Sarah Lacy’s new book, Once You’re Lucky, Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0 (goes on sale on Thursday, pre-order here, get free autographed copy here) does a deep dive into the histories of a number of high profile web startups.

But Lacy was also able to uncover a few stories that were never covered in the day-to-day press. One of my favorites: the story of a failed 2006 attempt by Al Gore’s CurrentTV to buy Digg:

At the meeting Gore ran the room. He charmed everyone on the Digg team. He remembered everyone’s name, and if someone got cut off, he was careful to come back to him and ask him to finish what he was saying. It was quite a contrast to the meeting with Murdoch. “It made me feel so good to know this guy is legit,” Kevin says, remembering and still glowing. “You could just tell.”

…

They came back a few weeks later. Gore was there again, with a glossy PowerPoint presentation that showed the CurrentTV and Digg logos coming together. Gore was standing in front of the screen, eyes on Kevin, with the Digg logo projected across his forehead. Kevin was trying his hardest to pay attention to what Gore was saying, but he was focusing at this large Digg logo on Al Gore’s forehead, thinking, “Oh. My. God.” That night twenty-nine-year-old Kevin called his parents. “You’re never going to believe what I saw on Al Gore’s forehead today,” he said.

CurrentTV ultimately made an offfer “at least in the range of $100 million,” but Rose and Digg CEO Jay Adelson walked away due to issues of control going forward.

Digg has been the subject of nearly constant buyout speculation, starting with a $4 million offer from Jason Calcanis in 2005 and a rumored $30 million deal with Yahoo in January 2006. More recently we reported their recent efforts to sell through investment bank Allen & Co. The complete history is here.

At the time of the offer, Digg had just 1.3 million or so monthly unique visitors according to Comscore. Today, Comscore says they have 13.3 million worldwide monthly uniques (this is almost certainly lower than actual). But sources have been telling us that they’ve been unable to get to their desired $200 million offer and may be raising money instead.

Facebook has announced Facebook Connect, which has similar functionality to MySpace Data Availability, announced just yesterday.

It is essentially a new version of their API for third party websites, which was first launched in August 2006. It will allow users to “connect” their Facebook identity, friends and privacy to any website. Third party websites will be able to implement and offer more features of the Facebook Platform off of Facebook – the same features available to third party applications today on Facebook. To make data portable, Facebook believes it’s about giving users the ability to take their identity and friends with them around the Web, while being able to trust that their information is always up to date and always protected by their privacy settings. The next iteration will be available publicly within the next several weeks.

One of their initial launch partners will be Digg.

I spoke with Ben Ling, Director Platform Product Marketing, and Ruchi Sanghai, Product Manager for Facebook Platform, this afternoon about the upcoming changes.

Facebook Connect has four primary features:

• Trusted Authentication – Anywhere during the user’s experience that the developer would like to add social context, the user will be able to authenticate and connect their account in a trusted environment. The user will have total control of the permissions granted. This is a proprietary authentication mechanism, but is more streamlined than the existing method and will not require a redirect back to Facebook.
• Real Identity – Users can bring their real identity information with them wherever they go on the open Web, including: basic profile information, profile picture, name, friends, photos, events, groups, and more.
• Friends Access – Users will be able to take their friends with them wherever they go on the open Web. Developers will be able to add rich social context to their websites, and will be able to show which of their Facebook friends already have accounts on their sites.
• Dynamic Privacy – As a user moves around the open Web, their privacy settings will follow, ensuring that users’ information and privacy rules are always up-to-date.

Facebook connect is Facebook’s first honest attempt to allow access to Facebook user data outside of Facebook itself. The company is describing it as giving third party applications access to much of the same data as Facebook applications have today. We’ll know more in a couple of weeks when it formally launches.

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Digg competitor Mixx landed another big distribution deal. CNN.com will be adding a “Mixx It” button after every article on the site. This will be right next to the “e-mail” and “share” buttons. Last March, the Mixx bookmark button was adopted by the New York Times, but only as one of many options. Similarly, when CNN.com readers click on the “share” button, they have the option to send the story to Digg, Facebook, del.icio.us, Reddit, and StumbleUpon. But Mixx will be highlighted as a separate button, apart from the regular share options.

The deal with CNN could give a huge boost to Mixx’s small-but-growing membership base of 500,000 registered users (and between 70,000 and 180,000 monthly unique visitors, depending on which measurement service you look at). CNN.com has 22 million monthly uniques in the U.S., according to comScore (and 30 million worldwide). CNN.com readers who decide to Mixx their stories will be able to bypass Mixx’s registration process when they get taken to the site so that they can browse immediately. They will still have to register, however, to save a story or set up a personal Mixx page.

