Forget about seeing Facebook (NYSE: FB ) become the next MySpace. Digg, once a popular news-sharing site, already has that dubious honor. New York's Betaworks has purchased the company for just $500,000, The Wall Street Journal reports.
Talk about a fall from grace. At one point, Digg was attracting 17 million monthly visitors and had Microsoft (Nasdaq: MSFT ) , Google (Nasdaq: GOOG ) , and Yahoo! battling over the rights to place contextual marketing on the site.
Venture capitalists also loved Digg. All told, the company raised $45 million in equity financing from the likes of Greylock Partners, LinkedIn co-founder Reid Hoffman, and Netscape co-founder Marc Andreessen, the Journal reports. Betaworks won't be giving any of them much of a return.
MySpace offers a similarly sad tale. After several years of leading the way on social media, the network, which gained popularity as a place for musicians to market their work, last June sold for $35 million to a group that included performer Justin Timberlake.
But don't weep for either Digg or MySpace. Founders of both companies have done well enough. News Corp. (Nasdaq: NWS ) initially paid more than $500 million to acquire MySpace in 2005, while Digg founder Kevin Rose has made successful bets on a number of start-ups you know, including Foursquare, Twitter, and Zynga. He's also working at Google in an as-yet undisclosed capacity.
Nevertheless, the point remains. Investing in innovators such as Digg and MySpace is dangerous, because what looks like a sure thing -- (cough) Research In Motion (cough) -- could be irrelevant within a few years.
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