Digg Inc., a seven-year-old social- media company that struggled to compete with Facebook Inc. (FB) and Twitter Inc., will be acquired by Betaworks, a New York technology-investment company.
Digg will merge with News.me, a startup funded by Betaworks that makes applications for the iPhone and iPad, Chief Executive Officer Matt Williams said today in a blog posting. Williams plans to leave the company to become an entrepreneur in residence at venture firm Andreessen Horowitz after the transaction is complete.
The startup raised about $40 million in venture funding from investors such as Greylock Partners and Highland Capital Partners. Marc Andreessen, a founder of Andreessen Horowitz, also invested. While Digg helped pioneer features that let Internet users share news stories with friends, the backers never saw a payoff. Betaworks is acquiring Digg's assets for $500,000, according to the Wall Street Journal.
Williams, who became CEO in 2010, cut the workforce by 37 percent that year in a bid to make the San Francisco-based company profitable by 2011. Digg also revamped its site to add more social and personalization features. Still, it failed to keep up with the popularity of Facebook and Twitter.
Digg will live on in a version that complements the News.me iPhone and iPad apps, Williams said.