
Reddit Is Raising Funds at a Valuation of $1.7B - champagnepapi
https://www.bloomberg.com/news/articles/2017-06-17/reddit-said-to-be-raising-funds-valuing-startup-at-1-7-billion
======
shawnee_
Reddit has an opportunity to do right everything that Twitter has done (and
continues to do) wrong.

It took me about ten years to figure out that Twitter is a cesspool of useless
noise and ego. Everybody tries to outdo each other with noise and follower
count. What Reddit does right is focus on _topics_ , primarily, not
personalities. (Although I actually like the new user profiles, since they
tend to be secondary focus).

Twitter could have been something different, and I think that expectation for
something more got priced into what it is valued at today. Based on Twitter's
current market cap (12.12 billion dollars!) it's already overvalued by a LOT;
and there's really nowhere else for it to go but down. Any new users it gets
are just bots or other political warfare tools.

For me, the final straw was that Twitter wouldn't "verify" Ecosteader as a
legit account. So I deleted my Twitter accounts, sold a small investment I'd
opened a couple years ago, and now spend more of my idle time reading Reddit
rather than Twitter. And I feel so much better for it...

A subreddit is far more useful than a hashtag... it has stay power,
searchability, and (like Twitter) is the kind of place where people will vent
and where companies can interact with customers / users. The key for Reddit, I
think, will be to do what is right for its users to achieve information
awareness... Conde Nast is a news platform, after all. Let's just hope they
don't let themselves go the way of Yelp.

~~~
CrystalLangUser
Reddit is only marginally better than twitter.

* They're launching new user profiles that center around the user; see the Washington post's Reddit account

* Reddit's model of communities is fundamentally broken. Each sub, unless STRONGLY curated like AskHistorians, develops its own hivemind. Post against the grain and receive downvotes, then take the downvote train as people LOVE to pile on downvotes.

* Reddit's upvote / downvote system is fundamentally broken. Easy to parse, light content or quips / jokes get hundreds of upvotes while actual, informational but boring responses get buried way below.

* Reddit has BLATANT advertising masquerading as user posts to big subs like Pics or MildyInteresting, or TodayILearned. Perfect usage of brand names, convenient brand symbol or product positioned perfectly, etc. And somehow posts that are straight up advertising get thousands of upvotes quickly.

* Reddit has done nothing about certain subreddits automatically banning people who post in X Y Z other subreddits, regardless of the content of their response.

* Their CEO, Spez, shadow edited people's comments in the_donald without telling anyone. Ellen Pao even commented on this and nothing fucking happened.

Etc. there are plus sides to reddit, but very few subs worth commenting in
unless you have the popular opinion.

~~~
quadrupleslap
Regarding the third point, although it might be fundamentally misaligned with
what you want to read, the Reddit system does do a very good job at
highlighting what most people want to read (for better or worse.)

------
komali2
Does anybody know why development at reddit is so slow? I know they have an
engineering team, but if you track the changes over the last couple years,
it's not much given how much time has passed. And that's not for lack of
feature requests that Reddit staff have admitted would improve the site.

~~~
jliptzin
Maybe they don't want to fix what's not broken. If their usage continues going
up at acceptable rates year after year, then maybe they have all the features
they need right now. I have witnessed more than a few properties decline after
site owners complicated the UI with stupid features barely anyone was asking
for just for the sake of working on new stuff.

~~~
pmoriarty
You can't even edit the title of a Reddit post. That's been known for years
and nothing's been done about it.

~~~
redthrowaway
That's almost certainly by design. Just as with tweets, it would be massively
abused.

~~~
johnfn
Ages ago an admin said "yeah it would make sense for post titles to be edited
within the first x minutes of making one", an incredibly low-hanging fruit
that has been requested since forever.

