How do you address the concerns of users who feel that Reddit has become increasingly profit-driven and less focused on community engagement?
We’ll continue to be profit-driven until profits arrive. Unlike some of the 3P apps, we are not profitable.
Of course they’re not profitable.
Most growing tech companies aren’t, because most geowing tech companies will take their revenue and immediately reinvest it back into more growth, as they know growth attracts further VC investments, which will actually cover paychecks in the meantime. This is exactly how the world of tech works nowadays.
Being profitable or not is meaningless if you’re talking about a company exploding in revenue.
If reddit “isn’t profitable” why is spez worth over $10 million? That’s not money you just stumble into having, and if your company “isn’t profitable” wouldn’t you not be making enough to be worth $10 million after only a decade? Wouldn’t your money be going into keeping the lights on and not enriching yourself?
*billion
And profitability is not the same as generating revenue.
You can earn $200M a quarter and still have expenses of $220M, meaning you’re making a net loss.
That’s why companies focus on exponential growth first and don’t really care about portability, but once the userbase is large enough, they will try to monetize it. Either through ads, or paid subscriptions, premium plans, special avatars, etc.
That will surely piss of some of the early adopters, but usually isn’t significant enough to make an actual dent.
The last step (which we have also seen) is then kicking out staff. That has two effects:
1., It brings down the overhead (= salaries and attached taxes & social security) 2. The revenue per capita is inflated, i.e. it looks as if every employee is generating 4000 bucks instead of 2500 (random example), which is something that looks good in an IPO prospectus.
Thank you for the explanation, I’m having a hard time understanding how an “unprofitable” business has managed to stay afloat this long.
Through investors, who consider the revenue a good indication for future profits. So they float the bill and receive shares in the company instead, and cash out during the IPO.
Investors will give cash in exchange for equity in the company. The cash is used to fund whatever expenses aren’t covered by revenue. Those investors are going to expect profitability to come eventually. Sometimes the business winds up doing some stuff that damages their product in order to achieve profitability.
A company that isn’t profitable will still compensate their CEO, so spez is certainly taking gone a big paycheck. In addition, these net worth calculations also take into account stock. Spez most likely still owns a piece of Reddit, and that would be a factor.
You can still get very rich off of a company that isn’t profitable.
Case and point: Adam Neumann
There were 3 things going for Reddit, content wise: memes, news, hobby subs. It was a 50/50 if my Google search included reddit or Wikipedia. If reddit threw up a banner every 6 months and asked for a donation, I’d gladly throw 20 bucks their way. Reddit should have been a non-profit.
Going public was the absolute worse decision they ever made.
Agreed, I don’t know why Reddit is pushing to go public. Personally I don’t see the value in a business that admits that they aren’t profitable, but that raises the question if they aren’t making money how as Reddit operated for so long? The upside to them going public is that they’ll have to start publishing financial statements and we’ll get to just how much money the “unprofitable” business is making.
I think it’s probably being pushed by the people who invested in Reddit to make it go public so they can sell shares / cash out. But this is just my opinion
I used to buy a pretty good amount of gold before they let in actual fascists and then downplayed their toxic impact on the community and the internet in general.
Every exec wants money for themselves, even if it comes at the cost of the company they run
These are the steps the current admins are following:
- get VC investors for public IPO
- go public
- watch stock price go up initially
- cash out and move to a country with no extradition treaty with the US
- laugh ass off and wipe ass with $100 bills
Steve Huffman continues to piss on Aaron Swartz’s grave.
they fumbled so hard. they could have had millions of new subscribers if they locked the api key under reddit premium and allowed 3rd party app to enter user api keys
50 a year isn’t terrible depending on your use case, but they burned so much good will
Yup, Spez claims that $2/user/month is all they’re asking. I’d have happily paid that direct to reddit if they’d been upfront from the get-go. Instead, I’ve deleted my account and left the site after a decade of contributions. Very sad to see it go, but I’m not going to be like those idiots whose still hanging around on twitter constantly complaining about the way it’s managed
Absolutely. I probably would have paid. I’m not big on subscriptions as I prefer one time upfront costs or lifetime subscriptions when possible, but I did use Reddit a lot.
Instead I deleted my posts and moved on. Now, where do I find huskytantrums?!
Sometimes I think there isn’t much I miss from Reddit. And then someone mentions a community I miss. Gotta find me a new huskytantrums.
For me it’s catswhoyell
This is what I was thinking. Heck, they could’ve increased the price of premium, locked the API behind it and keep a certain percentage of the third party apps’ cut, similar to how the App Store runs.
They could’ve been greedy pigs and STILL won.
I would probably still be here if they did that (I’ve been tempted to leave already, and I want to see the fediverse thrive) but I’m pretty sure a LOT of people wouldn’t be
I don’t know if I’d call it a fumble so much as a death march. They know what they’re doing is wildly unpopular, they know they’ll hemorrhage users, and they never change course. Full steam ahead with the Titanic.
