Photo: Flickr / Joi
Last week, Betaworks, a small, privately held company in New York bought a website called Digg for $500,000.This was shocking news to the Internet industry.
Just six years ago, Digg was a hot startup fielding big buyout offers. News Corp. wanted to buy it for $60 million. Al Gore took a look at snapping it up for his Current TV channel. A Google deal for around $200 million came agonizingly close to fruition.
But perhaps we shouldn’t be surprised at Digg’s fate, because its creator—a tech whiz and creative product inventor named Kevin Rose—has a way of creating amazing products and then neglecting them.
You could say his own career is the ultimate example of this cycle of unfulfilled promise.
Colleagues paint a picture of Rose as a brilliant product designer with an uncanny sense for the perfect user experience who was plagued with an utter disinterest in day-to-day activities.
The twilight days of his two biggest projects—an experimental app laboratory called Milk and the news aggregator Digg—are eerily similar, and speak to his core nature.
Below is a chronicling of his days at Digg, Milk, and the times in between, pieced together with interviews with several individuals that have worked with him or know people that have worked with him. Unless specifically named, our sources have asked to remain anonymous. Rose did not respond to a request for comment on this story.
Leaping from backstage to the hot seat at TechTV
Kevin Rose’s first gig was actually running cables for TechTV as an IT guy. By chance, he had stumbled onto a golden nugget of information related to Windows security, and was put on camera by TechTV’s Leo LaPorte.
Rose was a natural on screen.
As a result, Rose—just a tech junkie with a little bit of drive—was hired as a production assistant for one of the most influential shows in technology at the time in 1998.
Shortly after that he met Jay Adelson—whom he brought on to TV for a segment on one of Adelson’s companies.Rose always wanted to be an entrepreneur. Adelson, a tech-company founder with a background in film and broadcasting, always wanted to produce segments.
It was a perfect match. Adelson became a mentor to Rose, and Rose would often stay with Adelson and his family in New York.
Rose began kicking around ideas for a social-news aggregation website, which would go on to become Digg—one of the most-hyped startups of the Internet age, promising to “democratize the news.”
Adelson spent some time consulting and mentoring Rose, encouraging him to build a prototype of the site.
The drive and passion of Rose was hard to resist and eventually, Adelson caved, and joined Rose full-time on Digg.
Becoming King of the InternetRose became a media darling thanks to the swift success of Digg, which captured the minds of a young segment of tech-savvy teens and twentysomethings who spent hours voting headlines up and down.
TechTV went off the air after Comcast acquired it and folded it into another cable channel, but Rose found another outlet: Revision3, another startup he and Adelson cofounded. Its lead broadcast: Diggnation, Rose’s take on the top headlines on Digg. He and cohost Alex Albrecht frequently drank beer during episodes—a mild style of bad-boy behaviour that endeared him to millions of online fans.
As a result of Digg and Diggnation, his intertwined enterprises, Rose was a magnet for fresh, young Web talent that looked up to him and dreamed of making millions by turning Rose’s brilliant ideas into reality.
Rose wasn’t even 30 years old. He already had two of the hottest properties on the Web. Rosemania hit critical mass after BusinessWeek put him on the cover.
All along, Rose maintained that he wasn’t in it for the fame—that he just wanted to design products. But hiring a bunch of true-believer fans inevitably had an effect.
“He didn’t surround himself with older, wiser people,” a colleague said. “He wanted to surround himself with people who adored him, and I think that was probably a weakness, not finding someone who could say no.”Rose had Adelson, it’s true, and advisors like experienced tech exec Brett Bullington and David Sze of Greylock Partners. But he never took enough advantage of their advice.
For a while, though, the Digg crew was unstoppable. With Rose fully engaged, the site rocketed to tens of millions of users.
Photo: via Facebook
Burying the Digg acquisitionBy late 2006, Digg was already attracting suitors. Rose, who already showed some signs of wanting to move on to the next project, was ready to cash out.