It still hasn't been added.

~~~
rickhanlonii
I can think of a few problems with this just off the top of my head:

The first x minutes of a post are _heavily_ influential in the success of the
post, editing after allows you to hijack successful titles for gain (spam)

For large subs, posts only hit the top of /new for x minutes (for small x),
editing after is basically useless if it's not successful in that time

Mods patrol the /new queue as posts come in, allowing editing will complicate
moderation which is already a difficult job

~~~
johnfn
I mean whatever your concerns are, the admins/developers of Reddit are okay
with this change.

~~~
orf
_where_ ok, or at least one was in a comment posted 'ages ago'. That's very
different.

------
minimaxir
Here's a quick chart of the monthly number of submissions to Reddit over time
(until April 2017): [https://docs.google.com/spreadsheets/d/1d3kqAebZiUqmI-
GbmvNY...](https://docs.google.com/spreadsheets/d/1d3kqAebZiUqmI-
GbmvNY6Cz22QJrdwiX20ZuchQs_g0/edit?usp=sharing)

At about the start of 2017, Reddit saw a noticeable increase in the activity
growth rate, which investors _love_ (although the biggest chunk occurred
around October/November 2016, due to the U.S. Election)

And here's the BigQuery to reproduce the aggregation:

    
    
       #standardSQL 
       SELECT DATE_TRUNC(DATE(TIMESTAMP_SECONDS(created_utc)), MONTH) as mon, COUNT(*) as num_submissions
         FROM `fh-bigquery.reddit_posts.*`
         WHERE (_TABLE_SUFFIX BETWEEN "2015_12" AND "2017_04" OR _TABLE_SUFFIX = "full_corpus_201512")
         GROUP BY mon
         ORDER BY mon

~~~
ben_jones
Are there any studies being done in the increase of bot accounts used for
social media manipulation and other such marketing purposes?

~~~
shostack
If not bots then shills. There was a massive increase in obvious shills/bots
in the various political subs leading up to the election and through today
(although less so than before the election).

Let's get some engagement stats on those user counts.

------
chippy
Reddit has a huge value I think which has not been mentioned - that companies,
corporations, organisations use it to market and advertise themselves, for
free.

Sometimes they do that under the covers, so to speak, and some users don't
like it (e.g. hailcorporate) but often they will promote their products
transparently, and often normal users don't mind. The most obvious example is
Netflix on /r/movies. Multiple employees were observed continuously posting
things to the site, via submissions, comments etc and users liked it.

By introducing a charge for these corporate users they can reap in a
substantial income. Whether it would make sense for them to label these corp
users as such is another option, but they certainly know about them. I find it
interesting that most normal users find that they don't mind interacting with
paid marketing employees and that they consider it organic and natural, very
interesting. I also find it worrying.

~~~
pharrlax
>that companies, corporations, organisations use it to market and advertise
themselves, for free.

Another phenomenon I've been seeing more of is a company that gets in early to
a niche gaining control of the subreddit around that niche, tilting the scales
in their favor.

Two examples I can think of are /r/nootropics, whose mod team is led by the
owner of nootropics supplier Ceretropic, and /r/amazonmerch, whose sole mod is
the owner of MerchInformer, a SaaS Amazon Merch research product.

They're each careful to never moderate in an overtly heavy-handed way that
would cause a user revolt, but nonetheless, their companies are mentioned in
the each subreddit far more often than their competitors. It's an inherent
conflict of interest, and one that will only worsen as these niches grow in
popularity.

~~~
NoahTheDuke
Video game subreddits have this happen a lot. A new game will hit the market,
and the company will already have set up a subreddit with all of their staff
in control. It's an "official" subreddit, but that means it's no better than
any other official forums and lacks any ability to hold counter opinions.

------
crispytx
Isn't reddit already successful? Why are they raising money? Shouldn't they be
generating profits and returning those profits back to their shareholder(s)?

~~~
jMyles
> Shouldn't they be generating profits and returning those profits back to
> their shareholder(s)?

What black magic is this? Surely you aren't suggesting... the d-word?!

~~~
guftagu
> > Shouldn't they be generating profits and returning those profits back to
> their shareholder(s)?

> What black magic is this? Surely you aren't suggesting... the d-word?!

Okay, I'll bite. What's the d-word?

