12 ms·

Fidelity deepens valuation cut for Reddit and Discord

172 points by jmsflknr 3y ago

AdamN 3y ago
Haven't logged into reddit in weeks - how is it these days?
- sokoloff 3y ago
  I rarely set out to go to Reddit (in the sense of “my task is to read Reddit”), but I pretty frequently land on Reddit from search results. I think the Reddit utility was substantially reduced for that use case (too often landing on a closed subreddit) and that damage could last far beyond when this protest ends/is ended. I sure won’t be adding “reddit” to the end of my search queries for a while!
  - AlexErrant 3y ago
    This is how I've been boycotting Reddit myself; I'll click native google hits, but I won't visit the homepage/any subreddits directly. HN's filled that need somewhat.
    - pierat 3y ago
      If I have to, I change the link from www.reddit.com/r/stuffgoeshere to www.reveddit.com/r/stuffgoeshere It's what I used as a undelete viewer, with power tripping mods and admins. I'm guessing it'll quit working tomorrow.
  - neilv 3y ago
    I'm not boycotting Reddit, but years ago I had to un-train my fingers from unconsciously going to Reddit, because the value had gotten so low (or, on the front page overrun by manipulators years ago, it had negative value). The following Ublock Origin rules aren't perfect, but they mostly blocked the Reddit main page, which was what muscle memory would go to. While permitting search hits, links from HN, etc. ||old.reddit.com^ @@https://old.reddit.com/comments/* @@https://old.reddit.com/domain/* @@https://old.reddit.com/over18?* @@https://old.reddit.com/r/* @@https://old.reddit.com/search?* @@https://old.reddit.com/subreddits/search?* @@https://old.reddit.com/u/* @@https://old.reddit.com/user/* @@http://old.reddit.com/r/* @@http://old.reddit.com/u/* ||www.reddit.com^ @@https://www.reddit.com/comments/* @@https://www.reddit.com/domain/* @@https://www.reddit.com/gallery/* @@https://www.reddit.com/over18?* @@https://www.reddit.com/poll/* @@https://www.reddit.com/r/* @@https://www.reddit.com/search?* @@https://www.reddit.com/subreddits/search?* @@https://www.reddit.com/u/* @@https://www.reddit.com/user/* @@https://www.reddit.com/video/* @@http://www.reddit.com/r/* @@http://www.reddit.com/u/* In addition to using these UBO rules, I also deleted my bookmarks to subreddits.
- mandmandam 3y ago
  For people who care about sports and celebrities, it's gotten better. Those people will tell you they haven't noticed a thing, and they're glad the whiny mods are getting kicked. For people who care about anything else, the quality has dropped off a cliff. A lot of the cool people have left. Many more will be leaving today once Apollo and RIF are finally murdered. I don't think they'll be coming back very often.
- realitythreek 3y ago
  I ended up on Reddit from a search result last night and it was slooooooooow. I’m not sure if that’s the new normal but was surprised at how bad the user experience had gotten.
- adolfojp 3y ago
  Me and a few other moderators of some medium sized subs that we manage are leaving and a few others have been demoralized into doing nothing. We're having trouble finding new mods and the ones who are filling applications are either racists or power mods. The subs are operating in a restricted manner in part as a form of extended protest but in reality mostly because there's no longer enough manpower to run them in an effective manner. When the subs are finally forced to open fully the remaining mods will need to either make moderating their full time job or they will be crushed by a neverending queue of spam and hate and by people asking how to fix their mouse in a software forum. Interacting with other mod teams we've learned that this mod scarcity is apparently universal. None of this matters to reddit because in all honesty they would probably be happier and more profitable by converting the website into a read only feed of memes and kittens.
  - gremlinsinc 3y ago
    ironically, they would probably be better off creating a chatGPT moderator for each sub, it'd need to probably be programmatically unique to the sub. The irony being chatGPT wouldn't exist without Reddit data and supposedly the cause of the API updates, even this Sam Altman is on the board of Reddit. I'd like to build a DAO with a centralized hub which basically models taxonomies for things like channels or tags etc as well as being a central source of truth for usernames and authentications. It'd be fully open source and could be splintered if there's some conflict in the community. For instance racists can get bent and start their own centralized server and be defederated from the core. What would be funny is if a meme started that Reddit is now hiring moderators, payment is fame and glory. Nazis, Bigots, Hypocrites, Cult leaders welcome, apply within. You know it'd happen. Reddit is about to become voat or worse 4chan 2.0 electric boogaloo.
- endisneigh 3y ago
  Seems fine for me.
- jjice 3y ago