Early in Digg’s life cycle, a product person at Yahoo pulled Rose aside, saying he felt Digg could sell to Yahoo for $40 million. Yahoo, then riding high, had just snapped up a host of social Web startups like Flickr and Del.icio.us.
Around this time that Digg entertained the thought of selling to News Corp., which had recently acquired Myspace and a host of other Web startups, for $60 million, according to one of his colleagues. (Rose admitted as much at TechCrunch Disrupt in 2010, saying the deal was for $60 million with a $20 million earnout clause.)
Here’s what happened: In late 2006, Ross Levinsohn, then president of News Corp.’s Fox Interactive Media group, approached Digg. The executive team, including Rose, Adelson, and two others flew to Los Angeles to meet with Levinsohn.
This would be a hell of a payout, but Rose’s board was not having it. They had faith in Rose’s ideas and design ability, and wanted him to see it through.
“You don’t have any idea how it feels to have someone tell you you can’t sell your company for $60 million,”
“You don’t have any idea how it feels to have someone tell you you can’t sell your company for $60 million.”
Rose said, according to one colleague.
At this time, Rose owned about 60 per cent of the company. A sale to News Corp would put $36 million in Rose’s Wallet. He was 29 at the time. His staff would also get a big payout in return for their belief in Rose.
“He thought it was stupid, fucking insane,” one colleague said.
That’s not to say Rose wasn’t getting paid for his time. Digg had raised $8.5 million in its second round of funding. Rose sold some shares in that round, according to one colleague. (At the time, the notion of money in a financing round going to a founder instead of to the company was far more controversial than it is today.)
Rose may sound bitter about all this today. But at the time, he didn’t make much of a fuss. Rose hates conflict and “will do anything to get out of it, if possible,” according to one former colleague.
As soon as that deal fell through, Rose “hit the eject button,” the colleague told us.
Rose’s ‘side’ projects
Bored with Digg, he began working on a number of side projects—some of which gained some serious traction.
The members of Digg’s board, who wanted the savvy Rose around to help run the company he cofounded, were livid.
In summer 2007, Rose began working on a “secret” startup that would go on to become Pownce, a file-sharing application that presaged Dropbox.
Digg’s board insisted that Digg shareholders should have a piece of Pownce, given that Digg’s founder and a top designer, Daniel Burka, were working on the project.
This was not helping morale at Digg, and that led the board to tell Rose he wasn’t allowed to have any more side projects.
Photo: Flickr / gillat
Rose’s design abilities were obviously a key asset to Digg. But if he was going to be this distracted, Digg would be better off finding someone else.
Rose took even more money off the table when Digg raised $29 million in its third round of funding in 2008, according to one colleague—with Adelson’s approval.
“Adelson counseled us, saying, if you are offered those kinds of deals, you should take them because it’s a great way to mitigate your risk,” a colleague said.
But if Rose started another side gig, the board threatened to fire him, according to one colleague.
That didn’t stick. Rose decided to begin work on WeFollow, a Twitter directory, in early 2009 without telling anyone. He unveiled WeFollow at the South By Southwest conference in 2009.
Once again, Digg’s board was pissed, and asked Adelson to fire Rose, but Rose and Adelson had negotiated a mutual protective clause. Neither could be fired without the other’s consent.
In late 2009, Digg “magically” acquired WeFollow, as one source put it. This was all wrapped up in an earlier secondary deal with an earn-out that allowed Rose to take $6 million off the table, a colleague said.
A big chunk of that sale was locked up in an earnout agreement, forcing Rose to remain at Digg. But even with that financial reward dangling in front of him, he remained disengaged, only coming in once a week.
Digg’s board had essentially funded Rose’s diversion, and he was already thinking about what he wanted to do next.
Kevin Rose, angel investor
Angel investing was a natural fit for Rose, since he had an incredible eye for both design and talent. Investing also required far less day-to-day commitment than actually working to make a project a success.