IMHO one of the biggest mistakes made early on in the development of the Internet is that everything should be free and ad supported. That is how we ended up social media that is destroying our socitey in the name of driving up engagement and thus ad revenue. I think things would have been much better if every one was just expected to pay a few bucks a month for the services they use.
I’ll have to disagree. Products being paid wouldn’t have stopped
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the internet becoming centralized around fewer and fewer services
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forced those services to have had upheld their quality and promises
Cable TV started under the pretense of having no ads other than each network’s own, and to have access to pay-per-view events (which is sports and we can stop pretending sports didn’t sell cable).
And yet Cable, despite exploding more and more on widespread adoption, still became the same if not WORSE than public TV.
The paid-ternet would be the same or worse than what we have. And I know Facebook’s dream goal is to make a paid-ternet. If I die and become a cyberghost, I’ll haunt the hell out of any server rack where that goal is making progress and make sure it never succeeeds.
I agree with you here. Share holders are never going to be satisfied. The numbers always need to be going up which means new ways to generate profits must be found. Ads, subs, micro transactions, etc - nothing is off the table.
this. a thousand times, this.
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Nobody “decided” that. Paid subscription services have been around just as long as ad support. The ad support model grew organically out of the converging desires of users to have unfettered access to content, and the desires of advertisers to have unfettered access to new monetization opportunities.
Well said. Honestly while I’m sure many, especially those that have made it here, would have paid an ongoing subscription for a perpetually unshittified Reddit / other social media, the VAST majority of users are going to flock to a free version. We didn’t get where we are by accident.
There are so many ways they could have made it viable. Like comically easy. But that was never what they were interested in. The thing that they aren’t willing to just come out and say, is that their own app is built to generate advertising revenue. They have absolutely zero interest in fostering a 3rd party community, and the only concessions they are going to make are for things that actually have a chance at saving the spending money (i.e. make sure the free labor they get from moderators stays and make sure other people deal with questions like accessibility).
Can’t shake the feeling it’ll be a pump & dump. It would be truly poetic for Reddit to be pumped up with bot content, IPO, then dumped.
If I delete my account, how will I use it to sabotage reddit?
Spez has a very punchable face, if I ever saw one.
It’s insane to me that a site with as much activity and engagement as Reddit is allegedly “not profitable”. He’s either flat-out lying or they have mismanaged the site to a legendary degree.
Either way, it’s pretty pathetic.
This seems typical for dot com/social/next best thing. They grow at all cost in angel funding. Then cash out.
I think a large portion of the profit losses might have to do with reddit hosting video/images.
IPO’ing an unprofitable company in the current economy is a pretty ballsy move. More power to them I guess…
We’ll continue to be profit-driven until profits arrive. Unlike some of the 3P apps, we are not profitable.
Maybe fix your product before you expect the money to come pouring in.
wal-mart is profitable and they at least pay workers minimum wage. u/spaz can’t make a profit when unpaid mods do most of the work for them. Not a very good CEO
That would require reddit to make good decisions, which they’ve repeatedly demonstrated is impossible
It’s not impossible, they’ve just chosen not to. That says more than any AMA
That was such a tiny violin moment from u/spez. Redditors are the ones making all the content. Their job is no more difficult than 3rd party apps for the most part
and unpaid mods moderating
He’s just digging the grave more and more… but I doubt spez cares as long as he gets his golden parachute in the end
All spez wants it to keep things going until the IPO where he gets paid big. He’s doing these changes to appeal to IPO purchasers and “maximize” the value.
He just publicly admitted Reddit is not profitable and he’s mad that third party apps are. That IPO is not going to go well lol.
They would have to show their books as part of an IPO anyway, and everyone already knows its not profitable. It’s not like he accidentally dropped a big secret here.
How much does he own?
I keep reading this and I’m not 100% he is maximizing IPO value. I think he’s ultimately doing more harm than good.
Yeah, honestly I can’t see how good this can look from an investor perspective.
This will ultimately increase the number of users who can be advertised to.
For every person who is engaged about this there are a dozen that don’t understand what an API is and will happily switch over to another app from the app store if it has cat gifs.
True, there will be enough users that doesn’t care about all of this, but there’s still a non negligible part of user (and those are probably the best contributors), and more importantly moderators that will leave Reddit. It will probably disrupt the site, without all of the leaving moderators, Reddit will quickly become the wild west, and it would be really difficult for them to moderate the site themselves, there’s probably users that would want to replace the leaving moderators, but not enough.
Honestly I won’t care that much when it comes, because the “new” Reddit will not be the same Reddit that I loved.
I hope they’ll reap what they sow tho.
Moar ads!
Maybe if they put ads inside of the ads they’ll get more revenue.
Then put ads inside those ads, that’s like profit3
Yo dawg…
Man, I haven’t seen an inception meme in so long. Brings me back.
The guy is a complete clown.
The beatings will continue until
moraleprofit improves