~~~
syassami
going to guess he means dividends

~~~
s_kilk
Disgusting /s

------
jacquesm
Trying to imagine the kind of strategy that will yield a large enough multiple
of that valuation to satisfy the new investors, or the kind of strategy that
would create an annual ROI that would keep them happy. And failing. Anybody
have any idea what the long term game plan is here?

~~~
austenallred
It's pretty clear, to me at least, that they'll become one of the biggest
websites of any kind, and with a massive amount of data around what people
like and are interested in.

Pretty simple to imagine that being worth far more than $1 billion. Their user
growth recently has been astounding.

~~~
Judgmentality
Why are users worth money if they're barely being monetized? Considering how
big (and old) reddit already is, they should already be profitable, and hence
shouldn't need to raise money - unless they're planning something radical and
expensive. Reddit is a cool site and wildly popular, but that doesn't mean
it's going to make billions of dollars.

Also I suspect the site is increasingly populated with bots, not real users.
I'd actually imagine the site is less popular this year in terms of real users
than it was a year ago, although I have no way to know that and could be
wrong. I'd need to see hard evidence to believe it hasn't had a rapidly
growing bot population though.

~~~
austenallred
Because they have the potential to be monetized. I have wild success with
Reddit ads even though you can tell the ads products never receive much love
(or maybe that's just Reddit generally).

Companies are valued based on discounted future cash flow. In other words,
investors are betting that at some point in time Reddit will generate
billions, even when adjusted for a discount for time. That's not crazy at all
to me to see that happening.

~~~
zeantsoi
What do you advertise?

~~~
dboreham
The last thing you browsed on Amazon typically.

------
redm
I'm considering that taking this funding at a very high valuation will force
them to change Reddit in a way that results in its ultimate demise. What's
wrong with a good stable community and business, as it is?

~~~
sotojuan
Reddit is a YC company. YC companies, like most high profile VC-backed
startups, are supposed to own the world and be worth billions.

------
ngold
Cracks me up why Reddit is the way it is questions. Ask kevin Rose fron tech
tv. As soon as Reddit drops its bbs style it is dead. For those complaining
about Css RES.

Reddit is only a thing because people feel safe there. What other site of its
user base does that?

~~~
dorfsmay
What do you mean by "users feel safe"?

IMO, reddit is a thing because it is topic oriented instead of user/ego
oriented. It really is the modern day Usenet.

The two long term problems they have though is moneytising and bad/illegal
content (moderation).

------
theprop
Last I heard Reddit was doing less than $10 mn / year in revenues. It's highly
under-monetized, but it looks difficult to grow in 5 to 10 years to generating
$150 million in annual profits to justify this valuation.

I'm surprised Reddit stays so popular. I stopped using it ~8 years ago. The
habit didn't stick with me (beyond a year or two).

~~~
PhasmaFelis
I don't understand how investors still think that "Step 1: get a lot of users,
step 3: profit" is a great business model.

~~~
omegaham
Especially since there will always be another group of investors that are
currently on Step 1.

If Reddit's experience starts sucking once they try to monetize, there will be
no shortage of people who are going to offer a superior (i.e. non-monetized)
experience with the intent of somehow monetizing The Right Way in the future.
Wash, rinse, repeat.

------
grillwork
reddit is about to suffer the same mass exodus Digg did if they keep up the
shit brigade.. That site has gone to hell since the election.. ruined by
shills and bots in every subreddit.. can't be bothered w/ it anymore.. sick of
reading about Trump and Hillary.

~~~
iends
Stick to the smaller technical subreddits.

~~~
jmkni
Also the smaller local ones (for your Town/City/etc).

~~~
omegaham
/r/portland exists in an unending state of butthurt, but your town may be
different!