For CNN, the appeal of Mixx might have something to do with the fact that Mixx really lets readers get extremely granular in their interests. Categories are based on tags, with already 300,000 different tags on Mixx. So if you are interested in Alzheimer’s, for instance, you can add that tag to your personalized Mixx page or search for stories explicitly categorized with that tag. On Digg and other social news sites, you can search for stories about Alzheimer’s also, but there is no Alzheimer’s category. Notes Mixx CEO Chris McGill:

When you are looking at Yahoo Buzz or Redditt or Digg, they are really playing a one-size fits all game. All the stories are just shooting for the popular board.

Mixx, he thinks, can do a better job to help you find and share stories around your particular interests, no matter how obscure they may be. Of course, to gain all the benefits of such a system, you have to be willing to do a little more work in setting up your preferences. And, ultimately, the quality of the stories you find on Mixx will depend on the quality (and number) of submissions. With 13.3 million monthly visitors adding and voting stories on Digg, that is going to be a very difficult network effect to overcome. But if Mixx can convince enough CNN readers to join its bookmarking club, it could survive become a solid Digg alternative, or at least survive long enough to get bought.

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The DataPortability Project has gained another adherent in Digg, which announced on its blog today that it has implemented three under-the-hood enhancements.

These include implementation and improved support for XFN and hCard, which help other sites access information about your friends on Digg. The site has also added RDF to make its pages more semantic web friendly.

Digg joins Facebook, Google, Plaxo, Six Apart, LinkedIn, and Microsoft in its welcome decision to support DataPortability. But one has to wonder where its enthusiasm for the related OpenID movement has gone.

In February 2007, Kevin Rose said that Digg would begin adopting OpenID by the end of that year, but we haven’t seen any action on that front. Let’s just hope Digg doesn’t remain in the wrong camp for much longer.

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Putting a value on private companies is hard enough for insiders and venture capitalists who have full access to the company’s financial statements. When outsiders try to do it, even well-informed ones, it is nothing more than a guessing game. But it is nonetheless perhaps one of Silicon Valley’s favorite parlor activities.

Today, Henry Blodget & Co. at Silicon Alley Insider try to peg valuations on 25 private Web companies. Facebook is at the top of the list, but it is valued at $9 billion instead of the $15 billion that Microsoft’s investment put on the company. Why? Because everyone knows that the $15 billion is too high, so SIA decided to apply a 25X multiple on Facebook’s 2008 revenue forecast of $350 million. Does that make its valuation correct? Probably not. But in the absence of any true market pricing, anyone can go ahead and make a guess.

The same goes for any of the valuations on the SIA 25 list, which puts Wikipedia’s worth at $7 billion, Craigslist’s at $5 billion, Mozilla’s at $4 billion, LinkedIn’s at $1.3 billion, Ning’s at $560 million, RockYou’s at $325 million, and Spot Runner’s at $250 million. Note that three of the top five (Wikipedia, Craigslist, Mozilla) are essentially not-for-profits sitting on very valuable assets. The valuations for those three are based on what they would be worth if they were run differently with an eye towards maximizing revenues—which, of course, could impact how consumers interact with them, which in turn would impact their valuations.

Another 25 startups make up the contenders list, which includes Federated Media ($245 million), Yelp ($225 million), Meebo ($220 million), Mahalo ($150 million), Digg ($125 million), Etsy ($115 million), Powerset ($80 million), and Twitter ($75 million). A full list that changes dynamically every 20 minutes, based on changes in the Nasdaq, can be found here (although, exactly how the valuations are linked to the Nasdaq is never clearly explained)

Some of these valuations have more merit than others. Some have none whatsoever. For instance, SIA gets at its $125 million valuation for Digg by “splitting the difference” between a $200 million buyout rumor we reported and the $60-to-$80 million that Kara Swisher came up with. Splitting the difference between two rumors is not exactly the height of financial analysis.

But what are you gonna do? At least SIA acknowledges that the list is an imperfect work in progress. Don’t get too caught up in the actual numbers. It is more useful really as a starting point to think about relative valuation between different startups. Is Meebo really worth three times as much as Twitter? Is Ning worth as much as Slide? Let the parlor game begin.

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Publish2, the stealth Digg-Clone-For-Journalists that announced a fundraising this morning, is being very quiet about exactly what their product is and how it works. In an interview last week they told me only friends and family were testing it.

Well, it turns out “friends and family” is fairly expansive term in their book, and includes a lot of people who are quite willing to talk about it. As we said, Publish2 is a Digg-like site where anyone can submit links but only journalists can vote those links up and down. It also has a private research feature that lets journalists bookmark items without sharing them. “It’s like Delicious,” said one person testing the service, adding “I would never use the public part of the service, I’m too competitive to share my research with other journalists.”

So Publish2 looks to be a little like Digg and a little like Delicious. The only problem is that it may not be as good as either of those products.

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New startup Publish2 hasn’t launched or even entered private beta yet, but the company has scored $2.75 million in funding. The investor, Velocity Interactive Group, believes in the idea so much that they put both Ross Levinsohn and Jonathan Miller on the board of directors.

Publish2 is talking freely about the product, they just won’t show it to anyone yet. The idea is to create a news resource for news rooms, who are increasingly stressed due to headcount cuts and competition with blogs.

