Digg Downsizes Team

After relaunching Digg (to the fury of some users), CEO Matt Williams has just announced that Digg will be reducing headcount in an effort to reign in expenses.

We’ve been able to deliver nimbly on the new platform, with over 100 bug and feature releases to the web site in the past two months. Our Diggable ads product has seen a notable increase in use by advertisers and clicks by users.

Unfortunately, to reach our goals, we have to take some difficult steps. The fact is our business has a burn rate that is too high. We must significantly cut our expenses to achieve profitability in 2011. We’ve considered all of the possible options for reduction, from salaries to fixed costs. The result is that, in addition to lowering many of our operational costs, I’ve made the decision to downsize our staff from 67 to 42 people. (Official Digg Blog)

Hopefully this isn’t a sign of Digg’s demise, as the company still has potential despite being eclipsed by both Facebook and Twitter.

Digg currently is facing increased competition from smaller rivals like Reddit, the later who has been attempting to dethrone Digg (albeit unsuccessfully) for quite some time.

While Digg’s unique take on advertising shows promise, hopefully the company can come up with other revenue streams in order to achieve profitability.

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