“He can look at teams and know very quickly if they have the fire, and they have the creativity, and if they’re on to a big idea,” a confidant of Rose said. “He’s a young entrepreneur himself, he’s a very good gauge of talent.”
His investing career further fed Rose’s distraction from Digg.
As the Internet’s It Guy, Rose had a level of connectivity that had other angel investors jealous. Young entrepreneurs—like those he’d hired at Digg—looked up to him.
By late 2009, Rose had begun investing in earnest, and already had a big portfolio of white-hot startups like Twitter, OMGPOP, and Foursquare.
Here are some of his other investments, according to Crunchbase:
- Twitter — in $15 million series B round. Now worth $8 billion.
- Zynga — in $15.2 million series B round. Went public, now worth $3.5 billion.
- Square — in $10 million series A round. Now worth $4 billion.
- OMGPOP — in angel round. Sold to Zynga for $210 million.
- Foursquare — in $1.35 million angel round. Now worth $500 million.
- Gowalla — in $8.29 million series B round. Sold to Facebook.
- Path — in $2.5 million angel round. Rejected $100 million offer from Google.
- Fab — in $7.7 million series A round. Now worth $700 million.
“He’s a good fisherman,” a colleague said. “He can see through the pitch to a real core differentiating idea. Even if he can’t express it in words, I do think he has an instinct.”
“For someone like Kevin, that’s heaven.”
With those investments also came connections with some of the top entrepreneurs in Silicon Valley: Jack Dorsey, who founded Square and Twitter; Dave Morin, who founded Path; Ev Williams and Biz Stone, the other cofounders of Twitter; Mark Pincus, founder of Zynga. Rose was in with the in crowd of Silicon Valley.
Investing saw Rose at his absolute A game. Rose’s peers described him as a guy that “loves to be involved in early-stage ideas and figuring out user experience.”
“For someone like Kevin, that’s heaven,” a confidant and colleague said.
Rose’s heaven, though, was Digg’s hell.
Rose’s wilting desires
As Rose began investing, he became more infatuated with rapidly cycling ideas and creating products, and had become more and more frustrated with Digg.
He turned on his own biggest fans, complaining that the engineers he had hired were subpar talents.
“We were growing so fast that our solution was throwing warm bodies at the problem,” Rose said in an interview on This Week in Tech. “We got a lot of B and C-grade talent, they bring their C and D-grade friends in, and you have a big challenge on … bringing in new talent.”
Meanwhile, Rose was losing control of Digg’s user experience to a cabal of power users who gamed the site’s front page with ease, and the Digg team didn’t have the technical prowess to overcome them.
Instead of taking the approach that a tech powerhouse like Google might, the Digg team hacked together some “levers” that they could pull to temporarily defeat the cabal. It was a losing battle with Digg’s most devoted users.
“It was two years of us largely riding out the successes of a product that was launched late 2006,” one colleague said. “We spent two and a half years rewiring all of Digg and hiring while the thing was still flying.”
That was obvious when Google considered buying Digg for nearly $200 million. Google engineers took a close look at Digg’s tech, and interviewed Digg’s engineers. Convinced Digg’s technical team wasn’t good enough, Google killed the deal.
Once again, Rose had lost out on making himself, and his team, millions. Google walked away with the deal one day from closing. Success was ripped away from Rose at the last possible second.
Even with his part-time status, it was still a crushing blow for Rose.
“It was a very dark time,” a colleague of Rose’s said. “Someone says, ‘We’re gonna give you $200 million,’ and literally the Google deal fell through at the very last minute.”
Rose would stand off to the side during meetings, not saying much. In board meetings he would sigh and shake his head and say, “This isn’t what Digg was supposed to be about.”
“He was clearly frustrated,” a close colleague said. “It’s like LeBron James with the Cleveland Cavaliers. I think that frustrated him.”
“It’s like LeBron James with the Cleveland Cavaliers. I think that frustrated him.”
