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- cross-posted to:
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Now, Reddit — which is not yet profitable — says it seeks to grow its business through advertising, more e-commerce offerings and by licensing its data to other companies to train their artificial intelligence models.
Shame I left last year. Look at all the great innovation they’ll be doing
So you’re telling me the model cannot consistently run at a profit, even through it relies on a massive unpaid labour force.
https://www.reddit.com/r/technology/comments/1axll4s/reddit_files_to_go_public_reveals_that_it_paid/
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Spez got paid, according to that, $193,000,000 last year as CEO.
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reddit “never turned a profit”.
I can’t imagine the corruption/anti-integrity required to reconcile those 2 facts.
How come he isn’t in jail, for fraud??
The article in the reddit post you shared is misleading. According to the S1 filed with the SEC, spez’s current base pay is $450,000; in 2023 he got roughly $792,000 in performance-based bonuses. The rest of that 193 million is options.
How did he get performance based bonuses when his company isn’t profitable?
Apparently that wasn’t one of his MBOs, so we can infer the board is a bunch of dumbasses.
And with any luck those options will be worth fuck all after the IPO flops
Base pay is a meaningless figure in tech. Total comp is all that matters. The true high rollers intentionally keep their base pay low to dodge taxes. This doesn’t mean they aren’t still getting and using this money, it’s just an intentional straw man to allow them to make this exact argument.
Except that Spez can’t convert those options until some time after IPO and probably only in a staggered way.
You don’t need to exercise your stock options to access their value. It’s common practice to take loans out against their value, which allows you to access your money effectively tax free by instead paying interest against the loan. This is (again) a fairly commonplace practice used to make collecting tax difficult, and allow them to make the argument to regulators that they aren’t actually being paid that much, it’s totally just options they would never sell off. That’s why C suite has such a “burn everything to the ground, as long as our stock price goes up” mentality, because if it doesn’t, they have to start worrying about interest on their loans— because they have fairly low liquidity (percentage wise).
Why would there be any fraud? His salary is approved by the board that represents the current shareholders.
It’s also not particularly surprising on account of there being plenty of VC-subsidised companies that never turned a profit, had high salaries for their executives and then IPO’d.
If your question is moreso on the absurdities of capitalism, then that’s another discussion entirely, but I feel it’s important to note that this is nothing out of the ordinary.
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Can someone explain to me what Reddit’s costs are supposed to be? It’s not like they have to pay licences for things like music or have to host insanely large media files. Their content generation and moderation is free. For a long time their website was barebones and they didn’t have to make an official app. I can never even recall them advertising until recently.
CEO salaries?
You been banned from participating in …
You still have massive server costs. You have to maintain the massive dynamic comment database along with pictures now.
They are still paying for developers to make new things, both on the front ends and the back end.
Probably basically all operational expenses, with a minority being cloud expenditure and a majority being salaries for employees, if I had to guess.
I’m assuming that spez gets most of his pay in the form of stock options which doesn’t really cost the company anything real.
There isn’t off the shelf software to run things like Reddit, and the work to make that happen is pretty staggering. That isn’t to say there isn’t frivolous spending there - I have no idea.
Lemmy has been developed since 2019 and the software crumbled when network-wide users spiked into the ~75,000-ish monthly range when some vocal Reddit users sought greener pastures over the app/api issue last year. A lot of talented new developers contributed scalability fixes that were obvious to them (but not obvious to the main devs), and we now have the largest Lemmy server handling ~10,000 monthly users without crashing. The work that has gone into making Lemmy, an open-source Reddit alternative written in Rust (vroom vroom) handle the waning spike of Reddit users fleeing, was substantial. Look through the lemmy github issues discussions page and merged closed contributions/discussions for that journey. Those people were largely contributing time and expertise for nothing in return. Imagine paying a market rate to all of the people who contributed substantial time into the betterment of Lemmy. By the way, Reddit was open source: https://github.com/reddit-archive/reddit
Takeaways so far: this is a hard problem, even today with faster software and hardware - and Lemmy needed a diverse set of contributors to get its largest server stable at 10k monthly and ~50k across the network.
Reddit had 46,000,000 monthly active users in 2012, ~7 years after launch. Reddit has 330,000,000 monthly active users today. My guess is that Reddit employs a lot of smart software engineers that are needed to contribute solutions that allow the site to serve an ever-growing user count without major outages with new features rolled in. Meanwhile, the vast majority of Reddit users will never pay a thing to Reddit and it isn’t a good platform to deliver advertising through.
My point: It is easy to gloss over the staggering amount of work, talent, and skill that goes into supporting a site that operates at this scale. Reddit is around the 10th largest site in the US (8th if you exclude search engines) and 12th globally excluding search engines.
Sorry for my delayed reply but this was exactly the explanation I needed and I’m grateful for the effort you put into writing it.
Enshitification round two, coming to you, Reddit users.
How can something exist if they haven’t made money in 20 years?
How.much debt does the company have that shareholders will be buying into.
Because they have. A ton - they paid Spez almost $200 million last year. But when you invest, spend, or pay out all of the money you get, on your tax sheet it says you didn’t make any profit, because you don’t have any excess money.
They didn’t pay him that. It was $450,000 and $800,000 the year before with bonuses.
The $193M figure are his share options.
They didn’t make any profit, meaning they did not make more money than it costs. It’s not like they wouldn’t make money (the advertisements in example), but its not enough to make a profit out of the business. But given the millions the CEO gets (if its true), then no wonder they can’t make a profit, if CEO eats it all.
It is owned by companies that can afford for it to not be profitable, but with raising interest rates financing is more expensive so everyone is tightening purse strings. Not surprised they are doing the IPO now.
Because the Spez era has been marked by cutting off every avenue of revenue. Secret Santa? Gone. Ads? Not maturing enough. Mod tools? Never happened and created a boiling pot of user hostility that culminated in the API Pricing.
How do you short an IPO?
When has that stopped any tech or fake-tech company from making their IPO?
The IPO is where the Venture Capitalist get their paychecks. Is that or being acquired by some big tech like Google or Microsoft.
The current vc investments can not really be recouped with profits. They exist to make company valuation as big as possible before the IPO, so they can as much money as possible selling as much as the company as they can without losing control of the board.
The company will pump REVENUE just before the IPO to increase valuation, but the PROFIT right now is inconsequential in comparación with the total addressable market. It’s all pure speculation and a terrible way to make a sustainable business, but it’s the best way to get a lot of money for the VC and the founders.
Can we collectively short it?
Let them. If reddit dies and people move to federated platforms it’ll be for the better. Big if though…
Twitter has taught me that nowadays people are too adaptable, 90% of people will stick with Reddit no matter what they do.
The blackout was useless because most subreddits didn’t even provide an alternative on Lemmy or elsewhere.
The ones that did picked… Discord.
Because a chatroom with the exact same issues they were blacking out Reddit over embracing was going to be a viable alternative to a community forum.
Man I really don’t get how discord has become the default for so many things. It’s chat. It’s persistent, but not in a way that’s easy to look through. Like, support forums or discussions about things that aren’t just fleeting? Whyyy
It’s free and easy to set up, plus pretty much everyone already has an account
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