Alexis Ohanian
David A. Grogan | CNBC
Content aggregator Digg is making a comeback with the help of an unlikely partner: Reddit co-founder and rival Alexis Ohanian.
Ohanian and Digg founder Kevin Rose acquired the platform for an undisclosed sum. The deal is backed by venture capital firms True Ventures, where Rose is a partner, and Ohanian’s Seven Seven Six. The partnership was announced Wednesday in a video post to the company’s X account in which Rose called the partnership a “team-up he would have never imagined 20 years ago.”
Digg was founded in 2004 and rose to prominence as a major outlet for trending news because it allowed users to rate stories. Rose made what became an infamously goofy appearance on the cover of Businessweek in 2006 as the kid who “made $60 million in 18 months.”
The company said in a release that it aims to differentiate itself in the social media market by “focusing on AI innovations designed to enhance the user experience and build a human-centered alternative.” Digg said it will also create a platform that “prioritizes transparency, rewards human effort, and fosters enriching discussions.”
Ohanian also teased the collaboration, telling X followers on Wednesday that he was “working on something new… but also old… but also very new” and is “excited” to be partnering with Rose.
At its peak in 2008, Digg was reportedly valued at about $160 million. But the rise of Facebook and other social sites caused traffic to Digg to plummet. Meanwhile, Reddit, which was founded a year after Digg by Ohanian and current CEO Steve Huffman, emerged as a direct rival to Digg by forming communities around types of content and letting users similarly rate news stories.
In 2012, Digg’s brand and website were acquired by tech incubator Betaworks for about $500,000.
Reddit has continued its ascent, reporting nearly 102 million daily active users at the end of the fourth quarter. The site gained widespread attention when it became the center of the 2020 meme stock craze as retail traders inflicted huge pain on hedge funds shorting stocks using a subreddit known as Wallstreetbets.
Reddit went public on the New York Stock Exchange last March at $34 a share and has seen its stock nearly quintuple. Shares are up about 1% year to date and added 4% during Wednesday’s session.
Ohanian has moved on to other projects since he stepped down from Reddit’s board in 2020. He’s currently partnering with billionaire Frank McCourt in a bid for TikTok after President Donald Trump extended the initial deadline for the company’s Chinese-parent ByteDance to sell the social media platform or face a ban.
— CNBC’s Ari Levy contributed to this report.
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