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Digg For Fire: Rose Back To 'Startup Mode'

It seems like only yesterday that Digg founder Kevin Rose was smiling on the cover of Businessweek under the headline: "How This Kid Made $60 Million In 18 Months." Yet, after six years and $40 million in funding, the social news site is officially going back to the drawing board.      

On the heels of smaller staff reductions, the company this week announced plans to layoff another 25 people -- or nearly 40% of its remaining workforce. The cuts come just as Digg's publisher and Chief Revenue Officer Chas Edwards is jumping ship for photo tagging service Pixazza.

"Digg will still have 10 times as many staff as rival Reddit," notes Gawker. "Now it just needs Reddit's outsized momentum."

"We're in startup mode again," Digg's recently appointed CEO Matt Williams tells Mashable. "The burn rate is simply too high." (Illustrating Digg's present challenges, Mashable's story had been Tweeted 770 times on Tuesday morning, but only Digged 45 times.)

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Williams says the company is determined to reclaim its former glory -- and achieve profitability by 2011 -- by cutting costs, and resetting its strategy.

"Primarily, the company will focus on increasing engagement with the Digg community, which lost many individuals during the disastrous release of the New Digg," reports Mashable, referring to Digg's recent relaunch. Williams "wants the company to 'listen hard' to users in order to re-engage them."

Furthermore, Williams believes "Diggable Ads," so-called, will appeal to both users and advertisers. "He believes Digg's new ad format is an innovative and powerful ad product," writes Mashable.

Despite Digg's prospects, however, some are already using it as a new media cautionary tail.  

"Digg has become a Silicon Valley fable because it didn't sell out when it was hot and allowed itself to be surpassed by other hot social networks such as Facebook," writes SocialBeat. The conventional wisdom is that [onetime CEO Jay Adelson] and founder Kevin Rose should have taken big offers from the likes of Google and Al Gore's Current social broadcasting company."

Adelson, for his part, said formal offers were never forthcoming, and he doesn't regret not seeing a big payday after five years at Digg. Regarding Digg's future, "The jury is out," Adelson said this week at FailCon -- a conference with the tagline, "Embrace Your Mistakes. Build Your Success."

Meanwhile, it looks like Digg's loss is Silicon Valley's gain. "As I'm hearing that the talent pool of experienced engineers in the Bay Area is currently in short supply, this layoff might be a boon for local startups looking to add skilled staff," writes TechCrunch's Alexia Tsotsis. Cue the vultures.

Read the whole story at Mashable et al »

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