This may have been a good thing. Digg didn't have any constraints on buying new hardware and hiring new people, and we can see how that ended (they bought too much, hired too many people, and collapsed)!
As for hardware, all we wanted was a team printer that didn't jam, an SSD for ketralnis's workstation, and the right for our engineers to substitute an equal-cost laptop of their choice for the IT-approved MacBook.
Sure, the fact that they had a huge headcount, meant that they had to take more risk to try to monetize...but the nail in their coffin wasn't cost...but loss of traffic