~~~
jnordwick
So is /r/nyc :( all trump all the time

------
zitterbewegung
As others have mentioned development of reddit has been slow for the fact that
their Engineering teams were performing Administrative tasks to the point that
they could only maintain the site. Since they have cleared that hurdle by
instituting more straightforward moderation and administration. The only
exception to this is when a reddit admin actively modified a thread by users
being hostile. This creates irreparable problems because users can't trust the
administration to not tamper with their comments. They have on record stated
that they will not do this in the future but you can't undo the removal of
trust of their users. I have been a reddit user for almost 11 years and I am
not associated of the group in question and it has made me loose faith in
reddit.

Their struggles with advertisement is something they can actively address now.
Before when they were smaller than digg once digg made a huge mister and
alienated their users this allowed to flourish into the site it is today. Due
to the fear of what occurred to Digg their advertising was less aggressive
their advertisements have been less aggressive and attempt to be targeted.
But, since reddit is so large now the risk of alienation is much less. Also,
other condenders like imgur and voat have tried to take the throne from reddit
without success. Also, they have made great strides in making it accessible to
everyone and you can get anyone from any political spectrum. If reddit wants
to make money they have to broaden their appeal greatly and I believe thats
the purpose of the $150m. Hopefully when they do this they won't turn out like
digg because they are a much larger network now.

~~~
Nition
One thing I thought was interesting about the admin-editing-comments fiasco
was how a large portion of users expressed surprise that an admin editing
comments was even possible, and suggested it shouldn't be.

Others had to come in and explain that yes, in fact Mark Zuckerburg could edit
your Facebook comments if he really wanted to, and admins could edit your
comments on other forums and so on. It's just usually they choose not to.

~~~
wmeredith
Eh, this wasn't all that surprising to me. It reminds of the time my sister
was shocked to discover that her car had a battery. You don't have to know
shit about how a web site works to use one.

~~~
freehunter
>shocked to discover that her car had a battery

Ugh I had a long argument with someone in college about why their car wouldn't
start... it couldn't possibly be a dead battery, they didn't drive an electric
car.

~~~
joshjje
Obviously it was the flux capacitor.

------
ransom1538
Online communities die within months. Reddit isn't worth anything. _This is
insane_ \- this community can disappear. Look at Digg, myspace, friendster.
One wrong TOS update all the users will rebel and look towards the next
cheaply made forum.

Disclosure: Worked in this space 10+ years.

~~~
toxicFork
Reddit has a lot of distinctly separate sub communities that grow, start new,
and die out individually, and some which even hate others. So I think that
helps to protect from "community death" effect. For the other websites you
mentioned, they all feel like "one community" each.

~~~
ransom1538
_really_ \- myspace was one community? Forums don't have 'topics'? wtf. This
is insane. This is nuts. Reddit wont be around in 4 years. It will be a total
joke like all the other online communities.

~~~
exergy
Why the vitriol? Forums are as close to being "cult-like" as it gets. They are
effectively a subreddit in the form of a website.

As to the claim of reddit dying within four years, lol! I'll take that bet.

------
alecco
If reddit founders and investors make bank out of content generated for free,
the content creators will get pissed off there's nothing for them. And they'll
move on.

YouTube is the only one I see who is really trying to make it work. Instagram
worked it out by placed ads for the most popular models.

And a key sin of all these sites is they think the content is theirs. It's
not. Stop trying to regulate it to be what you want. It is what it is and you
should be thankful, very thankful, they chose your site to host it. But this
doesn't seem the case. The reddit admins in particular seems to hate a large
part of their content-creating user base.

~~~
ben_jones
Twitch is also a highlight here. When they came to the scene content creators
flocked to their business model very rapidly.

------
jknoepfler
I stopped using reddit when they put a "USE OUR MOBILE APP OR DIE" message
that cannot be closed conveniently on their mobile page. There is no possible
advantage that can accrue to me by giving them app-level access to my device
rather than running in my browser, which I trust far more than I trust them.
They are literally a dynamic, partitioned page-ranking system, why in the heck
would I ever let that escape the browser's sandbox?

I'm (obviously) not the target market, but I absolutely detest disingenuous
behaviour like this.

~~~
arkitaip
Reddit's mobile site is designed to be a bad experience to such a degree that
it's comical. I use it everyday and still get confused wrt to basic
functionality like what to click. It's also suspiciously slow in a way that
Reddit proper never is.

