> Still, he says making money is “not our top priority,” estimating the company spends only about 20 percent of its resources on its advertising business. Huffman declined to share revenue totals. The company is also not profitable.
I can't imagine giving $200M to a group of people who publicly say they're not focused on ensuring I get it back. Is this a VC investment or a charity?
Also, have they not achieved profitability after 10+ years because they don't know how to make enough money (i.e. ad sales team is weak), costs are too high (i.e. bad code so lots of infra or too many employees), or is it just not possible to be profitable in this space?
Brings to mind an article I read circa 2001 where a Google executive said, "Look, we could be profitable next month if we covered the site with annoying ads, but we're not going to do that. We're focusing on growth now."
Google was still a fairly young company at that point. Reddit is 12 years old and had a $1.6B valuation prior to this $200M infusion. They've already achieved growth.
I think the investors' motivations are non-financial, akin to how YC invested in Quora.
But what if Reddit, which has tons of great content, blocks access to Google search, focuses on building a really good search engine, and strongly marketing it via sharing search results in their platform, could this become popular ?
And while $200M doesn't fit a design change, search engines are expensive.
a) The investors may have been given a different answer as to how much Reddit cares about making money, even in the short term (I don't mean that they were mislead, but that it would be bad PR to tell the Reddit community the opposite)
b) They may have a plan towards profitability over a certain period of time that they haven't shared with you or me but that was convincing enough to potentially be a good investment (or maybe other scenarios, such as selling to an even bigger company who already can monetise... such as Google)
I can't imagine giving $200M to a group of people who publicly say they're not focused on ensuring I get it back. Is this a VC investment or a charity?
Also, have they not achieved profitability after 10+ years because they don't know how to make enough money (i.e. ad sales team is weak), costs are too high (i.e. bad code so lots of infra or too many employees), or is it just not possible to be profitable in this space?