Reddit: Return of the Junk Stock IPO | Hacker News Reader

Reddit: Return of the Junk Stock IPO

forbes.com

66 pointsbelter104 comments

> In 2023, the company’s revenue was $804.0 million. Research and development, at $438.3 million, was more than half, an awfully big number for a company of this age. Total costs and expenses were $944.2 million. The net loss was $90.8 million, which at least is an improvement over 2022, with its $666.7 million in revenue and $158.6 million in losses. [1]

These expenditures blow my mind. But if reddit can grow revenue to 1200m and cuts expenses to 300m, the story looks totally different. A turnaround like that might only take a couple of years. Reddit is an incredibly sticky product, just badly mismanaged. With some new management, it could even be a buy at 5bn.

[1] https://www.forbes.com/sites/eriksherman/2024/02/26/reddits-...

Best place to cut costs would be to retrench their whole video player team. At this point I am not even sure how it is possible to make a product that so routinely fails to function for so many people.

The video player is what drove me to use Apollo instead, and then killing Apollo was enough to drive me away entirely. It’s a great idea but management incompetence is huge. How many other major websites regularly piss of their users so much?

they killed RiF. i stopped going there entirely on mobile which was 90% of my visits. i never look at reddit when im bored now.

on desktop, if RES and old.reddit stop working. ill never go back

RiF still works but you need to patch the APK with your own api key. There's guides online.

No thanks.

That's fair, it's a hassle and reddit isn't worth it.

You also have to fire a lot of management that allowed the org chart to explode in the first place. Maybe take a few lessons from the Elon Twitter playbook.

Looking to musk for intelligent, thought-through business decisions is definitely an interesting strategy.

lol, let’s see how it pans out for them.

I'm no fan of Musk but his business acumen is undeniable.

If you say so.

He single-handedly destroyed one of the best brands of the modern online era (tweet, Twitter, the bird logo) only to replace it with a brand identity that was stale 20 years ago and is commonly associated with porn.

The site’s traffic continues to plummet and his investment is worth billions less since he unleashed his acumen.

He didn't buy Twitter to make money. He saw it as the propaganda tool that it had become, and bought it to rotate it 180 degrees and point it back in the opposite direction.

Yeah, if that was the case, he wouldn’t have tried so hard to get out of the deal.

I used to think he was a great businessman until the Twitter thing removed his mask. It’s easy to achieve financial success when your father owns an Emerald mine. Then you strong-arm people out of their businesses (look up the businesses he actually started).

That's a really bold declaration, given how hard he tried to renege on the deal and how severely he tried to cut costs.

So funny that he couldn’t get out of the deal because he instructed his lawyers to create an iron clad agreement to force the board to accept. They’ll be teaching that deal in contract law courses for centuries.

Yet I still can’t go a day without being sent a Twitter link or seeing comments on HN.

Twitter will be dead when people stop talking about it dying.

What is twitter? I think maybe you mean the social media company called X.

It’s already dead to me.

Musk has also made what I consider bizarre and impulsive decisions with SpaceX and Tesla. The gullwing doors of the model X almost bankrupted the company, for instance. Or take the blast pad incident during a recent starship launch. Experts warned him this would happen.

Musk making unforced errors isn't new. His businesses do incredibly well regardless.

It's almost as though many of his companies succeed in spite of, not because of, his leadership. Get enough money and smart people on a problem and they can survive most leadership foot-gunnings.

He was very good at raising money when money was free. Unclear if all the other things about him add up to a net positive for his companies now.

Musk is successful despite himself, not because of. When he doesn't have a whole team of people keeping him from making insane statements/promises/business moves, the image of a successful, shrewd businessperson really crumbles.

I'm not fooled by the illusion any longer, but I do understand it's hard to separate the things he's taken credit from other people for, vs the things he himself championed/implemented.

Congratulations, you've created an unfalsifiable worldview for yourself where Musk's outrageous success with Tesla and SpaceX has turned into evidence of his unhinged incompetence as a CEO.

Congratulations, you've created an unfalsifiable worldview for yourself where Musk's outrageous success with Tesla and SpaceX has turned into evidence of his competence as a CEO.

I appreciate how badly you want me to love him the way you do, but the emperor has been revealed to have no clothes and I'm not happy to put my head in the sand to continue defending his intelligence/business anymore.

