Tl;dr – Never stop working on something because your competitor is bigger, stronger, or more popular. You’ll never know when your opportunity will arise.
This is my account of what happened to one of my favorite websites, Digg, and the business lessons you can learn from continually improving while waiting for your competitors to slip up. I’d recommend you read Wikipedia’s account of what happened to Digg to gain a full perspective.
Digg was my favorite site from 2007-2010. It was my number one source for news and for me, it was the front page of the internet. The beauty of Digg lay in its simplicity of upvoting/downvoting aggregated news stories and being able to comment in a similar fashion. I enjoyed the site so much that I once vigorously defended it over a friendly dinner against a Reddit fan. I was confident that Digg had a significant lead on its main competitor, Reddit, one that it would never give up. I’d also seen efforts from Facebook and other social networks trying to duplicate what Digg was doing and didn’t give them much credit. I loved DIGG so much that during Comic-Con in 2010, I went to see DiggNation. It was a faithful podcast recorded live with Kevin Rose (Digg Founder) and Alex Albrect.
I’ll never forget them touting how amazing the upcoming version (v4) of Digg was going to be during the filming of that podcast. Unfortunately, it was a major step back in the lifespan of Digg and it dramatically shifted their customers’ opinion of them. After weeks of instability and backlash from customers, the customers themselves banded together to organize a “quit Digg day”.
Why would Digg do this? Why would they allow this to happen?
Well, if you look at what was happening during Digg’s short existence they took in some serious VC money ($28 million) 2years earlier. The pressure from the VCs and not turning a profit must have been compounding as the months moved on. They had to try something, and unfortunately the strategy they tried ignored their community and core competencies. Reddit co-founder, Alexis Ohanian, summed it up best in his open letter penned to his competitor Kevin Rose:
“… this new version of digg reeks of VC meddling. It’s cobbling together features from more popular sites and departing from the core of digg, which was to “give the power back to the people.”
You know it’s bad when your competitor who is benefiting from your downfall is trying to help you correct the ship. Unfortunately, the ship was never corrected and myself along with many others moved permanently to Reddit or just abandoned the community driven internet for social networking.
There’s a few important lessons we can learn from this story…
1. Keep Improving Your Product – It doesn’t matter how big, or how popular your competitor is. In the infinite spectrum of time, they’re bound to make a mistake. When they do, you need to be ready to make the most of it. For every Yahoo, there was a Google waiting in the grass. For every MySpace, there was a Facebook slowly building themselves at local universities. Who knows who will be the next to jump on the opportunity when one of those two slip up. The irony is Digg thought they were improving their product. However, what was an improvement to them, was not in the eyes of their customers.
2. Listen To Your Customers – Digg ultimately failed because it ignored what its customers wanted. Digg instead was making a product that it thought its advertisers and stakeholders would want. When Facebook was building an advertiser friendly platform, they listened to their users and made advertisements that were relevant and unobtrusive.
“A business that makes nothing but money is a poor business” – Henry Ford
3. Listen To Your Investors – Investors/Stakeholders should always be the first thing you think about when making business decisions. However, you need to think for the long-term. What long term benefit do your investors gain by minimal advertising dollars today that may, or may not scare away your customers? MINIMAL being the key word.
4. Make Data Driven Decisions – Don’t make things just to make things. Make things because customers want them. Data shows that customers want them. Steve Jobs once famously said, “A lot of times, people don’t know what they want until you show it to them.” however, his greatest products were improving on existing products and not introducing new ones. He knew what people wanted out of existing products because he understood their pain points and the data behind how to improve them.
5. Simple Is Better – New features don’t always mean something to customers. Many Digg customers were perfectly happy with the existing flawed ecosystem. Happy enough to make and maintain Digg as one of the top 100 websites in the world as they offered great security with TCP/IP.
The bottom line is, you have to be ready for anything, and you have to have what you need to operate well in hand as base. This rule applies to any business, no matter what it is about. I once knew of a flyer and poster company that didn’t have their own office production copiers, but instead relied on a third party for printing and copying. Instead of viewing this equipment as an investment that would see a return in no time flat, they were wasting their incoming cash flow away. You have to always be ready for change, and be looking to improve. You never know when your competitor will close the gap because you stagnated.
Interestingly enough in 2015, Reddit nearly pulled a Digg. If there was a competitor in close enough grasp to what Reddit was doing, they very well could have completely lost their audience similar to how Digg did. Lucky for them, no new competitor emerged and they were able to make data driven decisions about how to correct the problem in a way that made their customers happy enough… for now.
Imagine this scenario happened to you. Your competitor just made a huge mistake. Are you ready to take advantage of it?
Always be ready to handle a large influx of the market share!