  I don't use reddit a ton over the last few years and I'm only subbed to a handful of smaller subreddits (biggest is a bit over a million I think) and I haven't noticed a difference.
- marcosdumay 3y ago
  I looked at it recently out of curiosity, and my home page felt basically similar to always, but slower (the content was slower to come, not the site). It also made me notice that I haven't seen content from any valuable sub in a while, and the entire home was cheap jokes.
bhaak 3y ago
And now tell me again that the Reddit Blackout had now effect. How can the Reddit CEO not be fired?
- the_shivers 3y ago
  Doesn't Discord's valuation dropping just as much suggest the decline may not be driven by protesters?
  - AdamN 3y ago
    yeah, this seems like a mark to market change (the market just isn't paying as much as it used to) and is lagging by a few months. The impact of the blackout hasn't been quantified yet by investors and probably not even internally at this point.
    - zirpderp 3y ago
      if I were on the board I would be voting to fire him asap. you've successfully fomented a site wide revolt in the year you're trying to IPO. unacceptable.
      - edgyquant 3y ago
        The board probably forced him to do it
  - Stranger43 3y ago
    Given that the reason there were protest was that reddit wanted to monetize a part of their platform that was not generating ad revenue those two things could be completely related. if reddit cannot monetize their users, either as a product to sell to advertisers or by converting them to paying customers it's might not be viable as a profitable business.
- BaseballPhysics 3y ago
  It had no effect. These write downs are likely a byproduct of the macro environment. The cheap money has run out and the stock market is taking a hit as interest rates have climbed. Fidelity's valuations reflect what they believe they can sell their share for, and now they believe they'd sell it for less. If anything, my bet is Spez has been seeing that writing on the wall for a while (either because he read the tea leaves or because of signalling from Reddit's investors) and the API pricing changes are part of a desperate strategy to boost cashflow and hopefully goose their valuation in advance of a hoped-for IPO.
Capricorn2481 3y ago
> Worth noting that the vast majority of markdown in the value of Reddit and Discord holdings by Fidelity predominantly occurred last year Marking down Discord as well. Not sure any of this can be attributed to the blackout. But I wonder if Spez has been slowly feeling the IPO money bleed out and panicked early this year. Maybe that's why he had such a sudden 180 on policies.
- Stranger43 3y ago
  There seems to be a general problem with social media as a profitable business models as there don't seem to be any real path for companies to monetize their user base that don't end up causing damage. Given that Discord and Reddit have an overlapping user base it could be realization that that's not an user base that's either no especially desirable for advertisers or one simply hard to monetize for other reasons.
  - chongli 3y ago
    18-35 year old men is a demographic that is extremely valuable to advertisers. Unfortunately, it also seems to be quite a slippery bunch who shy away from most forms of advertising. They definitely love Steam sales though!
    - Stranger43 3y ago
      But it's only really an subset of that demographic and i suspect the age spread reaches far lower then 18(reddit might pretend otherwise for regulatory purposes). And i suspect a reason for the entire debacle is that a lot of the user base weren't seeing ads at all due to ad-blockers or the use of 3rd party apps. It's a problem that also seems to plague twitch in that they simply aren't generating the revenue that's expected from the amount of traffic generated.
      - tourmalinetaco 3y ago
        > And i suspect a reason for the entire debacle is that a lot of the user base weren't seeing ads at all due to ad-blockers or the use of 3rd party apps. Neither of which would be a problem for them if they didn’t remake and destroy the default UX on their desktop and made a functional app. By pushing users to third party solutions they also pushed them off of the ads. Because if you want a web extension to redirect to “old.reddit.com”, why not throw an adblocker on top?
tmysl 3y ago
Huffman will spin this into the result of economic forces outside of Reddit’s control.
- NotYourLawyer 3y ago
  That won’t take much spin. Read the article.
- edgyquant 3y ago
  You mean he will state the obvious
jelling 3y ago
The write-down might be fair. But the lesson I see with Reddit, Discord and Twitter is that letting a public company own even a tiny slice of your private company is a terrible idea. Despite only owning a point or two of multi-billion dollar companies, they implicitly get pricing power over the entire cap table.
- rubyn00bie 3y ago
