Over at Valleywag.com there’s a link to an interesting Business Week story about Digg’s financial black hole that’s only getting bigger and bigger as the company grows.

Digg’s burn rate is frightening, evening for a company that has received $28.7 million in secured funding. According to Businessweek.com, “Last year the company lost $2.8 million on $4.8 million in revenue, according to Digg financial statements reviewed by BusinessWeek. In the first three quarters of 2008, Digg lost $4 million on $6.4 million in revenue.” That’s a lot of money for a product that could theoretically be maintained by four of five employees and an army of servers or Amazon EC2!

The valuations for Digg, Facebook and many of the other “hot” Web 2.0 properties are a by product of a period of madness. A period of time were anything that required funding was possible and getting access to that funding was a fairly easy process.

A student right out of school with no savings could get a 100% mortgage for a house. A husband and wife with a terrible credit rating could refinance their mortgage and secured debts with a simple phone call. A teenager a concept could could present a pitch to a VC firm equipped with seemingly endless amounts of money and walk away with millions in investment. It was a time where Wall Street and America got drunk together according to President Bush a few months back. That time is gone and the leaders of the Web 2.0 revolution who keep talking about inventing a new business model are going to have to very quickly have to read up on the old business model – making money!

As the recession in the US deepens there will be many web companies closing their doors and turning off their servers and the companies who’ve had ludicrous valuations (and enough funding to keep the doors open for a few years) will inevitably tumble back to reality. After all, investors can only let their money burn for so long before profitabilty usurps nurturing as their number one concern.

If you don’t frequent the zend framework website you might not have realized that they already have a release candidate for version 1.6 of the zend framework. What’s interesting about version 1.6 (other than the additions to my new friend Zend_Form) is that it comes bundled with the Dojo javascript framework. On the surface this seems like a good idea: a php framework and a rich integration with a javascript framework. Your basic all-in-one package. Looking deeper, I feel like this has the business equivalent to “code smell” to it. Why did Zend select Dojo out of all the javascript frameworks out there? The community doesn’t seem to think Dojo is the right way to go. All the blogs I’ve been reading seem to be really pushing jQuery. But then again programmers (yes, myself included) are a fickle sort and tend to always jump on whatever bandwagon seems to have the most hype. So now Zend has taken it upon themselves to make it easier for programmers already using the Zend Framework to start using Dojo. Did Dojo start loosing the popular vote and figure their best bet for the future is attempting to piggy back on the Zend Framework’s hype? The relationship between the Zend Framework and Dojo is clearly beneficial to both parties and the integration of the two will only become easier and more seemless over time. I suspect it will get to the point where the ease of using Dojo far out weighs the hassle at attempting to use another javascript framework. I figure the result can go one of two ways, developers using ZF will either: convert to using Dojo or come together and extend the Zend Framework to have a rich integration with other javascript frameworks.

In a perfect world, business wouldn’t determine the choice of programming language or tools that we use. As part of an open source community, we have the tools required to make our own decisions and to branch off when business begins to constrict our choices.

What do you think?

Our resident server expert Justin Samuel has been Slashdotted!

Justin has just released the findings from a top secret research project he’s been involved with for the past year with a team of dedicated Nerds at The University of Arizona. Their findings have uncovered some flaws in the current Linux/Unix package distribution method which could lead to a compromised server or even worse.

Check out the paper here.

The company offering the longest iPhone contract in the world has finally released their iPhone pricing plans and surprise, they’re not even close to the pricing plans offered by AT&T. Then again, it is the Canadian Phone market I’m talking about. Home of $6.95 “system access fees,” 25 megabyte Blackberry data packages (Is that all I really have?) and value packs that contain such basics as extended voice mail (a mailbox that can hold more than 3 messages), caller ID and reasonable unlimited evening calling start times (like 6:00pm); all of which are givens in most other markets around the world.

Check out Engadget for the full breakdown of the pricing plans offered by Rogers.