Ask HN: Why is Reddit worth so little? | Hacker News Reader

Ask HN: Why is Reddit worth so little?

16 pointskthaker10 comments

I was looking at Alexa's global site rankings here:

http://www.alexa.com/topsites

Reddit is ranked at number 9 on the list. It's ahead of Twitter, LinkedIn, and Twitch, to name a few.

Those three companies each make billions in revenue each year. Some lose money, but they still produce quite a bit of subjective value and have valuations that are high to match. I know Twitter might lose value over time, but it's going to be in the billions for a while.

Reddit has more site visitors, way longer time spent on website, and more pages viewed per user than most of the sites on the list. But its valuation, last I checked, was $500 million - far below its peers. I've also heard that it only makes $10 million a year in revenue.

So why is Reddit's revenue and valuation so low? It's not as if it's worthless to advertisers - there's a fair amount of preference data to be gleaned from users based on which sites they visit and so on. Is it bad management? Lack of focus? Or something else?

AFAIK, reddit didn't take much venture capital so there was no pressure to make billions to appease investors that put billions in. They've never been aggressive about monetizing the site.

The network effect of reddit are also much less than twitter or facebook, it's primarily a news aggregator + comment system, there are plenty of competitors ready to step in if reddit starts throwing in tracking or invasive advertising.

> I've also heard that it only makes $10 million a year in revenue.

What's wrong with that? Not everyone wants to be the next google or facebook, I'd love to have a site that made $10 million a year, I'd be perfectly content with that and wouldn't have a desire to turn it into a multi billion dollar empire. ~20 years ago this was the dream of most software developers, carving out there own ISV niche and getting rich.

Unlike twitter, reddit is a sustainable business. If I had to bet on which one will still be here in 5-10 years I'd bet on reddit.

I love the fact that reddit chooses to stay small and sustainable.

Twitter is taking the opposite path and they do everything in their power to alienate their most passionate users. However, I think Twitter is infrastructure now, like Facebook and LinkedIn, and it would be very difficult to disrupt or displace.

I think this is a little bit of rewriting history. Reddit in the beginning was always fairly niche. Primarily for early adopters and tech focused. They were getting beaten by Digg, Fark, Slashdot, Twitter, Facebook etc. They sold to Conde Nast. I don't know if they could have raised a series A at the time. Steve Huffman and Alexis Ohanian created and sold Reddit in 16 months.

I'm not saying there's anything bad about not being billion dollar plus company, I'm just wondering why they're not at that point (if by choice or otherwise).

Also, I heard they took 50 million from a VC a couple of years ago, so they probably will feel pressure to start throwing off money eventually. FWIW, I just think Reddit could be a lot bigger than it is now.

twitter is primarily an app. you dont get alexa ranking for that.

twitch doesnt generate pageviews like reddit would. twitch tracks minutes watched, and i bet you that users of twitch spend a lot more time on twitch than redditors spend on reddit.

yes, reddit IS bad for advertisers. reddit are about the most informed people on the internet. you cant sell on reddit. ask any marketer. reddit advertising is bottom tier. unless you want to run meme ads that dont generate revenue. that can be fun, but ads are generally bought to drive revenue. not to appease the users of the site the ad runs on.

I may be wrong on this, but I'd hedge a bet that a majority of Reddit users run some sort of ad-blocking software. The "culture" (horribly wrong word but I can't think of a better one) on Reddit is also very anti-advertisement. Users are quick to point out even the most innocuous use of branding in posts as astroturfing. /r/HailCorporate is a perfect example.

That's irrelevant. As an advertiser, you WANT people who don't want to see ads to run adblock. Because you don't get billed for those impressions from people who wouldnt have bought anyway.

Adblock is a problem for publishers, not advertisers. Adblock actually helps align advertisers with consumers.

If you've gone to such great lengths as to installing adblock, you're probably pretty proficient in "exhibiting anti-marketing behavior".

> As an advertiser, you WANT people who don't want to see ads to run adblock.

No, you want people who wouldn't act on your ads to run adblock. The degree that that correlates with "people who don't want to see ads" is far from clear.

Reddit is incredibly scattered. It is hard to know where to post a thing you find interesting. Historically, there was no general "I find this interesting" place to post it. If you posted it to the wrong sub Reddit, it wouldn't go anywhere at all and might get deleted. There was no real means to share stuff "with friends" just because you liked it. It needed to be on topic for the sub Reddit in question. Each sub Reddit has different moderators.

This has its good points and bad points. I have been enjoying certain aspect of it, but this is probably a barrier to certain things as well. Monetization may be one of those things.

They very recently introduced enhanced profile options for users. This is in beta testing. This is a means to post something somewhere that you find interesting and have no clue where it belongs on the site. It also has a means to give a person more of an identity on the site than what was previously available. I see it as a significant and positive change that probably won't undermine some of the positive aspects of having a bunch of different sub Reddits.

I will suggest you check back in a year or two and see if valuations/monetization has changed any. I feel like the profile options currently in beta testing are probably game changing in a good way for the site.

Try advertising on Reddit. Volume on targeted subreddits is super low. Volume on the site in general is only good for very niche products.

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