Killing geese that lay Golden Eggs is old and enduring Silicon valley tradition.
Hosting costs should be jack shit, developing costs should be pretty low, etc. Reddit must be funking up in a pretty fundamental way to not be making money.
What makes reddit so special it shouldn't be able to afford to pay for itself? It doesn't make sense. Every social media company with this kind of massive userbase appears to be able to make good money, why not reddit?
Sure, maybe they cant make Facebook levels of cash - but 10th most visited website, with what should be low hosting costs (mostly text), should be more than sufficient. If they can't make it work, they'd need good reason to explain what makes them different, IMO.
I'm sure they've thought of keeping costs low, and I'm sure they could lower costs by a lot and know it. They choose not to.
They're not forced into their current path.
But it makes sense when you look at that VC money. Just being profitable would be a failure. Chase billions of revenue or die trying.
Or to put it a different way, if reddit spent $100M a year on employees and offices and $100M a year on servers, they would have amazing profit margins already.
I'm sure the VCs first playbook was to start cracking down on expenses, since it's typically easier to get results from than improving revenue....
You saw their VR division, right?
VR is just one of the places the money is going.