That’s not to say Rose was losing control of the company. In fact, everyone of Digg—all the way up to the board—cherished every bit of input Rose had on the company.
But the devastation from the failed Google deal made it more obvious that Rose wanted to sever his connection to Digg.
At least, that’s how it seemed until April 2010.
The catastrophic redesign
Seemingly out of nowhere, Rose decided he wanted to be involved with Digg again, and he suddenly ousted Adelson, his longtime partner, as CEO.
Here is the story we heard:
Digg had paid to move Adelson to California—which was especially hard on Adelson’s family, and particularly his children—and had been planning a redesign to “version 4,” or v4, for short, for some time.
But it seemed the company was floundering a bit under the command of Adelson, with Rose taking a huge step back from Digg.
So at dinner one night, Rose decided to make an announcement: Adelson was out, and he was taking over as CEO. Digg would announce it to the rest of the company and the world the next day.
Adelson was fired by the board, Rose didn’t exercise his veto, and Rose’s first order of business was to basically fire anybody that Adelson had brought in to do product.
For a short while, having Rose back full-time had a lot of people at Digg very, very excited — particularly his board, who was hoping he would come back with fresh ideas and invigorate everyone.
“Everyone hoped Kevin would be the saviour , you could take Kevin and plug him back in and he’d be this lightning rod and reinvigorate everyone,” a colleague said.
Portions of the redesign were actually unveiled to massive applause from Digg members and press in the audience at the South by Southwest conference in 2010, according to one source.
But Rose came back, took a look at the revision, and threw out the redesign. Months of work were trashed, and v4’s launch was set back by about six months.
“I don’t know if Kevin didn’t like where it was going, or if he got a bug up his butt, but he was going full steam,” a colleague said.
Photo: All Things D, Gawker Media
Some engineers were pissed for having their work trashed. But most everyone at Digg was ecstatic to have Rose back on board.When he came back as CEO, he was meeting with everyone on staff, hammering out ideas for products.
“That was probably the most fun I ever had with him,” one colleague said.
But Rose’s short attention span and distaste for the day-to-day grind returned quickly.
Amazon executive Matt Williams joined Digg as CEO in August 2010, with Rose stepping down once again and taking a back seat to running the company, just six months after coming back full speed.
“He just ran out of energy for that,” a colleague said. “It was always like fools’ gold, he would two weeks later decide he didn’t want to do it.”
And it was clear that v4 was an absolute disaster that decimated the site. This was despite the fact that v4 was essentially everything that Rose had hoped to achieve in the redesign.
Photo: Business Insider / Matthew Lynley
Distilling Kevin’s talentA month after leaving Digg, Rose unveiled his new venture—a rapid-prototyping app laboratory called Milk.
The idea was to craft a startup in which Rose would never be in a situation where he would be bored. He would always have the opportunity to work on early-stage ideas, which he thought was the most exciting part of starting a company.
Rose actually began working on Milk in February 2011, hunting down engineers and scratching down the first ideas and prototypes for Milk’s first project.
Milk was immediately met with acclaim, as it seemed to capture Rose’s talent at its very essence: working on early-stage products and user experience for several different projects.
He recruited fellow Digger Hodson and a small squad of engineers and designers to bang out its first product, a review application called Oink.
Rose was ecstatic being back in the early days of hacking together a working prototype. He would often bust into the room with a big box of Dynamo doughnuts, his favourite brand from a storefront near Milk’s hip offices in San Francisco’s Mission District.
Over the course of a few months, the team hacked together Oink. One engineer was corresponding with the Instagram team to build the camera component of Oink from scratch.
The app launched at the Web 2.0 conference in October 2011 to immediate acclaim, and rocketed to 100,000 users in a month.
Then, after a short break during the holidays, the Milk team assembled in its garage to get back to work. But on what?
Rose bounded in, a box of Dynamo doughnuts in hand. He wanted to see prototypes for the next Milk app.