  This feels like a really backwards way of looking at valuations to me. I would assume Fidelity knows more about how to value a company the size of Reddit or Discord than either of those companies. Valuations are based on reality not the dreams of founders and early investors.
- minimax 3y ago
  Fidelity is not a public company.
  - ethbr0 3y ago
    https://en.m.wikipedia.org/wiki/Fidelity_Investments#Ownership_and_management https://en.m.wikipedia.org/wiki/Fidelity_Investments#Ownersh... >> The founding Johnson family, individually and through various trusts, owns stock representing a 49% voting interest in FMR, and have signed agreements pledging to vote all their shares as a bloc. >> Most of the remaining 51% of the company is held by various Fidelity employees and ex-employees, including fund managers and ex-managers...
    - minimax 3y ago
      Yes, exactly. Fidelity is a private company just like Reddit and Discord are. There are still shares in the private company held by various owners, but the shares aren't traded publicly, which is what it means to be a public company.
      - ethbr0 3y ago
        To unify the point that GP was making, it's dangerous to let publicly transparent funds take slices of a private company, as their valuation announcements give them control. In reality, at this scale, I'm not sure if there's an alternative though. Syndicated investment is required to amass the capital levels needed.
bloopernova 3y ago
Somewhat related question: reddit has been quoted as having around 1,700 employees. Does anyone know how many of those are devs? And how that compares against similar sites/companies? Reddit has consistently been incredibly slow to fix bugs and implement new features, so I was wondering how dysfunctional their dev teams are.
- hughesjj 3y ago
  Iirc most of the devs are building the features that users actively hate like like chats and live streams etc. The tiktokification. Also, ads, of course. Still though yeah I'd imagine a minority of that number are devs.
  - realitythreek 3y ago
    This seems like the problem with capitalism. You start with a company that is providing a great service using 25 people. But it does well so throwing money at it can make it better (and worth more), right? But not everything has to be worth a lot of money. You could just keep being a great community and double digit employees.
    - Gigachad 3y ago
      Reddit was profitable way back. Capitalism would have allowed it to continue on in this state perpetually. Spez got greedy and wanted more money though.
      - realitythreek 3y ago
        Exactly, this was what I was trying to say. Being sustainable can be enough, it doesn’t have to be the next Meta.
      - danaris 3y ago
        I think this is where it's helpful to draw a line between regular capitalism and the late-stage hypercapitalism we've descended into these days. My rule of thumb is that it's the difference between "we provide a service or make a product, and if we do it well, then we make money" and "we make money, as much as possible, however possible, and if we have to provide a service or make a product to do it, that's a necessary evil".
goolz 3y ago
Huffman, if nothing else, you have brought entertainment to my life recently with this debacle. Between Reddit and RHEL lately it’s just amazing how fast companies like to burn through good will. I used to use Reddit daily and now I refuse. If I was an advertiser I would be in full sprint (I believe many have left already).
- n3m4c 3y ago
  Advertisers just aren't running away from Reddit. They were never there in the first place. Reddit's revenue is tiny considering it's userbase. And their data is categorized well, by default, for free by a volunteer force of moderators. And still they're not making money. How is that even possible?
  - covercash 3y ago
    >How is that even possible? Reddit has never really had a competent CEO and that has never been more apparent than with Steve Huffman who has no background or skill as a leader. He also was never the one responsible for building and fostering the community side of things, that was Alexis’ department. One could argue that even as a developer he was second fiddle to Aaron. “What would you say you do here, Steve?” - The Bobs I wouldn’t be sad if OpenAi or Google acquired Reddit as a source for training future models. Don’t try to optimize it for advertising, the value is in the human-created content.
    - eli 3y ago
      I think the value of owning reddit as a data source for training AIs is vastly overstated.
  - eli 3y ago
    Many (most?) of the categories are not desirable to advertisers and the user base is hostile to advertising. A google ad that appears when someone searches "car insurance" is very different from an ad in a car insurance subreddit. It's also different from Facebook where you could target based on demographics.
TheCaptain4815 3y ago
What's crazy to me is how Discord or Reddit could approach Twitter in valuation? Even if the user base is similar (at least between Discord v Twitter), the target marketing for "FurryFriend558" on Discord must be impossible, whereas lots of twitter folks use their real names n such.