Yes, Elon accidentally fell into creating multiple billion dollar companies.

Not what I said.

Was also shocked by those numbers. And supposedly each DAU even generates more revenue than Pinterest and Snap - what is Reddit doing to make operations that much more expensive?

They’ve put a lot of research into making their mobile website unusable. These kinds of innovations aren’t cheap.

Desktop too. It is extremely slow while old.reddit.com is pretty fast.

it's really impressive what they've done. I don't think I've ever seen a web forum churn client CPU like reddit does

Simple answer: 2000 employees for a social media website doing 800 mil in revenue is too much(remember that mods are also not being paid which should technically be a tailwind to profitability). IMO once this is out in the open there will be no way around 30% headcount cut over 2-3 years.

The monetization has also been very bad historically(selling awards is really dumb), so there are definitely ways to pump revenue up fast as well. But once again, headcount cuts will probably accelerate once its public

> 2000 employees

Reddit software developers are maintaining at least 5 different user interfaces:

1. Old Reddit (old.reddit.com) (no longer maintained, I guess)

2. New Reddit (new.reddit.com) (also no longer maintained?)

3. New New Reddit (aka Twitter Reddit, sh.reddit.com)

4. Mobile browser Reddit

5. Mobile app Reddit

It takes a lot of work to keep all of those user interfaces crappy, slow, and hard to use.

> It takes a lot of work to keep all of those user interfaces crappy, slow, and hard to use.

They're slacking on Old Reddit. It is still usable with RES.

> (no longer maintained, I guess)

Yet only one that properly works (in context of it's design).

You need to have reddit admins that are paid employees of the company which meta-moderate. And you need to build out systems to give them information on the users so that they can make moderation decisions.

You need to build out anti-bot infrastructure. Arguably whatever infrastructure they have isn't keeping up at all with new challenges, but that infrastructure is probably miles more complicated than you think, even though it doesn't do its job well enough.

And your attacker is groups of humans, some of them probably funded, all of them able to organize on other sites like 4chan and 8chan. Reddit has largely managed to deal with shit like the old nazi babytalk subreddits that used to proliferate everywhere (shit like r/FrenWorld and its "six million nosefrens who love baking" lightly coded nazi shit). That takes effort to keep it from spreading all over your platform.

And that's on the front end dealing with the users. You still have to run a company that sells ads to its actual customers and you need to support all that infrastructure as well. And the corollary to that is that you have to deal with the nazi babytalk subreddits and stamp them out because nobody wants to see that spread all over your platform and advertisers will utterly lose their shit over it -- being a "free speech absolutionist" is going to be incredibly damaging to revenue.

Everyone here also hates the redesign, but it has been wildly successful at driving numbers. Everyone here hates the way that flood of users maximizes the Eternal September of reddit even harder, but that keeps all their numbers going up and to the right. Everyone hates the shitty issues with the redesign. But that effort probably long since paid for itself. Even image and video serving is doing well enough to keep users stuck to the site better and not going to competition and not seeing more ads. Even if it sucks, that probably helped revenue.

To do that all technically better, you're probably going to have to higher more expensive developers and take even bigger hits to the bottom line rather than firing half the company and even further dropping the balls that are being juggled.

They could of course kill all the attempts at shitcoin integration and probably fire half of middle management who keeps coming up with those kinds of ideas, but that's just US management disease.

HN loves to think that any one of us could rewrite reddit in a weekend, but only if you're looking at the easy part of the job which is building a web forum. Not if you're looking at the actual requirements of building out the most popular web forum in the world (or at least western world I guess, IDK what China has internally)

I wonder what proportion of that (ridiculous) R&D figure consisted of infrastructure - I can only imagine that it was justified as an investment in network and compute infrastructure, rather than marketing research and development in the web apps (which is notoriously unstable and unusable on mobile)

What annoys me the most about Reddit is, that it's essentially just a rehash of Usenet with marginally more moderation features, up/down-voting and custom CSS for each group/subreddit. That's about it. If I were to attempt to implement a Reddit "clone", I'd merely spin up a couple of ISC InterNetNews NNTP servers and slap a web application in front of those.

