this post was submitted on 23 Jun 2023
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Beyond spez (and the fact that he is a greedy little pig boy), I’m curious about the corporate dynamics that prevent a company like Reddit from being profitable. From an outside perspective, they make hundreds of millions per year via advertising, their product is a relatively simple (compared to industries that need a lot of capital to build their product), and their content is created and moderated for free by users. Could any offer some insights or educated guesses? Additionally, I’m curious how this all ties into the larger culture of Silicon Valley tech companies in the 2010s.

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[–] ritswd 12 points 1 year ago (2 children)

That is a brilliantly thoughtful take, thanks a lot for taking the time!

The one thing I would temper, is that we don’t know for sure if there would have been better ways to monetize. I’m hopeful that there have been smart people at Reddit who looked into it and gathered good insights about it; maybe some approaches that feel right to us laymen actually crumble under closer scrutiny, with those insights we don’t have. Maybe there is a different leadership team out there who would have figured it out; but I don’t want to rule out the possibility that there isn’t, and that it just couldn’t get figured out. Maybe Reddit was just a terrible investment that had no way to get anywhere good, and that’s just how it is with startups sometimes.

[–] derelict 7 points 1 year ago (1 children)

Having worked at startups, there almost certainly were better ideas floating around that couldn't get the political capital to get adopted.

[–] ritswd 5 points 1 year ago

Better ideas, most definitely. But good enough to make Reddit profitable? I guess my point is: it’s very possible that yes, but it’s also very possible that there wasn’t really anything to be found.

[–] [email protected] 2 points 1 year ago (1 children)

The one thing I would temper, is that we don’t know for sure if there would have been better ways to monetize.

This is a fair point, and I do want to avoid the Armchair QB issue, where it's easy to make something The Team didn't do sound like it would have been successful, once matters are already decided and whatever was picked clearly failed.

That said, I think that over their lifespan, especially their time at peak, there must have been opportunities and options for monetizing that Reddit failed to fully exploit or embrace. I think that so many other people have made so much money off of Reddit over the years that Reddit Inc not getting their share feels like it must have involved missed opportunities.

At the very least, I don't think that the existence and community of Reddit is inherently impossible for Reddit to profit from.


I apologize in advance, this train of thought ran long and late; it's a really unique situation that touches on some stuff I think is super interesting.

Monetizing reddit required some very unconventional thinking compared to typical approaches at tech startups. Which kind of does loop back to how I closed above - I think that some of what has slowly gone wrong with Reddit over the past decade is rooted in tech startup culture itself, and that tech startup culture very highly values founders, tech people, software solutions, metric-able sales tactics ... and can massively undervalue soft/social skills and knowledge more aligned with Humanities' fields.

Starting off trying to go user-supported on somewhere between a donation basis and a soft-gamified award system is very tech startup - build a good software product users like to interact with, then ask the users to support the company, ~but make it fun~. That their next option was then to transition to ad sales using things like in-community placement to "target" is a fairly equivalent model of creativity - the users aren't donating enough, so lets serve a couple ads just to cover the gap.

Now, fully: I have biases here. I'm from a branding and communications background and my academics was 'community'. With that starting point, I don't think Reddit ever truly understood how significant and how impressive what they had built, from a community perspective, really was. Or how massive a commercial opportunity many of those communities represent if approached correctly.

As a very surface example, I think something like 90% of niche hobbies are fundamentally based around goods or services of some sort, and have companies competing to access the hobbyists as a targeted market. Reddit has hosted the dominant communities for many of those hobbies for a decade or more. Yet Reddit has never visibly attempted to leverage that.

Something I'm sure has been suggested and I strongly suspect has been rejected because it's complicated and has a long payoff scale would be selling abstract 'community membership' to companies buying ads. Not just placing the ads, but a much more comprehensive, but less strictly tangible, package of traditional ads, product placement, community management, and communications coaching. Redditors really like supporting "their own" and they tend to value even corporate entities that can engage on their level and participate in community membership; companies that can proverbially "take off the suit and shitpost" can Fellow Kids their way to financially valuable relationships with communities. Reddit being able to offer an advertiser a package similar to the level of support Victoria provided AMA celebrities during her time with the community - meets the successes that a company like Ghost Ship sees in their level of community engagement around Deep Rock Galactic.

It definitely is more complicated than just that and that model has other separate sales barriers, especially as a starting program. Equally, it cannot offer the concrete outcomes many large companies currently look for, while being a challenge to price accurately for smaller companies etc - I absolutely acknowledge that it would be hard. At the same time, I'm also wanting to note that this approach would be playing into an existing model for many companies' engagement with relevant consumer groups on Reddit already, and when done well the approach has a massively proven track record and clear payoff. Without necessarily following the exact model I'm speculating about above, but using it as an example of ways that Reddit could have been working to add value and and support to a space that already exists with proven (advertising) marketplace demand.

TLDR; at the very least, there absolutely were ways Reddit could have monetized its strengths rather than just its traffic.

[–] ritswd 1 points 1 year ago

No need to apologize!

Yes, I agree there is something to this. I’m thinking monetizing the strengths would have been an unproven path for stakeholders, compared to the usual ways they worked elsewhere, and thereby was considered too risky? I’m not sure what went down.