- RadiozRadioz 3y ago
  Advertisers don't need real identities to be able to advertise to people. If FurryFriend558 talks about leafblowers a bunch and browses sites with Discord integrations, advertisers will have no problem serving them the latest leafblower deals without a thought about what their real name is.
  - TheCaptain4815 3y ago
    Good point, I forgot they read all our messages. I suppose in that light all you'd need is some minor classifications (estimate on age, race, sex, etc) and you could tailor ads based on that + their recent messages.
- hwbehrens 3y ago
  In addition to the point mentioned by the sibling comment, I think there is also an element of "go where the users are", by which I mean that if FurryFriend558 spends 10x or 50x more time on Reddit or Discord, even if the ads are less effective the total effect is still higher. Prior to dropping Reddit recently, I certainly spent more than two orders more time there than on Twitter.
- lolinder 3y ago
  Discord's business model doesn't rely on advertising. A company's value has nothing to do with the number of users it has and everything to do with how much money it can make, so it's theoretically possible for Discord to be more valuable with a much smaller user base if the users are much more willing to pay.
dmazin 3y ago
Reddit and Discord are private companies, yet because they are held by giant funds which publicize their internal valuations, we get something similar to the valuation heartbeat of a public company's stock price. That said, how come I'm only seeing this recently? Did something recently change about how Fidelity or other investors publish their info? Or maybe the only thing that has changed is that a lot of companies are losing value, so we're discussing it more.
- beebmam 3y ago
  Private valuation is a scam. Public valuation should be observed with skepticism.
- werrett 3y ago
  It’s the latter. Lot’s of companies loosing their zero-interest rate valuation but funds have always needed to mark down swollen private valuations. Fidelity marks down stake in pre-IPO startups Cloudera, Dropbox March 30, 2016 https://www.reuters.com/article/us-funds-fidelity-ipo-idUSKC https://www.reuters.com/article/us-funds-fidelity-ipo-idUSKC...
corry 3y ago
Hey, OpenAI - this is your moment. $5.5B + 20% premium to acquire the largest, best source of UGC community in history while it's distracted by squabbles over APIs, moderators, etc. Reverse the API bullshit, remove all the pressures about IPO'ing, and win some positive PR among users. Not sure that would be good for humanity, but it would probably be good for Reddit users.
- paxys 3y ago
  Where exactly is OpenAI getting ~$7B cash from?
- shmatt 3y ago
  I agree with this, except the "positive PR amongst users" - OpenAI is going to want to extract every single piece of information from users without compensating them a single penny. No way they allow something like permanent deletion of comments. And they will obviously be using every single database entry - public or not, to train their LLMs Back to the main subject. For me the obvious buyers in terms of makes most sense are Meta -> OpenAI -> Shady data broker. Sam Altman is also one of the investors in Reddit For Meta it goes beyond the data, which is a plus. There are a ton of similarities between FB groups and Reddit. FB groups is even more popular in terms of DAU, and some communities are bigger there than on Reddit. Plus they also utilize free moderation without any uprisings. Owning both communities would be huge for Meta in generating ad $'s
SilverBirch 3y ago
People are going into a lot of detail about Reddit here, but I'm not even certain this has anything to do with reddit at all. When you have a holding in a private company you obviously can't just mark to market, so you need a different valuation method. My guess would be that the method in this case is that they take a look at Reddit, find some public comparables (Facebook, Snapchat etc.) apply a fudge factor using the comparable metrics they have, and that's how they do the valuation. I highly doubt they're looking at Reddit each month and making value judgements on the strategy of the CEO. Most likely this valuation move (which isn't huge) is just them reflecting the move in comparables over time rather than re-thinking the valuation of Reddit. The original article writes: > giving a preview into how one of the world’s largest asset manager sees the impact of the ongoing slowdown in the public market on privately-held startups This is correct, this news is showing us what's happening in the market in general, not specific changes in reddit.
deleted 3y ago
[deleted]
paxys 3y ago
Every privately held company should have its valuation slashed in today's environment. It's just that in most cases founders and VCs aren't willing to admit it and take the hit. If they were all forced to open up their books the reality would be very different to what you see publicly.

