The founder, Joshua Schachter, posted twice to his list about the investment and I figure that is pretty much the whole story. If you want the details on the investment, that's about all there is to tell.
But I've gotten a number of comments on this blog and elsewhere suggesting that there are people who'd like to hear my side of the story.
So, I'll try to give you that.
del.icio.us is a really interesting web service that lets anyone who uses it "tag the internet".
Most people, me included, go there for the first time, look at del.icio.us, and then shake their heads and say "I don't get it".
But for those who come back and actually use it, the experience is very different.
del.icio.us becomes a critical tool for them to manage their web experiences.
That's what happened to me. That's what happened to Brad. That's what happened to Charlie.
So we figured we ought to pay some attention to del.icio.us.
What we learned when we dug into it is that "tagging" is a relatively new, but increasingly important, phenomenon on the web.
Simply put, tagging is the exercise of associating words, any words you want to use, with URLs. That's all it is - a series of words and URLs. The words are the tags. But when lots of people start tagging with a similar tool and similar words, and the tags are shared, some very interesting things result.
I like to send people to the del.icio.us tag page to see what that result is.
del.icio.us made tagging popular, but others have used it with incredible results. The most obvious example is Flickr. I believe that tags and RSS feeds of the tags has made Flickr vastly superior to other photo sharing sites.
RSS feeds make tagging even more powerful. Because everyone's tag can be an RSS feed, tagging becomes extremely viral and portable.
Jeff Jarvis was the first person that pointed the power of this out to me. I asked him about del.icio.us and he said that he didn't tag, but he pointed me to this tag that he subscribed to as an RSS feed. It was like looking at someone's personal daily bookmarks. That was the aha moment for me.
The most difficult part is getting the posting window into an easy place to use. I highly recommend the experimental bookmarklet. If you haven't done something like this before, it will not be clear what you need to do. In Internet Explorer, you need to select one of the posting windows from the links on the about page and add them to you "link" bookmarks. It's much simpler if you use Firefox. In that case, you simply drag the link for the bookmarklet to the place on your browser underneath the field that displays the URL. That will create a little icon that says "post" on your browser toolbar. Anyime you are on a page you want to tag, you click on that icon, and tag away.
That is all there is to del.icio.us really. It's hard to get going, but once you do, you will be surprised by the results, particularly if you share the tags with others.
If you want a simpler way to understand the power of tagging, I suggest John Udell's screencast. It's a really good description of how this stuff works.
I am going to try sharing my tags with everyone who reads my blog. The post underneath this one is an automatic daily post to my blog of everything I've tagged the day before and the tags I used. I hope you will all find that useful.
Many people ask why Joshua took an investment. He built del.icio.us almost two years ago and its been up on the Internet for almost a year and a half. It has a huge number of users and is growing very quickly.
But del.icio.us needed some things that Joshua could no longer provide in his spare time (nights and weekends).
Seth Goldstein thought Joshua could use some capital and introduced us to him.
Joshua needed capital for the two major priorities.
The first is scale. The service is taking off and it needs to be configured like the popular web service that it has become. That means boxes, bandwidth, redundancy, etc. That costs money.
The second is ease of use. That means tweaks to the user interface that make the service easier to use for non-techies. That means new features that users have been asking for. That means spending time writing code, testing it, making the service work better for its users.
Joshua's hope is that by dedicating himself full time to the service it will become better for its faithful users and better for new users. That feeds right back into the community because more tags means more shared information which is what this is all about.
The question everyone asks is "what is the business model". To be completely and totally honest, we don't yet know. This was a seed investment and none of the investors put up very much capital. Joshua retained complete control of the service and is going to focus on making it better. That is all anyone wants to see happen right now. In time it will become clear what the business model should be. And there are a number of them to choose from for sure.
In summary, we believe tagging is important, its here to stay, del.icio.us is a very important participant in the tagging phenomenon, and we are really excited to be part of its development.