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Comment by blitzar | Hacker News Reader

They could accept that "reddit the product" (in its current form) is a 2-5bn market cap business with solid 0.5bn revenue; run the business on that basis (all values in today $$'s).

Not every product / market is a trillion dollar business. Trees dont grow to the sky.

This isnt to say dont innovate. If they invented a new product; the VR Meta TikTok Shorts iPhone Satellite Headset Watch (TM), then one can reevaluate what "reddit the product" means, but charging for your API or introducing a paid verified badge isnt changing that definition.

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The revenue doesn't matter though if their expenses exceed it. Reddit is not a profitable company. So the parent poster's question remains valid: was there ever going to be a way to "make money" (i.e. profit) without alienating the user base?

Why is Reddit not already profitable? They don't pay their moderators, they don't pay for their content, it's mostly text- and image based, very little video, they have a userbase which buys meaningless awards for real money, they should have "native advertising" deals to no end, and very high CPR for their ads since the userbase tells them about their interests.

Sounds to me like they're just bad at running a business.

I don't know. I can only guess that it's because it was created by two college students with the intent of allowing people to share interesting content with each other (a pet project), and then became more popular than they could ever have imagined.

Server costs went up in order to keep the site alive, and investors saw the potential and subsidized those costs, and everything ticked along swimmingly until the investors became impatient. Again, this is just speculation.

You are wrong in that they DO host videos and images and quite a lot at that. Originally they only allowed text posts but that changed a while ago and now a lot content is hosted on reddit itself. I personally think that was a huge mistake. If where is one thing you have to know on the internet is that you should stay away from being a hosting site, it almost never works out.

Imgur was profitably hosting images until reddit brought image hosting in house.

It’s kind of silly, to be honest. They basically had free video and image hosting, and Reddit decided to say screw that, lets increase our server fees dramatically. I still don’t really understand what motivated that decision. Did they really gain so much by self-hosting content?

I do understand that business decision though. You don't want your business model to depend on a dominant supplier who then can extort high API fees from you... does that sound familiar, somehow?

Ha, that’s a great point!

Imgur also became a community of its own. I don’t remember when it happened, but perhaps Reddit thought they were becoming a true competitor and opted to pull away.

But if the supplier depends entirely on content created by your userbase for its survival, how much leverage does it really even have?

But those suppliers would be extorting fees from users, not reddit. You could say the same thing about any paywalled content. Reddit doesn't scrape and host web content, why do they feel the need to do so for images/video?

I think there is a point to be made about a smoother user experience, but youtube is a great example where their embeds can still be monetized.

Reddit not pushing ads through the API is like if youtube didn't give you ads on embedded videos.

"but reddit is extorting fees from users, not google. why would google care if reddit wants to self-immolate and keep content inside their platform?"

my brother in christ, no man is an island; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promentory were.

nobody wants their website to be a linkfarm to content that's all 404'd, it's not that complex. How do you keep that from happening? Host it yourself.

I believe they are trying to protect themselves from imgur or YouTube deciding they don’t like being an unpaid data store.

It’s stupid and premature in my opinion; they should have bought Imgur instead.

And the Reddit video player:host was notoriously crappy.

> they should have bought Imgur instead

In that case, wouldn't they still be paying for the hosting?

YouTube and Twitch even pay the creators, and are apparently (at least sort-of) profitable, and they don't even get a share of the brand deals that are baked into the video. Sure, they are backed by huge cloud operators, but still. The hosting costs for Reddit should not be that high.

I wonder if they perform image/video deduplication at scale (or if it is even possible). So many images are just reposts or slight variations on the same thing.

Couldn't agree more. A web site who's content is freely provided, moderated for free and pretty much just linked to other content and they still can't make money without charging extortionate amounts of money.

So many suitable options were voiced for the 3pa such as profit shares or just reasonable priced API fees.

It baffles me that Reddit didn't already turn a profit. So over bloated and the shit they have actually paid people for such as the official app and desktop site, is just sub standard

Trim the workforce. How many engineers, UI/UX, product and QA do you need to run a reddit.com? Likely, 200-300, not 2000! Focus on the core product and the profit will come.

Someone pointed out that 90% of that 2000 is probably ad sales teams. Their actual software and UI people are likely appropriately sized.

I don’t think that’s true. I remember, for several years now, how after each VC capital, they boast how they are to “double in size”. That’s not just ad sales.

I would also think, the numbers could be reduced - but then I never run a plattform of that size.

And they are operating worldwide, processing take down notes, handling court orders alone, is a big deal.

I am sure that this part of the business is a tiny, tiny fraction of the current bloated workforce. Know what, agree, it’s a hard job, keep all those people in. I think they are mostly relying on the volunteer mod force, rather than internal people, but whatever. Keep them all. Still 200-300 is more than enough.

Fraction of that if we just run old.reddit.com instead, you know the good version of the site that actually loads and works.

old.reddit.com is what most people want anyway, maybe with the added gallery controls they added.

> run the business on that basis

How do people live on only 500k a year.... They dont buy a private jet and a $50million house.

Reddit does not have to spend half a billion dollars every year to satisfy their users (which is what its entire valuation was in 2014).

The point was this: Reddit should have held costs down to be profitable. Growing at all costs is not a great way towards profitability, believe it or not.

Growing at all costs is not a great way towards profitability, believe it or not.

Depends on whose profits you care about. Growing WeWork at all costs was wildly more profitable for Adam Neumann than trying to slowly grow a sustainable commercial real estate company ever would have been.

The core problem is that no one in charge at Reddit HQ 'wins' if reddit where to become a much smaller, but profitable, company.

If Reddit's goal is " is a 2-5bn market cap business with solid 0.5bn revenue", then do they need an order of magnitude more staff than say, 5 years ago? My understanding is their, rather dramatic, scale up was to chase Twitter/Instagram/TikTok. If they're going to drown in expenses before achieving it, then it seems pursuing that was a poor business decision driven by investor expectations of hyper scale (never mind its effects on the product for users).

Reddit isn't profitable because its management runs it in an unprofitable way, because they're chasing even bigger profits. They have way too many employees, namely.

Their infrastructure costs can't be much different than archive.org, but archive.org doesn't try to get huge profits and doesn't have many employees.

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