Entrepreneurship

Bio

The August 14, 2006 cover of BusinessWeek featured Kevin Rose with the headline, “How This Kid Made $60 Million In 18 Months”. Rose is a former co-host of the TechTV show, The Screen Savers (later Attack of the Show! on G4). He worked for several dot-com startups during 90’s tech boom before becoming an Internet celebrity after forming Digg in November of 2004. Digg is a technology news website, that combines social bookmarking, blogging, RSS, and non-hierarchical editorial control. According to alexa. com, Digg is now ranked among the top 100 websites worldwide. In October 2005, Digg.com received $2.8 million in venture capital from major investors, including Omidyar Network, the outfit led by eBay founder Pierre Omidyar, Netscape co-founder Marc Andreessen, and Greylock partners. (SOURCE: WIKIPEDIA)

Interview

Forum Link: How do you graduate from having a cool idea to running a one of the web’s top news portals?

Kevin Rose: I think it really comes down to believing in the idea enough to take the time to invest and commit to it, to see it through. At the time when the site first launched, I was a big fan of other sites like del.icio.us and Slashdot. I believed in it so much, that I was willing to work on it pretty much around the clock. I’d come home from my 9 – 5, which was really like a 9 – 7, and spend hours at night designing the site, thinking about how it might work. For the first six to eight months, it was just me and one other guy working on the project, so it was a lot of work and it cost me a lot of money at the same time.

Forum Link: You put up your own money from the beginning?

Kevin Rose: Yeah, I was saving up for a down payment on a house. When I told my girlfriend that I was actually spending all of the money building up the web-site, she didn’t think that was a very good idea.

Forum Link: it was slow going, early on. You had a couple of thousand of users in the first 4 to 6 months?

Kevin Rose: Yeah, something like that, it was 50 – 75 new users a day for quite a while.

Forum Link: at what point did you say to yourself, ‘they’re getting it, it’s really happening’?

Kevin Rose: Well it’s funny. It felt like a really slow process. I was looking at the new registered users per day and I would see that we were at 50. Then I remember when it hit a 100. Then, I was like: wow, we’re adding a 100 new people per day. That jumped to 250, then 1000 and 2000, and it just kind of went from there. It was time to buy more servers. I think that the big moment, was when we launched outside of just technology based news, because we knew that we had the tech fans. Then, we launched into politics, the world of business, sports and entertainment news. It was at that moment, that I thought that if the masses really understand what we’re trying to do, we will be well received. And they did, and that is when traffic really went crazy.

Forum Link: Can you describe what is unique about digg?

Kevin Rose: I was trying to create a cycle where everyone was rewarded for participating in Digg. You have people who find good content on the web. They want to expose others to that content. It’s something that they really care about and they would really like to promote it, so they come to the site and tell their story. Their name is associated with the story. This cycle generates new sets of users.

Forum Link: the recognition is the reward?

Kevin Rose: It will be eventually, when that story makes the home page, when people start consuming the story. Their name is associated with the story. and they are seen as someone who submits good quality content. and they’re making friends with other people who have similar interests.

“I think it really comes down to believing in the idea enough to take the time to invest and commit to it, to see it through.”

Forum Link: we’re talking about reputation.

Kevin Rose: Right. There are people who are digging through all of the upcoming stories, because they believe, that if they can find a good one, early on and promote it, that benefits the entire community. They become friends with each other and form bonds and follow each other. They can follow what their friends are digging and can see what everyone is up to. If a story can become popular enough to hit the front page, the user who submitted the story gets the recognition. We drive a ton of traffic back to the original destination, so now all the traffic goes to that web site. The web master takes notice because they see a big spike in traffic coming from this site, they never heard of called Digg. They say: this is pretty cool, I’m going to expose my audience to Digg. So they do a post about it.

Forum Link: without you even having to ask for it?

Kevin Rose: They see this huge burst of traffic, so they want to let their community know, that they should Digg stories. Sometimes they would do blog posts. They sometimes put Digg buttons all over their site, next to each piece of content, so that it would be submitted.

Forum Link: has the world changed because of what you are doing?

Kevin Rose: I think there have been stories on Digg that definitely would not have been covered by mainstream media. I think the community is very good at serving really interesting nuggets of information. I love the fact that Digg has created a level playing field for all kinds of different content. It is not really about the fact that I have my article in the New York Times anymore. Its about having a good piece of content. It can be a personal blog, that gets just as much traffic and eyeballs as an article on the front page of the New York Times web site, which is pretty powerful.

Forum Link: is it an open source media?

Kevin Rose: Yeah. One of the scariest things in launching this product was that, I would wake up in the morning and wonder what is on the front page of my website.