But the Milk team wanted to push Oink into its next version and launch it at the 2012 South by Southwest conference. The team asked Rose to focus on rolling out Oink 2.0 while thinking about other app ideas in the background.
The result was classic Rose: He became more distant and more interested in his next idea—which, this time, involved Google and one of the first angel investors investors in Milk, Google Ventures.
Rose shut down Milk and Oink, and took a chunk of his team over to Google.
One colleague close to the deal with Google said part of the Milk team sought to break Oink out as a separate company and raise capital, but Google wouldn’t allow it.
Here’s another take from someone close to the deal:
Rather than spend more time and money and pivot and try 10 different things over a couple of years, (Rose’s) attitude was, OK, if it doesn’t work, let’s move onto the next thing. That’s what the investors signed up for.
Rose’s argument was that Oink wasn’t good enough. While the app had rocketed to 300,000 users, Rose wanted millions and millions—the kind of success he once had at Digg.
Once again, Rose moved on, with promises unfulfilled and a team which looked up to him left hanging.
Photo: Flickr / Mari Smith
A new career at GoogleRose was ostensibly hired as a senior product manager on Google+, Google’s big social initiative.
But as soon as Rose had joined Google, the partners at Google Ventures—ostensibly a separate venture-capital firm, though backed entirely with money from Google—asked for help in securing some deals in the hottest new startups.
Rose was happy to oblige, since he would once again be involved in early-stage ideas and wouldn’t get bored.
Google officially accommodates employees’ side projects through a policy known as “20% time,” and that’s how Rose’s involvement with Google Ventures started. But he ended up leaving Google and joining the venture-capital arm full-time.
As a venture partner at Google Ventures, Rose gets to do the “fun” part of the business all day long—helping early-stage companies develop their products and hone user experience.
He still retains a cachet with young entrepreneurs, given his age, his success at Digg, and his savvy bets on startups like Twitter and Zynga.
Rose had access to deals that Google couldn’t get. And Rose had already established himself as a well-respected angel investor.
It sounds about as perfect of a fit for Rose as it gets — a situation where Rose is constantly bouncing from company to company, lending his uncanny design expertise to bang out ideas, and not being held responsible for day-to-day activities.
Digg’s final breath
Last Thursday, Digg announced that the Web property was being sold to a New York-based startup Betaworks.
The Wall Street Journal reported the price tag as a paltry $500,000, though sources close to the deal said there was some additional equity involved. Digg reportedly sold some patents to LinkedIn for another $4 million and transferred its engineering team—the talent Rose had dissed as B-level players—to a subsidiary of the Washington Post Co. for $12 million. Still, it was an ignominious end, considering the $45 million Digg had raised over the course of its lifetime.
While Digg was floundering, the announcement basically came out of nowhere.
Should we consider Digg a failure? And if so, does the blame rest on Rose?
Digg advanced many ideas that would find fuller expression elsewhere, like Facebook, Twitter, and Reddit, all of which built on Digg’s core notion of social news sharing.
By cashing out from Digg early on, Rose was also able to pursue what he was clearly best at—a career as an investor with an incredible eye for talent and design.
His Digg and Milk teams did not do nearly as well, but at least they have jobs at the Washington Post Co. and Google.
And Digg alumni went on to start a host of other startups, like SimpleGeo, Sprintly, and Kiip.
It may be impossible to separate Rose’s wanderlust from his creative impulses.
But other entrepreneurs went through bouts of distraction. During Facebook’s first year, Mark Zuckerberg seriously considered abandoning it for a file-sharing service called Wirehog. Twitter founder Ev Williams wavered for years about his commitment to Twitter.
Ultimately, though, those founders doubled down on their core projects, and the world is better off for their steadfastness.
What might Digg have become?
We’ll never know.
Who might Rose be now had he stuck to making Digg a success?
The answer, in the end: Someone different than he is.
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