Digg was founded in 2004. By 2008 it was worth $200 million, the price Google reportedly offered to buy it for. This week, the site sold for just $500,000.
The move strikes some similarities with Groupon. The daily deals site was offered $6 billion, also from Google, but refused. Groupon later went public at a valuation of $12 billion but, following various accounting controversies and questions surrounding the sustainability of its business model, its stock plunged and is now worth only $5 billion.
Digg published a blog post about "the next stage" of its future, saying that "Digg has always been a site built by the community, for the community." Matt Williams, the current CEO, wrote that "we couldn't be happier to announce that the next generation of Digg will live on with the team from Betaworks." Something tells us, that after selling a site worth less than 1% of what it once was, they could have been happier.
Update: TechCrunch is reporting that Betaworks did acquire Digg's leftover assets for around $500,000, but Digg also sold intellectual property (about 15 patents) to LinkedIn for up to $4 million and the Washington Post acquired the team for up to $12 million, bringing the total value of the Digg acquisition to roughly $16 million.
However, this remains just a fraction of the company's peak valuation, and even of the amount of funding it raised ($45 million).