~~~
anthony_franco
Their new mobile version is pretty bad.

I use their old mobile site and it's fast to load and easier to use. I hope
they don't sunset it...

[https://i.reddit.com/](https://i.reddit.com/)

------
cdnsteve
Can't read anything on mobile, now forcing login or app use on users, no
thanks

------
throw_away_777
Reddit has the worst mobile site i've ever seen, with constant pop-ups that
make the site basically unusable. Sometimes a good idea and first to the
market is better than good execution.

~~~
jmkni
Yeah, their mobile website isn't very good, neither is their app.

IMHO the only way to use Reddit on a mobile device is to request the desktop
site. However, I recently opted into their new user profile thing which is
completely broken on mobile (and you can't opt-out).

~~~
omegaham
i.reddit.com is bare-bones and buggy, but it's _fast_.

------
owaislone
Isn't 1.7B a bit too low for Reddit considering it's size and popularity
especially in the US?

~~~
k2xl
It did seem a bit low to me too considering how much other social networking
apps are getting valued at.

Reddit has been around for over 11 years. It's something to say about the
loyalty of their community.

Their ability to target advertisements towards specific subreddits could
become a large source of revenue. Especially since advertisers can easily
target those with those interests.

I think it's different than facebook groups because subreddits are at the
heart of the reddit ecosystem.

------
monksy
From what I've seen about reddit is a few things:

1\. They have some weird policies about how they want their employees to work.
At one point of time they were ok with being remote, then they moved everyone
to SFO or told them to pound sand. 2\. Scaling issues: Seems like that's an
after thought and only gets addressed "when it happens"* (Never thought put in
after the fact) 3\. The Modmail.. it's bad when you're dealing with lots of
it. There are features completely lacking. (Like searching, or a CRM for users
and how they contacted the mods) 4\. The non-obvious spam.. it's gotten worse
now that they took down r/spam.

------
Kequc
Please explain to me in simple terms why a website property is worth so much.

Keeping in mind this has remained a mystery to me ever since Facebook didn't
sell for a million dollars an eon ago. Facebook's founder is today worth some
ridiculous sum of money. Why is that? I'd have sold Facebook for a million
dollars and then just made another website. What am I missing. YouTube sold
for some amazing sum ages ago to Google, who has from my understanding still
not turned a profit with it.

Since I am clearly so out of touch please make the explanation easy to
understand.

~~~
rorykoehler
They're not websites. They're social graphs and they are very powerful sources
of information that can be used in too many ways to list. Facebook revenues
alone are $8B per quarter. You'd sell that for $1M?

~~~
Kequc
Well tra la la.

Excuse me, Facebook revenues were not that high at a 1m valuation. Nobody
would sell something that earns $32B/yr for 1m, I'm dubious that it earns that
much money and I'm curious about why, if so, that is.

~~~
rorykoehler
Facebook wasn't first and had all the momentum. MySpace sold for $580M in 2005
and I'm sure Zuckerberg would have seen that as relevant to Facebook's
potential value.

To answer your question as to why, Facebook is an advertising company. People
pay to publish ads, they pay more for highly targeted ads which is what
Facebook offers.

------
makecheck
It seems like Reddit would be a good candidate for experimenting with tiny
fees: namely, $12 per _year_ just to use it. That’s one (moderately priced)
lunch in total, a dollar a month, for a site that provides a huge amount of
content and discussion or just distraction. Far less than one crappy movie in
a theater, too. And if everyone paid this, they’d have tons of cash.

~~~
icelancer
>And if everyone paid this

"If I just capture ONE PERCENT of this nine figure market, I'll be rich!"
-standard entrepreneurial slide deck

The paid rate would be well under 1%. Potentially an order of magnitude lower
than that.

~~~
fwdpropaganda
1% seems like a huge number here.

