Betaworks, a New York-based startup incubator, just bought the assets of San Francisco-based social news-sharing site Digg for $500,000.
That’s embarrassing, considering how close its investors got to scoring a deal for 400 times that amount.
In 2008, TechCrunch’s Michael Arrington reported that Google was in “final negotiations” to buy Digg for $200 million. Neither company ever commented publicly on the talks, but we heard on our own that the talks were very real.
Google cofounder Larry Page and Digg CEO Jay Adelson were all smiles at the Allen & Co. media conference four years ago.
Here’s how, according to one source, the talks advanced so far only to come to a screaming halt.
Google has long been ruled by its engineers. Marissa Mayer, then in charge of Google’s consumer search products, championed a purchase of Digg as a way to improve the quality of Google News by using Digg’s voting mechanisms as social signals.
The deal ran aground after Googlers started interviewing Digg engineers. Googlers—who are kind of snobby when it comes to judging other coders—didn’t find them up to Mountain View standards. Google could build a Digg in-house. And just like that, the deal was off.
Google went on to launch Buzz, a now-forgotten service that was something of a cross between Twitter and Digg. And it eventually hired Digg cofounder Kevin Rose after his mobile-app incubator, Milk, failed to make a splash.
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