November 24, 2010 12:48 PM PST

10. Digg: Where do we start?

It’s almost painful to write about the decline of social-news site Digg: A few years ago, founder Kevin Rose was mentioned in the same sentences as Facebook founder Mark Zuckerberg. Now, well, not so much.

The problems really started a little over two years ago, when Digg, having reportedly snubbed nine-figure buyout offers and fresh off a $28.7 million Series C funding round that CEO Jay Adelson said at the time was going to fuel a “major expansion effort,” was revealed to be losing money–lots of it. But it was in 2010 that the mess hit the fan. Its sorely-needed “Version 4” overhaul didn’t go over so well with its loyal community. There were not one, but two rounds of layoffs this year, meaning that the company is less than half the size it was when Adelson himself jumped ship in the spring.

As for Digg, it’s still alive under the auspices of new CEO Matt Williams (and founder Kevin Rose is still doing something there) , but the outlook isn’t too bright for this company with a long track of missed opportunities. There has perhaps not been a better example in years that sometimes entrepreneurs have to throw away idyllic dreams of changing the world and, to be blunt, take the money and run.

Photo by BusinessWeek

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Received & published by Henry Sapiecha