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Once I was fortunate enough to work at a company that did not take VC money. I was very very lucky. It was a combination of luck, and ethical founders.

On the other hand, a VC funded company I worked for (Hampton Creek) seemed like a ponzi scheme. When I quit the options strike price was so expensive I couldn't afford to pay for the options nor the taxes to "gain", the alleged hundreds of thousands of dollars in value it was "worth". What a joke. I think in the end we will see a lot of these companies are loaded with red ink and offer very little value.

I venture to say a majority of these unicorns are pump-and-dump schemes.

Your intuition seems right. I remember a time when companies used their developers to update their site without having to raise hundreds of millions of dollars.

Once you understand what a pump-and-dump scheme is and how it works, you see the word with different eyes.

Do you have any links or a succinct explanation of how it works, then?

Pump & dump is roughly the following:

1) Be rich/famous enough for people to pay attention to what you do

2) Pump a bunch of resources into something (company, stocks, whatever)

3) Everyone concludes there must be value, because you're investing your own cash

4) Others start investing, increasing the value further

5) You sell (dump) your stake at the new price before everyone realises they've invested in something worthless.

Say you invest $1 million in $1 shares and the extra investment/interest from others raises the share price to $1.20, you sell everything and get $200k profit for no work. Everyone else is left holding shares which turn out to be worthless.

Read the book The wolf of the wall street. It is quite entertaining and describes the pump-and-dump scheme really well:

https://www.amazon.com/Wolf-Wall-Street-Jordan-Belfort/dp/05...

https://en.wikipedia.org/wiki/Pump_and_dump

Steve Blank on the Tech Bubble: 'VCs Won't Admit They're in a Ponzi Scheme'

https://www.inc.com/zoe-henry/steve-blank-tech-bubble-burst-...

VENTURE CAPITAL IS A "LIQUIDITY PONZI SCHEME," SAYS STEVE BLANK

https://news.ycombinator.com/item?id=12061550

I've tried Reddit ads. Not only do they don't work, they invite backlash from Redditors.

And I say this as a heavy user of the site who knows exactly what kind of content formats work best on it.

We had the complete opposite experience - we ran a tiny ad buy when the platform had just opened up, and the effect was amazing. The community embraced us and for years afterwards, people shared it in comment threads throughout reddit.

You have to make something they want, and you have to engage with them in the comments section as a redditor. If they feel pandered to, it's going to backfire. I see a lot of ads on there that seem like try-hard pandering.

It's certainly more difficult to use well than most ad platforms, especially for bigger companies.

> It's certainly more difficult to use well than most ad platforms, especially for bigger companies.

I think this is going to be a big issue. Large advertisers want reach, not hyper-targeting a tiny sub with 3,000 subscribers.

While you can certainly make something that would appeal to, say, /r/edmproduction, would a large advertiser like P&G be able to create something for default subs (that have huge reach)?

I agree that it's going to be a big issue for Reddit if it wants to be a multi billion dollar company. If, on the other hand, it wanted to be a community site that pays to keep the servers running, it wouldn't be a problem.

That said, our ads weren't targeted at a sub, and they worked well.

I feel strongly that none of the VC investors in Reddit actually use Reddit regularly.

Totally agree. I've worked for several big corporations and they are extremely inefficient; as a software dev you could do nothing all day and nobody would say anything... I think sometimes it's actually better FOR THEM if you do nothing all day than add more code to the growing pile of over-engineered garbage that they're building (and which will need to be rewritten)...

Big companies are so entrenched in their over-engineered ways that they develop very low expectations about productivity.

I mean, if you look at Facebook; does anything actually change? No, it looks pretty much the same as last year - 5000 Facebook engineers working on it full time for a year and there is no noticeable, meaningful improvement.

I don't know if these big tech companies are hiring all these unnecessary software developers out of duty, for competitive advantage (just draining the talent pool) or what else but it definitely looks like a bubble.

Facebook can't really risk changing much to the frontend UI else risk alienating the millions of non-techies out there who use the site because their brothers, sisters, aunts, parents and grandparents are on it rather than because it is hip and trendy.

However there is always backend work that needs to be done: security updates, bug fixes, updating frameworks to work with newer tech, automation / pipelining improvements (since they are working on such a large scale), etc. And that's not even mentioning the business side of things like ads, moderation, etc.

> They are trying to sell it.

I think a more natural move would be to IPO. Since Steve Huffman stated that monetization is not a top priority, it won't be happening anytime soon.

Fun fact : they sold reddit in it's infancy and then later regained control. That sale didn't end well. Even if they do find a more savvy buyer like FB/Google , reduced founder control in a community driven website can't be a good thing. Having spent billions to acquire reddit, the new owner will likely begin to turn it into an advertising machine which has the potential to alienate the core userbase. On reddit, the core userbase is everything.

That's what they said about Facebook and Google ads. Reddit is a treasure trove of a user's information and tastes. People spend ridiculous amounts of time on it.

An IPO would end up like snapchat. Without solid $$$ growth, wall street will eat reddit for lunch. Much better to do sell it to Google / Facebook or the media companies.

There is absolutely no way whatsapp would been able to fetch it's valuation if it went IPO.

>>That sounds odd too me as well, maybe I am not versed in startup culture. Having a goal of going from 230 to 300 people seems like a pointless metric (and wasteful). It's like saying "I want to write 1000 lines of code today".

This one of those largely company things where bosses assert their authority and power in the organization based on the head count under them. So in many companies people hire extensively even if they absolutely don't have to.

The more people you have under you, the more you are considered powerful.

This phenomenon is just starting to happen at the company I work at. It's a great company in almost every dimension, but this particular problem is especially insidious and almost impossible to stop once it happens.

Every manager is encouraged to increase the number of people they manage. Managers in turn get disproportionate rewards compared to developers (such as offices -- not even the most senior ranking developers get offices, but the lowest ranking managers do), so developers are encouraged to go into management. Before long, the company is bloated with highly paid managers managing managers, top-skill developers no longer developing, and the supposed dual technical track is hardly anything except a bullet point on some other manager's resume.

>> The company has about 230 employees, up from around 140 at the beginning of the year. Huffman would like to end 2017 with around 300 full-time staff.

> That sounds odd too me as well, maybe I am not versed in startup culture. Having a goal of going from 230 to 300 people seems like a pointless metric (and wasteful). It's like saying "I want to write 1000 lines of code today".

I understand this criticism but I think the intent behind their statement is different from the intent you're reading into it.

It sounds like you think they're using it as some kind of empire building management metric (I might be wrong). ie. 300 people and well be a great company! As you say that'd be pretty stupid and so I doubt that. Here's my guess: the headcount number is by product of a broader growth plan. ie. We need to get to X revenues, or scale to X users, or build Y products in Z months which means we need to hire X engineers, Y marketers, Z salespeople in a certain time frame.. add all that up and that means we need 300 people by the end of 2017.

The reason it gets boiled down to 300 is two-fold: 1) It's just hard to get a journalist to be interested in that kind of considered detail & much easier for journalists to remember that one number 2) It's actually still a good signal in an ultra-competitive hiring market. ("you bet we're hiring!, we have lot's of jobs openings! didn't you here we're looking for 100's of people, come and help build that site that you already spend half day on")

300 as a management metric = no sense; 300 as by product of growth plan, headline grabbing takeaway, beacon to potential talent = better.