Last summer, New York-based hybrid investor / incubator / holding company thing Betaworks acquired social news site Digg and relaunched it soon after, hoping to bring back some of its mojo in the process. Nine months later, Betaworks has acquired another news-oriented application, this time bringing Marco Arment’s popular story-saving app Instapaper into the fold.
In an email, Betaworks founder and CEO John Borthwick remarked that the acquisition clarifies Betaworks’ role as a company that builds and operates multiple products, rather than just as an incubation space for new ideas which eventually got spun out. And, more importantly, with Instapaper’s purchase model, it makes Betaworks into a company that actually makes money.
“Starting 14 months ago I began to move Betaworks into being an operating company,” Borthwick wrote. “In our first three years we were a factory for building companies, we built them and spun them out, hired CEO’s and got other people to fund them. 14 months ago I paid our investors all their money back and started making the shift to operating company.”
As part of the transition, Betaworks has been building around the social reading and discovery space. With the acquisition of Instapaper, Betaworks is adding even more tools for saving — and sharing — news that is important to readers. Borthwick wrote that Instapaper will be a “perfect fit” with Digg and its forthcoming Digg Reader, which is being positioned as a sort of Google Reader replacement.
In a blog post, meanwhile, Instapaper founder Marco Arment said that he was passing on responsibility to Betaworks so that he could “try other apps and creative projects.” In looking for a new home, he wanted Instapaper to find a place where it could be fully staffed and grown.
With that in mind, the deal was structured to ensure the health and longevity of Instapaper, “with incentives to keep it going well into the future.” Arment said he will “continue advising the project indefinitely, while Betaworks will take over its operation, expand its staff, and develops it further.”
Digg, for its part, seems to have benefitted from the change in ownership: It’s reportedly grown 93 percent over the last 12 months since being relaunched under Betaworks management. Adding Instapaper to its existing roster of social reading and discovery products could help to advance its aim of capturing that market.