A Stark Reminder That Tech Investing Can Be Hazardous to Your Wealth

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Forget about seeing Facebook (NYS: FB) become the next MySpace. Digg, once a popular news-sharing site, already has that dubious honor. New York's Betaworks has purchased the company for just $500,000, The Wall Street Journal reports.

Talk about a fall from grace. At one point, Digg was attracting 17 million monthly visitors and had Microsoft (NAS: MSFT) , Google (NAS: GOOG) , and Yahoo! battling over the rights to place contextual marketing on the site.

Venture capitalists also loved Digg. All told, the company raised $45 million in equity financing from the likes of Greylock Partners, LinkedIn co-founder Reid Hoffman, and Netscape co-founder Marc Andreessen, the Journal reports. Betaworks won't be giving any of them much of a return.


MySpace offers a similarly sad tale. After several years of leading the way on social media, the network, which gained popularity as a place for musicians to market their work, last June sold for $35 million to a group that included performer Justin Timberlake.

But don't weep for either Digg or MySpace. Founders of both companies have done well enough. News Corp. (NAS: NWS) initially paid more than $500 million to acquire MySpace in 2005, while Digg founder Kevin Rose has made successful bets on a number of start-ups you know, including Foursquare, Twitter, and Zynga. He's also working at Google in an as-yet undisclosed capacity.

Nevertheless, the point remains. Investing in innovators such as Digg and MySpace is dangerous, because what looks like a sure thing -- (cough) Research In Motion (cough) -- could be irrelevant within a few years.

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The article A Stark Reminder That Tech Investing Can Be Hazardous to Your Wealth originally appeared on Fool.com.

Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google at the time of publication. Check out Tim'sWeb home,portfolio holdings, andFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Microsoft, Google, LinkedIn, and Facebook.Motley Fool newsletter serviceshave recommended buying shares of LinkedIn, Microsoft, and Google and creating a bull call spread position in Microsoft. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.

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