The debunking of BusinessWeek's 'Digg made $60m' story

Filed under: Business, Internet, News, Social Software

The debunking of BusinessWeek's 'Digg made $60m' story

by David Chartier Aug 4th 2006

BusinessWeek is running a story featuring Kevin Rose on the cover, with the headline: "How This Kid made $60 Million In 18 Months." That sounds like a heckuva success story, but not everyone believes the math. Our own CEO Jason Calacanis debunked it himself, but since he owns us and Netscape - a digg competitor - I figured y'all might want to hear it from others in the community too, including Jason Fried at 37signals and Scott Rosenberg - writer, editor and co-founder of Salon.

The debunking more or less centers around figuring out how BW came upon their numbers, since much of the talk in the article is of what Digg is estimated to be worth, and where the company is going to move next - not what Rose presently has in his pocket. Ultimately, it sounds like BW took Digg's $200m estimated worth and divided it by Kevin's roughly 30% ownership to snag that $60m phantom number. Decent math, but shoddy tactics. BW says they got the numbers from 'unnamed sources', but that doesn't get them out of the trouble of slapping it on their front cover.

Check out the debunkings I've linked for more in-depth details on the article and where BW went wrong, as well as some funny parodies that are already arising, including *surprise!* how 9rules has suddenly announced that they themselves have made billions in just 12 months!

Tags: 37signals, business, businessweek, calacanis, debunk, digg, jason, math, profit, revenue

Reader Comments (Page 1 of 1)

Grokodile said 5:42PM on 8-04-2006

So, does this mean they are just getting some free hype because they have a big pocketed competitor that someone doesn't like, or is coinciding with a desire to acquire money from someone somehow?

Color me skeptical.

David Chartier said 5:58PM on 8-04-2006

I wouldn't call the hype free, but my money is on your first theory. Netscape is obviously nowhere near digg's userbase, but I think the possibility of such a well-backed competitor and Jason bringing the concept of 'getting paid for what you like to do' to the social web 2.0 universe are giving them a run for their money.

King Bastard said 6:05PM on 8-04-2006

Our version of the cover is better.

Bryan Martinez said 7:29PM on 8-04-2006

Don't hate, seriously. I have been a fan of this site for almost a year now, and always seem to enjoy your articles & the effort put into them. However, this just seems to be a sad attempt at trying to knock on a competitor. Rather than trying to just bring someone else down, I think ya'll will be better off sticking to the normal well planed articles and prove your selfs better.

Michael Smith said 10:05PM on 8-04-2006

Sounds like a whole lot of playa hatin' to me. Is there ever any article in any magazine that gets the net worth correct when it comes to internet net worth? The answer is no, this is one time that it seems you do not have an impartial view because Digg is a competitor. So you mean to tell me that buisnessweek went out of their way to give free hype just to take a swipe at Netscape. You must be kidding me.

David Chartier said 9:15AM on 8-05-2006

Guys, all of us here at DLS are big fans and users of digg:

http://digg.com/users/dcharti/dugg

We're simply reporting on what's going on in the industry, good and bad (y'know, that whole fair and balanced thing). BusinessWeek published a bogus report on digg, and everyone else is calling them on it. That doesn't mean we don't love digg any less. It just means someone pulled a stunt, got caught, and now people are talking about it.

Jordan Running said 4:36PM on 8-05-2006

What David said. We don't view Digg as a competitor by any means, and you'll notice that we often link to Digg as the source of the news we post here.

Michael: "So you mean to tell me that buisnessweek went out of their way to give free hype just to take a swipe at Netscape." Nobody implied that. I haven't read the BW story, so I don't know what, if anything it says about Netscape, but it seems to me the main criticism of the article is that they pulled this $60 million figure out of thin air in order to make for a dramatic headline. BW seems desperate to look like it's on top of this Web 2.0 thing, hence this cover story, when in fact, like most dead tree glossies, it's wayyy behind. Ergo all the parodies.

Nature of Mathematics said 3:32AM on 9-29-2006

I love the success story, but man I can't stand Digg. Maybe 2 in 10 articles is worth anything, it's very much like a slightly faster but more volatile Slashdot.

If I don't want to be irritated, it's a lot easier to combine maybe 2 or 3 RSS feeds and get better news and less noise.

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