The only thing that Reddit did – on the interaction level – was replacing the Usenet experience with a visually more appealing and easier to access web frontend. In that regard it's a continuation of Eternal September, with the side effect of draining the user pool from Usenet, leading to the shut down of many Usenet servers world wide because "nobody is using it anymore".

Every programmer sees message boards and quickly runs down a database schema for users, comments, and upvotes, because they're all trivial and almost identical. The user base that builds up is the value. In the case of Reddit, I don't mean to imply positive value, but that's the value.

The question is how they managed to make such a commodity operation so dang expensive to run.

Endless injection of cash? Sometimes I think that the VC model is wrong, and taking a few pages from bootstrapped start-ups might make lot more sense...

I think VCs and similar sees profit as wasted growth. The product Reddit is selling is a bag holding transfer.

>I'd merely spin up a couple of ISC InterNetNews NNTP servers and slap a web application in front of those.

If this was the only thing differentiating Reddit from anything other text reliant information service, why hasn't anybody come along and disrupted Reddit by doing something similar to this?

Because that's not why people use products. They use them because others use them or the reputation suggests others use them.

You're ignoring the network of users they have, which is absolutely the hardest thing to create for an app like this. Any technically superior clone you build can easily lose to Reddit due to its userbase.

Moderation is the actual feature people want. Usenet has no useful moderation so ended up full of spam

Reddit is fundamentally a link aggregator and there are countless examples of them. 20 years ago (jeez) slashdot was doing the same

In fact, Reddit went mainstream when Digg fumbled their 2.0 launch, and just recently Reddit was in danger of doing the exact same thing with their poorly designed apps and new design.

This IPO valuation is based entirely on the value of the user content that will be sold to AI firms. The product is always the users.

I miss newsgroups. They were good enough. We didn't need to dress them up.

Our incessant chasing of the latest shiny thing, it's all so silly. We keep throwing the baby out with the bathwater in our endless, desperate forward motion.

> If I were to attempt to implement a Reddit "clone"

Go on champ. Show us how it’s done.

> side effect of draining the user pool from Usenet

Two different worlds. This is utter fantasy.

> Go on champ. Show us how it’s done.

The baseline product can and has been cloned by many people. Hacker news is one of those clones. Whipped up with minimal effort in a meme language no one ever used before.

Getting popular is the tricky part.

Please don’t be needlessly snarky

How has reddit community changed since it's API permission changes that removed all third party apps? A lot of people forecasted doom for the network and many subreddits went private to protest.

Have the predictions come true? Presumably all those changes were to juice numbers pre IPO. In hindsight, did it work?

Reddit drove away lots of users via that change, although I expect Reddit's MAU still grew overall due to the continued worldwide penetration of the internet. In addition, while in the short-term it almost certainly lost users, it drove the remaining users towards frontends that were more profitable to Reddit (i.e. away from the website and towards the app), so I expect the company still sees that as a win, at least as far as the IPO is concerned.

However, the deleterious effect on Reddit's overall culture cannot be understated. The people who were most driven away by the API changes were power users, and Reddit has become far more bland and repetitive as a result (to anyone familiar with the tenor of Reddit it may seem hard to believe that it could lower the bar any further, but I assure you, it has). The difference in trending subreddits from immediately before the blackout to immediately after was dramatic; whereas before you could expect the site-wide trending posts to have the nutritional content of cardboard (with the occasional gem from e.g. AskHistorians), it has been replaced with a flood of celebrity drama, ragebait from "unpopular opinion" clones, and ragebait creative writing exercises via dozens of similar "am I the asshole" clones. This is normalizing somewhat as the clones compete with each other and coalesce (Reddit's algorithm tries to limit trending posts to one per subreddit), but it's still a regression.

That said, it's still not the worst that Reddit has ever been; that title still belongs to back to 2016 when TheDonald popularized how to game the trending algorithm via brigading their own stickied posts. But I'm using Reddit less and less as they keep making the experience even worse, especially on mobile, which is more hostile to the Oldreddit interface than ever. After the IPO I expect them to jettison Oldreddit entirely, at which point the site will be beyond useless for anyone who actually wants to use it as a place to read comments rather than as a poor TikTok imitation.

As someone who enjoys writing ragebait posts, I can confirm that in recent months it's been easier than ever to get thousands of people raging over some nonsense. The relative lack of moderation has been very useful in this regard.