Forum Link: and you would never know, it would be a surprise?

Kevin Rose: I wouldn’t. It’s a really weird feeling to think that you control and run this web site, but you really don’t. You own the servers, and the code, but really it is the community that pushes everything to the front page.

Forum Link: what is it that drives you to do what you do?

Kevin Rose: For me, its about a challenge. It’s a challenge to understand how people are sharing information online and how that is changing over time. I’m not sure how to explain it, but I felt that it was a great problem to tackle, because it was changing so fast. The way information is being shared through the net and the way that has changed over the last few years. It was such a one way experience, initially, and now it’s like we are actually taking part in the conversation. It’s really interesting to see that all of the media from email to talking over IM, to sharing things over Twitter, to Digg and del.icio.us, you name it; there are just so many different ways now to get your message out there and just share information with others. It’s what keeps me really interested.

Forum Link: how do you aggregate the mass of information you are dealing with? at the end of the day someone has to play the editor.

Kevin Rose: We have a piece of software that is our ‘promotional algorithm’, that promotes stories to the front page of the web site. That is basically written to ensure that there is a unique and diverse pool of people digging something before it is pushed to the front page.

If you created a thousand accounts right now and submitted them to Digg; even if you used different computers; we have ways of determining if there is truly interest around the story. There are a lot of people who want to try to ‘game the system’. We have so many, close to 20 million people a month, who come to Digg, so to some people to have a way to manipulate the system, to get their story in front of a lot of eyeballs is worth a lot of money. There are a lot of people trying to get there content on the front page.

Forum Link: so your system is constantly a target for people seeking free publicity.

Kevin Rose: For us it is really kind of an arms race. It is just like the search engines. This is nothing new. It is kind of a cat and mouse game. It is also something that we have to invest a great deal of time in and hire Phds in mathematics to figure out some of these issues.

Forum Link: i would like to ask you about the “digital Boston tea Party” that was staged at digg. You eventually conceded to the wishes of your users to break the copyright laws by revealing the encryption key for hd-dvd discs. are you happy you made that decision or were you simply forced to do it in order to save your credibility?

Kevin Rose: Well, the first and foremost thing that we always want to do, and that we have to do obviously or else we wouldn’t exist, is to abide the law and that includes DMCA (Digital Millennium Copyright Act) takedown notices that are sent to us. One of the things that we didn’t do at that time, was to provide some transparency, to really show the Digg community why the item was being removed, and send them to the appropriate web site to explain what was going on behind the scenes. This is something that we have since changed. If we do receive take down notices, we do comply and post the notices to Chilling Effects website, to let the community know what is going on. So, rather than just going to your profile and seeing that a story is missing, you will see a link to the DMCA takedown notices.

Forum Link: so, at least they’re being told why their story is missing from digg.

Kevin Rose: Right, exactly. Which is huge, because when people see that something is missing or has been deleted, they assume that it was censorship and then they will just resubmit.

Forum Link: But in that specific instance you actually allowed the post to stay despite the takedown notice.

Kevin Rose: What happened was this: when we received the notice, everyone was receiving it, at the same time. Google got it and Youtube got it, so everyone was pulling the post down. We did the same thing, but a lot of people kept on posting and reposting. This was happening all over the net. It was everywhere. Once this happened, people were really up in arms, because the code had not been proven yet. There was no one that had actually created a tool around this code. It was a series of twelve digits, letters and numbers. And people were saying: how can you censor numbers and letters? At that point we talked to our attorneys, and they told us: well it’s out there, it’s not just you doing it. It was more like public domain at that point.

Forum Link: in other words, you found that you were in a legally defensible position.

Kevin Rose: Absolutely. Here was a code that people were claiming it could, potentially unlock DVDs, but none of this had been proven so, we just put the post back up.

Forum Link: so, you were not exactly walking into the line of fire to defend the free-dom of speech?

Kevin Rose: You never know. Anyone can sue, anyone for any reason at anytime – and that could have dragged on forever and cost millions of dollars. It was still a risk. But for us, we just want to be more transparent in the future. We will continue to take down some of the information. We have to abide by the law.

Forum Link: when you started digg, were you explicitly trying to hook as many eye-balls as possible? were you trying to exercise a kind of social experiment? or were you challenging yourself to find out what would happen if you were to set up this unusual platform for people to interact with the news?

Kevin Rose: I think when you try to plan hooking as many eyeballs at the beginning it will just never work out. The initial idea of launching the site was to see what would happen, when you gave the masses the control over the front page. That was the concept, and it started off with Tech News.

Forum Link: and you didn’t know what you were going to get?