The main service will be a Digg-like social bookmarking site, says CEO Scott Karp. Like Digg, anyone can submit a link to a news story. But the only people who can vote on stories are pre-approved journalists. The goal, he says, is to avoid Digg’s spamming issues and ensure that only quality news can get to the top in any category. He says it’s “Digg, powered by journalists.”

It’s sort of the opposite of Yahoo Buzz, which launched last month, in its approach. Buzz only takes links from pre-approved sites, but anyone can vote. Top stories must pass through an editor, though, before going to the Yahoo home page.

It seems that everyone has tried one variation or another of Digg. In addition to Buzz, AOL launched Propeller in 2006, which also required editors to approve top stories. And there are others with models that fall somewhere in between.

Publish2 will also allow newsrooms to use the service to create customized headline feeds Presumably the quality will be high because only journalists get to vote stories up. That may be true. But it’s just as likely Publish2 will end up a ghost town. One of the main reasons for Digg’s success was the viral way stories spread. People send stories to their friends to get them to Digg them up. Those people, seeing Digg perhaps for the first time, may come back to read the news. Publish2 won’t have that benefit.

We’ll withhold judgment until the product launched and we can take a look for ourselves.

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Episode 143 of Diggnation: Hosts Kevin Rose and Alex Albrecht announce the sale of Revision3 to Fox News at about the 2:05 mark. Rose says “Well, ah, we basically have a big announcement for everyone. Revision3 has been acquired by a bigger company. We’ll be moving to Fox News.” He added “I’m thinking of getting a fox tattoo, its kinda part of my signing bonus, if i do it i get a little extra money.”

It’s an early (very early) April Fool’s joke, of course. Jump to the 3:45 mark. They are clearly playing off a story from two weeks ago, spread quickly via a credulous Robert Scoble Twitter message, that CNET had acquired Revision3 for $58 million.

The company was founded in April 2005 and has raised $9 million in funding.

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Mixx, a Digg-like site that ranks news stories based on reader voting, will launch a new “breaking news” feature later today that should get real news onto the home page very, very fast. More on that below.

Since launching just last September, Mixx has been on a tear to release new products. Groups came in December, followed by private mail in Februrary. Also in February they released a clustering feature that I think would fix a big problem at Digg – duplicate stories describing the same event. With the new feature, other users could add different but related stories to the main news item. This removes the need for Duelling stories and it gives the reader more content on the stuff they just clicked on.

So today they’re releasing yet another new feature. Like the others, it’s worth a little thought. The goal is to get the really hot news up to the home page very quickly and without having to go through the normal vote gathering process, which can take up to 24 hours before a story makes it to the home page. To get this special treatment, A special user, called a Super Mixxer (here’s how you become a Super Mixxer), must tag a story as Breaking. Once a story has been tagged by two Super Mixxers, the story goes to the home page under the Breaking News area. The story will continue to build up votes and move into the general Popular area of the page at that time. Others may drop off entirely.

For now only text stories can be Breaking, although they will add more story types over time.

This is different from how Digg handles things. Nothing gets special treatment until its gone through the normal voting procedure. Once it’s a top page story, though, if it continues to do well it can move over to the Top story in whatever topic is being viewed. So Mixx is getting the best news to the home page very, very quickly. Whereas Digg likes to make it tough to get on the home page at all, but then find ways for the really good stuff to stay there even longer.

I think the Mixx feature is a great way to make sure that breaking news gets to the home page extremely fast, possibly hours before it goes popular on Digg The key pressure points are whether the Super Mixxers are in fact all that Super. And if they are willing to take the time to constantly scan incoming news for relevant stuff. Another thing to think about – if this model works and traffic grows substantially at the site, look out for the guys that will want to pay the Super Mixxers to vote for their stuff.

It is just one more feature that I like and that Digg doesn’t have or show much inclination to build. At some point Mixx is going to have their very onw big audience for social voted news, second only to Digg in reach.

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There’s a joke that no good Web 2.0 service has come of age until there’s a script available to clone it. Digg has Pligg, Popurls has ezUrls (both predated AllTop). Now Twitter has ReVou.

ReVou promises “Twitter clone software made affordable” for $399 as a self hosted script. The script offers all of Twitters features, including SMS support, and even comes with its own API. The only question then becomes is why would you want to host your own Twitter? This is what ReVou says:

Existing site owners can benefit from running a micro blogging service resulting in more viral growth for your website when your users interact with follow friends by receiving updates via our social network platform. With our SMS integration as well as custom API, we allow you to gain more revenues through purchase of SMS credits, revenues from web advertisements and as well benefiting from 3rd party applications built for your site using our API.

Naturally I’m a little skeptical but there is a thriving marketplace for Digg style voting sites, with some services (Sphinn comes to mind) doing particularly well in various verticals. Perhaps there’s no reason why Twitter clones might not have some success, be it as stand alone sites or more likely integrated into existing membership based sites.

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