Perhaps that actually benefits Reddit though? More engagement even if it is mostly dimwits responding in earnest to troll posts.

Why do you think you enjoy doing that? Tangentially, are you below the age of 25?

I'm actually 72 years old and this is my retirement hobby. It keeps my mind busy and I find it amusing.

Maybe try crosswords instead, or pick up an instrument. Less sophomoric, and likely more mentally engaging than trolling teenagers online.

I can definitely see the appeal in making people fume out of their ears over some completely irrelevant thing you said on the internet that they can completely ignore but still choose not to.

People throwing tantrums in public and making clowns of themselves has always been funny.

Trolling is a art

You are the hero we need but not the hero we deserve.

EDIT: I shouldn't have replied to this

The newbie poster here openly admits to liking to troll people via ragebait. And is also somehow 72 years young.

That post is itself ragebait. They are just trolling.

I was going to remark about how top tier a troll his post was. Trolling about your own ragebait-trolling on a site where there would surely be someone upset enough about it to feed the trolling. Really good one.

It’s very subjective but Quality of moderation has dropped in my opinion. Things like giving moderators the ability to moderate anonymously (you can now conceal names of moderators entirely but on sidebar and in coms) has also result in power tripping moderators having a field day.

On the whole though the Reddit won - all the serious protestors left and the remainder (majority) folded

It was always clear that the nazi mods would never ever give up their power, which made this whole "protest" ridiculous from the start. The only ones who left were the few good people in small subreddits, who just wanted a forum to talk about their niche hobby, leaving behind an even larger percentage of powertripping narcissists.

From personal perspective, discussion quality has gone to the rock bottom on various subreddits. And platform is even worse when using from the browser. Other than that, no idea.

Discussion isn't allowed. Dissent from the groupthink will be deleted if not banned outright.

Yup. It seems like the mods that left were replaced with narcissistic people who are only there to throw their power around. A few subs were ruined after for me.

Of course it worked. No popular website gives people unlimited use of an API for free. Its financial death. Reddit kept it on far too long, Facebook was suitng anyone attempting to build an app based on unofficial APIs more than a decade ago, and it worked great for them

I also haven't really seen any of the major (Reddit mods are not spread out, a very small group control the majority of large subreddits) mod just quit. Anyone who edited their content "so reddit doesnt profit" just gave the internal Reddit DB more value to sell to the LLM companies

Reddit moderation, like Facebook Group moderation, works for free because people are bored and love the power grab. There are SO MANY Facebook Groups with over 100,000 and 1,000,000 users, their mods work endlessly 24/7 to stop spam and make sure everything is kosher. They've never once asked Zuckerberg for cash, the ego boost is just too big to give up

Can't be bothered to log into every device to read a reddit page. It requires an account for some pages as simple as r/rust

For stuff like that use https://old.reddit.com/r/rust

In my experience that solves the issue. It’s not the most mobile friendly but workable and my go-to regardless.

old.reddit.com is the only reddit worth using.

I worry it's going soon after the IPO.

You can use old.reddit.com instead of www.reddit.com, and that will bypass the login requirement.

It did work in terms of what the Reddit owners wanted, which was engagement - they did get more people onto their app and using their platform. The owners got just what they wanted.

In return, quality has fallen off a cliff. Moderation on some of the most popular subs is scarce, so all the popular ones have started to coalesce into a 'blob' of sameness. Discussions are poor as well, and misinformation is rife.

For the niche subreddits, often dedicated to one topic, where there isn't a lot of traffic, not that much has changed. There's still a decent amount of engagement. It might be that some quality has fallen off there, but it's the "new normal".

> In return, quality has fallen off a cliff. Moderation on some of the most popular subs is scarce, so all the popular ones have started to coalesce into a 'blob' of sameness. Discussions are poor as well, and misinformation is rife.

All the more poignant in light of the recent announcement that they were going to sell access to their "content" to train someone's AI. Good luck with that.

It's 100% the same. The official app isn't even that bad if you remove the ads. The biggest problem (powermods) still remains ironically after all of this. Bummer really, I thought they would use the opportunity to clean up

The main concern with the official app is the data it hoards. Back in the day it even needed permissions for your Google account on Android, and did not work without it.