172 points by jmsflknr 3y ago

AdamN 3y ago

Haven't logged into reddit in weeks - how is it these days?

sokoloff 3y ago
I rarely set out to go to Reddit (in the sense of “my task is to read Reddit”), but I pretty frequently land on Reddit from search results. I think the Reddit utility was substantially reduced for that use case (too often landing on a closed subreddit) and that damage could last far beyond when this protest ends/is ended. I sure won’t be adding “reddit” to the end of my search queries for a while!
- AlexErrant 3y ago
  This is how I've been boycotting Reddit myself; I'll click native google hits, but I won't visit the homepage/any subreddits directly. HN's filled that need somewhat.
  - pierat 3y ago
    If I have to, I change the link from www.reddit.com/r/stuffgoeshere to www.reveddit.com/r/stuffgoeshere It's what I used as a undelete viewer, with power tripping mods and admins. I'm guessing it'll quit working tomorrow.
- neilv 3y ago
  I'm not boycotting Reddit, but years ago I had to un-train my fingers from unconsciously going to Reddit, because the value had gotten so low (or, on the front page overrun by manipulators years ago, it had negative value). The following Ublock Origin rules aren't perfect, but they mostly blocked the Reddit main page, which was what muscle memory would go to. While permitting search hits, links from HN, etc. ||old.reddit.com^ @@https://old.reddit.com/comments/* @@https://old.reddit.com/domain/* @@https://old.reddit.com/over18?* @@https://old.reddit.com/r/* @@https://old.reddit.com/search?* @@https://old.reddit.com/subreddits/search?* @@https://old.reddit.com/u/* @@https://old.reddit.com/user/* @@http://old.reddit.com/r/* @@http://old.reddit.com/u/* ||www.reddit.com^ @@https://www.reddit.com/comments/* @@https://www.reddit.com/domain/* @@https://www.reddit.com/gallery/* @@https://www.reddit.com/over18?* @@https://www.reddit.com/poll/* @@https://www.reddit.com/r/* @@https://www.reddit.com/search?* @@https://www.reddit.com/subreddits/search?* @@https://www.reddit.com/u/* @@https://www.reddit.com/user/* @@https://www.reddit.com/video/* @@http://www.reddit.com/r/* @@http://www.reddit.com/u/* In addition to using these UBO rules, I also deleted my bookmarks to subreddits.
mandmandam 3y ago
For people who care about sports and celebrities, it's gotten better. Those people will tell you they haven't noticed a thing, and they're glad the whiny mods are getting kicked. For people who care about anything else, the quality has dropped off a cliff. A lot of the cool people have left. Many more will be leaving today once Apollo and RIF are finally murdered. I don't think they'll be coming back very often.
realitythreek 3y ago
I ended up on Reddit from a search result last night and it was slooooooooow. I’m not sure if that’s the new normal but was surprised at how bad the user experience had gotten.
adolfojp 3y ago
Me and a few other moderators of some medium sized subs that we manage are leaving and a few others have been demoralized into doing nothing. We're having trouble finding new mods and the ones who are filling applications are either racists or power mods. The subs are operating in a restricted manner in part as a form of extended protest but in reality mostly because there's no longer enough manpower to run them in an effective manner. When the subs are finally forced to open fully the remaining mods will need to either make moderating their full time job or they will be crushed by a neverending queue of spam and hate and by people asking how to fix their mouse in a software forum. Interacting with other mod teams we've learned that this mod scarcity is apparently universal. None of this matters to reddit because in all honesty they would probably be happier and more profitable by converting the website into a read only feed of memes and kittens.
- gremlinsinc 3y ago
  ironically, they would probably be better off creating a chatGPT moderator for each sub, it'd need to probably be programmatically unique to the sub. The irony being chatGPT wouldn't exist without Reddit data and supposedly the cause of the API updates, even this Sam Altman is on the board of Reddit. I'd like to build a DAO with a centralized hub which basically models taxonomies for things like channels or tags etc as well as being a central source of truth for usernames and authentications. It'd be fully open source and could be splintered if there's some conflict in the community. For instance racists can get bent and start their own centralized server and be defederated from the core. What would be funny is if a meme started that Reddit is now hiring moderators, payment is fame and glory. Nazis, Bigots, Hypocrites, Cult leaders welcome, apply within. You know it'd happen. Reddit is about to become voat or worse 4chan 2.0 electric boogaloo.
endisneigh 3y ago
Seems fine for me.
jjice 3y ago
I don't use reddit a ton over the last few years and I'm only subbed to a handful of smaller subreddits (biggest is a bit over a million I think) and I haven't noticed a difference.
marcosdumay 3y ago
I looked at it recently out of curiosity, and my home page felt basically similar to always, but slower (the content was slower to come, not the site). It also made me notice that I haven't seen content from any valuable sub in a while, and the entire home was cheap jokes.