------
rimjeilly
ven cap $ = the demise (most likely)

------
runeks
I suggest Reddit spend the first $1,000 in funding to fix the official Reddit
app, so it properly displays Reddit markdown:
[https://pbs.twimg.com/media/C_16loHXUAAaVlK.jpg:large](https://pbs.twimg.com/media/C_16loHXUAAaVlK.jpg:large)

------
agentgt
What's interesting about Reddit is boutique consumer product companies that
use it to create cult like addictics of their products.

It would be interesting to see some potential marketplace addons or payment
processing.

Thus reddit could long term replace or absorb Etsy and maybe maybe Craigslist.

~~~
rayuela
This would be a great idea! Some of the local subreddits already have some
commerce going on.

------
threepipeproblm
Maybe an interesting time to point out a site I just ran across which is
reddit-like, but (as far as I can figure) uses cryptocurrency to fund itself
and pay contributors.

Steemit "Your voice is worth something"
[https://steemit.com/](https://steemit.com/)

Of all the supposed reddit-killers that have been put forward, this is notable
because of the funding mechanism, and because everyone there seems so damn
excited. However, a lot of the most popular articles seem to be about...
Steemit itself.

------
Elect2
What's the point of the new "profile post"? What kind of content you are
willing to post on your profile?

------
lph
Good. Maybe they can finally afford to make their "Submit" button idempotent.

------
ares2012
If that happens, the Digg team is going to REALLY regret all of those missteps
along the way.

------
notwedtm
So Reddit is worth less than Minecraft? How does this work?

~~~
goobynight
Think of how Reddit can monetise or has.

Now think of all the revenue streams you get with the Minecraft intellectual
property.

Also, Minecraft's community is way less volatile. A glorified forum can die
and become worthless real quick, if you don't play it right.

------
Sir_Cmpwn
If Reddit is still around in 10 years, I will eat my hat.

~~~
heartbreak
Google is roughly 19 years old, right? In 10 years Reddit will be 22. That's a
pretty high bar you're setting.

~~~
Sir_Cmpwn
$1.7 billion dollars, with a B!

------
ptenk
They should do an ICO. I would buy their tokens.

------
ejcx
Would love to know revenue numbers. At some point, 10 years in, you need to
have a monetization plan. $1.7B is a lot of money

~~~
minimaxir
The last known revenue figure was $8.3M in 2014:
[https://techcrunch.com/2015/02/18/reddit-
charity/](https://techcrunch.com/2015/02/18/reddit-charity/)

~~~
mikeyouse
There's a caveat with that revenue figure in that they very specifically quote
how much _Ad_ Revenue Reddit earns, not total revenue. They sell branded
products and Reddit gold which definitely increases that number.

~~~
grillwork
So T-Shirts and Gold checks next to your name are worth a 1.8B valuation? It's
a propaganda machine at this point.. that's its worth.

~~~
manquer
You jest.. t shirts sales can be huge in sports . For ex some soccer teams
like manchester united or real madrid make enough to justify a valuation not
much different based on the t-shirts sales alone...

------
m-j-fox
I love Reddit, but remind me what's their business model? I've never seen an
ad using Relay For Reddit. Free content is great but how do they keep the
lights on much less justify $1.7 billion? (Also, HN. Servers are cheap but how
do they pay dang to tell me I'm being toxic?)

~~~
crispytx
They run sponsored posts on the HTML version of reddit, not sure about their
mobile app tho. I've actually paid to run some ads on reddit and would
recommend them. Their ads are cheap and they'll definitely send traffic your
way if that's what you're looking for.

~~~
meesterdude
i have not had such great experiences with their advertising platform.

------
naaaaak
1.7B for a pro-censorship left-wing cheerleading site. Not worth.

~~~
SkyMarshal
How do you explain /r/the_donald then?

~~~
vultour
You mean how they are basically isolated from the whole site while all the
other spam subs get a free pass?

------
kumarvvr
Seems to be less than reasonably priced.

I know reddit gets a lot of flak for shit-posting content, especially during
and after the recent US elections, but it has huge potential to become a
consistent part of a users media consumption & participation diet.

It's really addictive.

