken the Digg story and run with it. Here are a few of the best responses: (Jason Calicanis, GigaOM, Good Morning Silicon Valley, MicroPersuasion, ValleyWag)

Listening to ''A Rush of Blood to the Head'', by Coldplay (Play Count: 7)

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