bhaak 3y ago

And now tell me again that the Reddit Blackout had now effect. How can the Reddit CEO not be fired?

the_shivers 3y ago
Doesn't Discord's valuation dropping just as much suggest the decline may not be driven by protesters?
- AdamN 3y ago
  yeah, this seems like a mark to market change (the market just isn't paying as much as it used to) and is lagging by a few months. The impact of the blackout hasn't been quantified yet by investors and probably not even internally at this point.
  - zirpderp 3y ago
    if I were on the board I would be voting to fire him asap. you've successfully fomented a site wide revolt in the year you're trying to IPO. unacceptable.
    - edgyquant 3y ago
      The board probably forced him to do it
- Stranger43 3y ago
  Given that the reason there were protest was that reddit wanted to monetize a part of their platform that was not generating ad revenue those two things could be completely related. if reddit cannot monetize their users, either as a product to sell to advertisers or by converting them to paying customers it's might not be viable as a profitable business.
BaseballPhysics 3y ago
It had no effect. These write downs are likely a byproduct of the macro environment. The cheap money has run out and the stock market is taking a hit as interest rates have climbed. Fidelity's valuations reflect what they believe they can sell their share for, and now they believe they'd sell it for less. If anything, my bet is Spez has been seeing that writing on the wall for a while (either because he read the tea leaves or because of signalling from Reddit's investors) and the API pricing changes are part of a desperate strategy to boost cashflow and hopefully goose their valuation in advance of a hoped-for IPO.

Capricorn2481 3y ago

> Worth noting that the vast majority of markdown in the value of Reddit and Discord holdings by Fidelity predominantly occurred last year Marking down Discord as well. Not sure any of this can be attributed to the blackout. But I wonder if Spez has been slowly feeling the IPO money bleed out and panicked early this year. Maybe that's why he had such a sudden 180 on policies.

Stranger43 3y ago
There seems to be a general problem with social media as a profitable business models as there don't seem to be any real path for companies to monetize their user base that don't end up causing damage. Given that Discord and Reddit have an overlapping user base it could be realization that that's not an user base that's either no especially desirable for advertisers or one simply hard to monetize for other reasons.
- chongli 3y ago
  18-35 year old men is a demographic that is extremely valuable to advertisers. Unfortunately, it also seems to be quite a slippery bunch who shy away from most forms of advertising. They definitely love Steam sales though!
  - Stranger43 3y ago
    But it's only really an subset of that demographic and i suspect the age spread reaches far lower then 18(reddit might pretend otherwise for regulatory purposes). And i suspect a reason for the entire debacle is that a lot of the user base weren't seeing ads at all due to ad-blockers or the use of 3rd party apps. It's a problem that also seems to plague twitch in that they simply aren't generating the revenue that's expected from the amount of traffic generated.
    - tourmalinetaco 3y ago
      > And i suspect a reason for the entire debacle is that a lot of the user base weren't seeing ads at all due to ad-blockers or the use of 3rd party apps. Neither of which would be a problem for them if they didn’t remake and destroy the default UX on their desktop and made a functional app. By pushing users to third party solutions they also pushed them off of the ads. Because if you want a web extension to redirect to “old.reddit.com”, why not throw an adblocker on top?

tmysl 3y ago

Huffman will spin this into the result of economic forces outside of Reddit’s control.