Fair enough. I've accepted that everyone knows more about me than myself and moved on haha

> It's 100% the same.

To be honest, I only looked at a few niche subforums, but on them the daily posts have halved.

But maybe it's also how those sites now gather the data.

Do you know more about this?

The daily posts we see are mostly a function of the algorithm. I don't frequent small enough subs where the number is so small that they can't be saturated - so my experience might be tainted

My usage of reddit as dropped by a considerable amount, and I am now only active in the sysadmin subreddit mainly for professional reasons..

Hard to say, I ended up leaving for Lemmy, which isn't as big but it gets the job done

The content has suffered. It’s even shittier than it was a year ago.

They’re playing shenanigans with Google Accounts and auto login.

Log out of Reddit and revisit.

It may create an account for you and automatically log you in.

Cursed DAUs

Put?

How is this possible? A website cannot just magically cross-domain get your Google account details...

By using the really, really, really badly designed listener auth flow... which just allows javascript to grab your google creds.

https://developers.google.com/identity/sign-in/web/listeners

Doesn't this "bad" design allow Reddit to show a higher DAU? Isn't DAU correlated with ad prices? Sounds like a winning design to me, especially if it only appears that the design is bad, and not the intent behind it.

Oh without a doubt this makes Reddit look like it has way more users than it actually does. 2/3rds of them single visits or visitors with no posts, no comments, no engagement, just someone following a google result.

I guess this never worked on browsers that disables third party cookies by default, like Safari and Firefox?

incorrect. This works on all browsers, on all platforms. It's a hook into their exposed OAuth2.0 flow. You'd have to disable javascript to stop it. signIn action can be a fetch and you're f$&ked. You'll get the "Sign In With Google" popup (with you're username already snatched).

I've always wondered how on earth this is compliant with GDPR, you do not consent to anything of it.

The thing that amazes me the most about Reddit is the site feels as if it has not changed in over a decade. I realize there is a new UI and small changes here and there but fundamentally it feels the same. I am amazed the amount of money they have raised given how little has changed. Equally impressive that they have never added any new substantial features. Something that comes to mind is how often people will search only Reddit for product reviews. Would be interesting if Reddit had built something to make this more streamlined, throw in ads along with it.

It has changed a lot, for the worse. There was a huge subreddit purge for non "shareholder friendly" topics (e.g. suicide, watchpeopledie, etc..) a while back.

The new web UI is an absolutely horrid mess that takes forever to load and doesn't work properly.

Weird to use removing the "watchpeopledie" subreddit as an example of ways it's changed for the worse.

I agree that the new UI is terrible though.

The reason why reddit feels like a better places for product reviews is because of how organic it appears. The moment you make something more 'streamlined' for that, the less organic and useful it feels for users, and the easier it's able to be gamed.

Certainly but my point being that Reddit has raised a lot of capital and still has no idea how to be truly profitable.

That's a frog slowly boiled in water speaking. Dialog was far more intelligent and less censored back then. And the UI was not such an overwrought mess.

Reddit and Twitter shared a very similar niche, people who prefer their information in text form. Both face growth challenges since things like instagram require less effort to consume, and have wider appeal since they are based on images / videos.

This underestimates just how slimy Reddit is. When looking at all the stats and financials provided remember this is a company that started by creating fake users & happily acknowledges as much. Or the direct edits by founders to underlying database to influence discussions. Or the weird super moderators that have power over thousands of subs that seem to have their own agenda far too often ( https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fb... )

I think fake users / artificial content is a pretty common "things that don't scale" hack.

But yeah editing user content and the extreme mod control should disqualify Section 230 protection IMO.

I block reddit at my router.

As a user, I want to support public discourse, mostly-free speech, etc and among large sites, Reddit strikes a better balance than sites like Twitter and Truth Social which tolerate people using them to commit real harm in the real world, or sites that swing the other way and kowtow to the pearl clutchers and ban anything that offends anyone.

As investor, I'm optimistic and plan to participate: they're improving monetization by clamping down on users who don't see ads or otherwise pay. If you don't like it, start your own site - the tech isn't hard or expensive anymore. Also, it would be shooting fish in a barrel for Reddit to launch (or partner) to offer marketplaces for subreddits where commercial offerings are discussed.

I just want to see spez and co. punished and destitute.

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