Kevin Rose: I had no idea.

Forum Link: You were not working backwards from an exit strategy?

Kevin Rose: I don’t know if you could even do that. I don’t think you can say: I want to be a millionaire now and how can I work my way backwards to get to that. Digg was just an experiment. I installed Google adsense. I was happy when the adsense dollars started coming in. I thought to myself, if I can pay for my servers, I don’t care about taking a salary, but if I can pay for my servers, I’ll be happy, because at least I don’t have to keep spending my savings on this.

Forum Link: do you see technology as a great enabler? are you excited about its potential to change the way we live?

Kevin Rose: I think it really gets exciting when we start talking about applying the Digg concept to other things, other everyday kind of things. I like the idea of eventually being able to go to Digg for a kind of peer group of individuals that I trust. If I need a new refrigerator, and I get five results back recommending model A37F or whatever, I get excited and I say this is going to be something that I’m going to investigate.

Forum Link: You should have no problem lining up sponsors for something like this.

Kevin Rose: Absolutely. It works anywhere, where there is too much information. When you apply a collaborative filter, you produce better results. And I think you’ll start to see just that in the future.

Forum Link: for digg you brought in a $8 million first round of financing from a group a-list investors including Greylock Partners, omidyar network, and marc andreessen. what was it that attracted this savvy group to you?

Kevin Rose: Eventually with our growth, it got to the point where we needed more engineers, more servers, and so we had to go to some VC funding for that. We were in a very fortunate position, where it was us, kind of turning down VCs rather than the other way around. We had a lot of interest when we went looking for money. We talked to the investors about our vision and about ourselves and painted a picture of where we saw ourselves long term. They believed in what we were doing. We had solid growth ever since launching and it just worked out.

Forum Link: what is the business model at digg that will allow you to eventually become profitable?

Kevin Rose: Our business model is very straight forward – we serve ads – we serve over 200 million ads per month on the web site. It’s actually more than that, it is probably closer to 400 million, we do about 200 million pages served per month. For us, it just about keeping the company small and lean. I was around for the first web bubble and it seemed it was just hiring for hiring sake. Now it’s because our engineers are working 60 hours per week, that we say we need some more help to aliviate stress.

Forum Link: are you focused on becoming profitable or still trying to build a critical mass of users, that might lead to becoming a diggtube or diggbook?

Kevin Rose: We don’t need to go after any more rounds of funding. We’re on the path towards becoming a profitable company. We have a fully funded business plan, for us We are hitting our numbers exactly as we had hoped, and we will eventually become a profitable company.

Forum Link: are you thinking about the exit strategy? are you hoping to be acquired by someone?

Kevin Rose: No acquisition. The only time when that would make sense is if the two companies had a really good match and would allow for the company to achieve something much bigger then we could achieve on our own.

Forum Link: so if Google came to you with a billion dollars, you would turn them down?

Kevin Rose: It would have to make sense. You have to wonder what’s going on. You have to ask why this company or why that company? What can we achieve together?

Forum Link: it has to be about more than just money.

Kevin Rose: Absolutely. For us it is just about continuing doing what we do. We like that we are small and independent. We can execute fairly fast and get new products out the door quickly. If a deeper partnership is something that makes sense in the future, then that is something that we will consider.

Forum Link: so you were not surprised that facebook turned down a billion dollars?

Kevin Rose: No not at all. I know Mark. He has a vision and he wants to do it on his own. And I mean why not?

Forum Link: so you believe that staying independent can be a viable option?

Kevin Rose: Well, I would hate to think that it couldn’t be. There are so many people who think that acquisition is the only way out. Why does it have to be like that? Why can’t I just be profitable and do what I like to do and have a happy life?

Forum Link: what are some of the key lessons that stand out in your mind from starting up a company?

Kevin Rose: I would definitely say: try and bootstrap the company as much as you can, as long as you can. There is no reason to try and get VC or Angel funding early on. You’re going to give away a huge chunk of your company for too little money.

And the other thing is, that if you are starting a new project with a friend or two, make sure that you realize that 1 out of every 8 business doesn’t work. Look for simple solutions first. There is a lot of open source that doesn’t require licencing fees or renting servers rather than buying servers. When we started Digg it was all done on rented $99 month servers. If the project doesn’t work out, you won’t be stuck with all types of hardware.

Forum Link: what is your definition of entrepreneurship?

Kevin Rose: For me, it is having the guts to leave my 9 to 5 job, and want to pursue what makes me truly happy. People say that if you do what you love, then you will actually never work another day of your life, and it’s actually true. I never feel like I’m working anymore. I get up and I’m excited, excited to read my emails and work on new projects.

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