Digg new chief executive Matt Williams said that Digg is focused on getting healthy again by cutting costs, resetting its strategy and re-entering ‘startup mode.’ Earlier today, Digg has announced that it’s laying off 25 of its 67 staffers today, which is just over 37 per cent of the company’s workforce.
Williams said: “Unfortunately, to reach our goals, we have to take some difficult steps. The fact is our business has a burn rate that is too high. We must significantly cut our expenses to achieve profitability in 2011.”
“We’ve considered all of the possible options for reduction, from salaries to fixed costs. The result is that, in addition to lowering many of our operational costs, I’ve made the decision to downsize our staff from 67 to 42 people,” he added.
It’s a part of an attempt by the San Francisco social news discovery site to rationalize its costs and to reach profitability by 2011. In an interview with BoomTown this morning, Matt Williams noted that ‘the burn rate is just too high’ for the company.
“We need to reset, in terms of stategy and get back in a start-up mode,” said Williams, referring to the recent turmoil at Digg, related to management upheavals and product snafus. “The cost structure is not in line with our business.”
The announcement from the company’s new chief executive, Matt Williams, came hot on the heels of the departure of Chas Edwards, Digg’s chief revenue officer, which takes a similar job at a photo-tagging advertising start-up called Pixazza.
Edwards is just one of many such issues at Digg, where Williams seems to have stepped into a very big mess since he arrived just six weeks ago.
That includes dealing with a new version widely derided by its passionate and opinionated users, for which Williams quickly apologized.
“I knew it was going to be a big job in terms of a product turnaround,” said Williams. “I think the users love Digg and want to see us succeed and we ultimately let them down.”
Williams said his goal was to get to profitability in 2011, which required the employee layoffs. From there, he said, “We will be on good footing to be more innovative.” That would be a nice change of pace, given Digg’s fall from Web 2.0’s hottest start-up to one that seems only to falter.
On Tuesday the entire Digg team will gather at an all-hands meeting where Williams will outline the company’s strategy for the next year.
Primarily, the company will focus on increasing engagement with the Digg community, which lost many individuals during the disastrous release of the New Digg. He wants the company to “listen hard” to users in order to re-engage them.
What about the revenue side of the new Digg equation? Williams’ response was simple – Diggable Ads. He believes Digg’s new ad format is an innovative and powerful ad product. The company will be “doubling down” on Diggable Ads and finding new ways they can be utilized by advertisers.
At the end of August, Digg rolled out a major redesign, nicknamed Version 4.0, in a bid to increase the site’s appeal and make the service more personalised.
At that time Kevin Rose, Digg’s co-founder, described the new look as a “major revision” of the platform. Writing on the company’s blog about Digg, version 4, he said: “This is just phase one of what will be an on-going, iterative process, involving lots of input from all of you. We’ll be pushing out features on a regular basis and tweaking often.
“Our goal has always been for Digg to be a place where people can discover and share content and conversations from anywhere on the web. With Digg v4, we are introducing a few things that will make discovering and discussing news a lot better.”
Digg, which was launched in 2004, is a social news service designed to help web users discover and share content from around the internet. Digg members submit links to stories, and the user community votes on how interesting those stories are by “digging” the articles they like, and “burying” those they don’t.
The site attracts more than 35 million unique users per month, and many news websites and blogs feature Digg buttons to allow readers to easily share articles they’ve enjoyed. However, its popularity has waned in the last 12 months, with many people preferring to share links to stories through other social news sites like Twitter or Reddit. [Digg Blog via Daily Telegraph (UK) and All Things Digital]