Kevin Rose reflects on Digg, the dangers of outside investors, and his legacy

By the time Digg was portioned off for sale this year, company founder Kevin Rose wasn’t visiting the site anymore. He had already left Digg for other projects, including his own startup and a role at Google Ventures, and says it had become hard to see what happened to his “baby.” But even if Digg has changed since its initial roots, and he has regrets some aspects of how things went, Rose is still proud of what the team accomplished.

“When I look at some of the early stuff we did in 2004 and early 2005, I’m proud of that,” he said Wednesday evening at the Founders Showcase event in Mountain View. “There are a lot of things where we were the first company to launch some of these social features on the web.”

Rose took the long view of his role at Digg Wednesday night (as Om did in the wake of Digg’s sale), reminiscing on some of the challenges he faced as a new entrepreneur and coming of age around the same time as other companies who eventually did the social-media thing better:

“I grew up in between Facebook and Twitter,” Rose said. “People took what we created and innovated on top of our creation to make something better. And it’s tough to maintain that,” he said, citing the realization that came when he heard people talking about news they’d seen on Twitter, rather than news they might have previously seen on Digg.

Rose also said that Digg hired individuals with very niche skills, like developers who only knew PHP and were not as useful once PHP went out of use.

“We ran into these huge problems, and didn’t have generalists who could go up and down the stack,” he said, noting that it was a problem he worked to correct at Milk, his next startup, and urges young companies to think about.

One of the best aspects of his current gig at Google Ventures, Rose said, is that he can apply some of the wisdom he gained in his Digg and startup years to help younger entrepreneurs, who he cautioned against taking on too much financing too early.

“I don’t think you should give away a lot of your company,” he said, noting that he liked bringing on advisors, as long as they were willing to invest some of their own funds in the company’s success.

Rose spoke highly of New York-based incubator Betaworks, which acquired the remaining assets of Digg for $ 500,000. That didn’t really reflect the value of the company’s parts, Rose said, which were acquired by companies like The Washington Post and LinkedIn. Rose said Digg received higher offers but picked Betaworks because it thought those executives had the best vision for what to do with Digg, and he thanked the investors for being willing to go along.

“We had a site with a lot of visitors, and when we sort of put out a word that this was up for sale, there were a lot of companies that offered more money. There were spam sites wanted to make it a link farm, and a bunch of properties that would have really screwed things up,” he said. “But if there’s any company that understands the real-time nature of the web, it’ll be the people that brought us all these really cool things like bit.ly and Chartbeat.”

Rose said he’s seen mock-ups of the new Digg, and he likes it.

“I love the design. It’s very simple, and there’s a lot of emphasis on real-time,” he said “It’s very bare bones, but in a good way. They’ve killed a lot of features and bloat that’s grown up over the years, and they plan on launching a very bare bones system and then over the next couple weeks increase the functionality.”

An audience member asked Rose what he hopes his legacy will be, and he thought about it for a minute.

“When it comes to investing, I want you to be able to look through my portfolio and say, ‘That could have been big.’ They might not all make it, but at least they could have been something really cool,” he said. “I want to do Pinterest when it was Pinterest, not a clone. Big ideas and shaking things up is my passion.”

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