The current community would most likely say "invite-only" is a feature not a failure.
Dan made the executive decision to open the site up to viewing by the general public against the wishes of a lot of the members.
Community quality is an issue that most sites just try to ignore. When someone tries something different to relative success -- invites are extremely hard to come by and current members are very active -- rushing to call it a failure is short-sighted.
Or, it's his opinion. He didn't say the site was a failure, just that from his perspective, those are two things that make this site not worthy of further attention.
I waffled a bit on my opinion of this site, but the best way to categorize the site is to think of it like a design aggregator. The aggregation is a bit more focused and driven by the members, which effectively weeds out the general crap you'd find on any other free-for-all design site. By this metric, signal-to-noise is extremely high, and the site is a success.
However, the elitist vibe that this whole site creates doesn't sit well with me. I hated that crap in high school, and my feelings haven't changed much on that in the intervening 20 years. Dan and his community can keep the site private. I didn't start designing to win popularity contests. This, to me, is also a failure of the site.
Also, realize where this is being posted. Most news here concerns start-up businesses. If you have no profitability, and are a communal-invite-only image posting site, it sounds like it will be a failure. As a pet project, I'm sure it can sustain itself indefinitely.
Aside from all that, I do like the site on its technical merit alone. Somebody create a site that does the same thing, but is open to the public. 120,000 pixels, a way to screen grab easily, and a REGISTRATION PROCESS. I'll sign up.
Dan made the executive decision to open the site up to viewing by the general public against the wishes of a lot of the members.
Community quality is an issue that most sites just try to ignore. When someone tries something different to relative success -- invites are extremely hard to come by and current members are very active -- rushing to call it a failure is short-sighted.