Hacker News Reader

Comment by koolba | Hacker News Reader

> Still, he says making money is “not our top priority,” estimating the company spends only about 20 percent of its resources on its advertising business. Huffman declined to share revenue totals. The company is also not profitable.

I can't imagine giving $200M to a group of people who publicly say they're not focused on ensuring I get it back. Is this a VC investment or a charity?

Also, have they not achieved profitability after 10+ years because they don't know how to make enough money (i.e. ad sales team is weak), costs are too high (i.e. bad code so lots of infra or too many employees), or is it just not possible to be profitable in this space?

View on HN

Brings to mind an article I read circa 2001 where a Google executive said, "Look, we could be profitable next month if we covered the site with annoying ads, but we're not going to do that. We're focusing on growth now."

Worked out okay for their investors.

Search results pages turn out to be the most valuable possible place to put ads.

Reddit might not be nearly so.

Then again Facebook initially seemed like it would have that problem but they seem to have overcome it.

But what if Reddit, which has tons of great content, blocks access to Google search, focuses on building a really good search engine, and strongly marketing it via sharing search results in their platform, could this become popular ?

And while $200M doesn't fit a design change, search engines are expensive.

If it were that simple Facebook would have tried it by now.

Google was still a fairly young company at that point. Reddit is 12 years old and had a $1.6B valuation prior to this $200M infusion. They've already achieved growth.

I think the investors' motivations are non-financial, akin to how YC invested in Quora.

a) The investors may have been given a different answer as to how much Reddit cares about making money, even in the short term (I don't mean that they were mislead, but that it would be bad PR to tell the Reddit community the opposite)

b) They may have a plan towards profitability over a certain period of time that they haven't shared with you or me but that was convincing enough to potentially be a good investment (or maybe other scenarios, such as selling to an even bigger company who already can monetise... such as Google)

Maybe direct profitability is a red herring and the investors actually see the site as a propaganda and public sentiment modification engine.

I guess the brand is getting quite valuable.

I think there was some calculation estimating reddit's hosting costs at less than $10M. so it's probably not that.

A huge amount of reddit users (I think 70%+) use ad blockers.

Source?

Not true. Source: I was the ads PM not too long ago.

So out of curiosity, how many do block ads? I heard it's about that for gaming sites, but what's the rate like on Reddit as a whole?

Reply on news.ycombinator.com