ArsDigita took $38 million in venture capital investment from Greylock and General Atlantic in 2000 to provide working capital for expansion of its product line. Greenspun claims that the venture capitalists staged an internal coup to drive the founders out of the management structure and installed incompetent professional managers with little idea of how to run a technical company, resulting in the collapse of the company and a lawsuit between the founding shareholders and the venture capitalists over control of management. The lawsuit was settled out of court on undisclosed terms. Later, it was revealed by Eve Andersson that Greenspun received approximately $7.6 million, while the other founders received nothing.
Ars Digita was a prime example of dot-com excess. Recruiting was performed nationally, with four tiers of hiring, ranging in salary from $80,000 to $150,000 annually. Potential recruits where required to pass a series of programming tests in the Tcl Programming Language. These problem sets included calculating Fibonacci sequences and other basic computer science tasks.
Recruiting was touted heavily by Greenspun, and Ars Digita became notorious among the 'elite geeks' as a place where recruiting could result in significant payoffs. During the spring of 1999, for example, recruiting 5 hires would earn the employee a Honda S2000. Recruiting 10 employees would net a Ferrari F355. A trophy F355 in bright yellow was kept parked outside of the Prospect Street office in Cambridge, MA to entice employees into recruiting. Later in the summer of 1999, as new management was brought on board, the policy was quietly changed to a lease of the cars, not outright ownership.
Approximately 180 Ars Digita employees where hired at the company's peak, but with little to no business plan to back the hiring, the weight of payroll and offices in Cambridge, Berkeley, Washington D.C., and Ann Arbor soon overwhelmed the company. The Ann Arbor office was closed in September, 2000, with the other offices following over the following months.
Employees at Ars Digita were treated incredibly well. The Cambridge, MA office, for example, had a full stocked kitchen on each floor, and a full game room with a pinball machine. Each employee desk was outfitted with an Aeron chair, two Sun Microsystems 17" Flat Panel Monitors, and a VOIP telephone.
Additionally, Greenspun invested several million dollars into a home in Cape Cod as a 'developers retreat'. This home was rarely used, even though it was completely refurbished with networking, meeting rooms and bedrooms. Another fully-stocked kitchen was kept there.
In 2002, ArsDigita was acquired by Red Hat.
The founders of the ArsDigita Corporation also set up a nonprofit organization, the ArsDigita Foundation, which sponsored a yearly programming contest for high school students and, in 2000, a free physical school teaching an intensive one-year course in undergraduate computer science.
ArsDigita is unrelated to ArsTechnica, despite the similarity in name.