NotYourLawyer 3y ago
That won’t take much spin. Read the article.
edgyquant 3y ago
You mean he will state the obvious

jelling 3y ago

The write-down might be fair. But the lesson I see with Reddit, Discord and Twitter is that letting a public company own even a tiny slice of your private company is a terrible idea. Despite only owning a point or two of multi-billion dollar companies, they implicitly get pricing power over the entire cap table.

rubyn00bie 3y ago
This feels like a really backwards way of looking at valuations to me. I would assume Fidelity knows more about how to value a company the size of Reddit or Discord than either of those companies. Valuations are based on reality not the dreams of founders and early investors.
minimax 3y ago
Fidelity is not a public company.
- ethbr0 3y ago
  https://en.m.wikipedia.org/wiki/Fidelity_Investments#Ownership_and_management https://en.m.wikipedia.org/wiki/Fidelity_Investments#Ownersh... >> The founding Johnson family, individually and through various trusts, owns stock representing a 49% voting interest in FMR, and have signed agreements pledging to vote all their shares as a bloc. >> Most of the remaining 51% of the company is held by various Fidelity employees and ex-employees, including fund managers and ex-managers...
  - minimax 3y ago
    Yes, exactly. Fidelity is a private company just like Reddit and Discord are. There are still shares in the private company held by various owners, but the shares aren't traded publicly, which is what it means to be a public company.
    - ethbr0 3y ago
      To unify the point that GP was making, it's dangerous to let publicly transparent funds take slices of a private company, as their valuation announcements give them control. In reality, at this scale, I'm not sure if there's an alternative though. Syndicated investment is required to amass the capital levels needed.

bloopernova 3y ago

Somewhat related question: reddit has been quoted as having around 1,700 employees. Does anyone know how many of those are devs? And how that compares against similar sites/companies? Reddit has consistently been incredibly slow to fix bugs and implement new features, so I was wondering how dysfunctional their dev teams are.

hughesjj 3y ago
Iirc most of the devs are building the features that users actively hate like like chats and live streams etc. The tiktokification. Also, ads, of course. Still though yeah I'd imagine a minority of that number are devs.
- realitythreek 3y ago
  This seems like the problem with capitalism. You start with a company that is providing a great service using 25 people. But it does well so throwing money at it can make it better (and worth more), right? But not everything has to be worth a lot of money. You could just keep being a great community and double digit employees.
  - Gigachad 3y ago
    Reddit was profitable way back. Capitalism would have allowed it to continue on in this state perpetually. Spez got greedy and wanted more money though.
    - realitythreek 3y ago
      Exactly, this was what I was trying to say. Being sustainable can be enough, it doesn’t have to be the next Meta.
    - danaris 3y ago
      I think this is where it's helpful to draw a line between regular capitalism and the late-stage hypercapitalism we've descended into these days. My rule of thumb is that it's the difference between "we provide a service or make a product, and if we do it well, then we make money" and "we make money, as much as possible, however possible, and if we have to provide a service or make a product to do it, that's a necessary evil".

goolz 3y ago

Huffman, if nothing else, you have brought entertainment to my life recently with this debacle. Between Reddit and RHEL lately it’s just amazing how fast companies like to burn through good will. I used to use Reddit daily and now I refuse. If I was an advertiser I would be in full sprint (I believe many have left already).

n3m4c 3y ago
Advertisers just aren't running away from Reddit. They were never there in the first place. Reddit's revenue is tiny considering it's userbase. And their data is categorized well, by default, for free by a volunteer force of moderators. And still they're not making money. How is that even possible?
- covercash 3y ago
  >How is that even possible? Reddit has never really had a competent CEO and that has never been more apparent than with Steve Huffman who has no background or skill as a leader. He also was never the one responsible for building and fostering the community side of things, that was Alexis’ department. One could argue that even as a developer he was second fiddle to Aaron. “What would you say you do here, Steve?” - The Bobs I wouldn’t be sad if OpenAi or Google acquired Reddit as a source for training future models. Don’t try to optimize it for advertising, the value is in the human-created content.
  - eli 3y ago
    I think the value of owning reddit as a data source for training AIs is vastly overstated.
- eli 3y ago
  Many (most?) of the categories are not desirable to advertisers and the user base is hostile to advertising. A google ad that appears when someone searches "car insurance" is very different from an ad in a car insurance subreddit. It's also different from Facebook where you could target based on demographics.

TheCaptain4815 3y ago

What's crazy to me is how Discord or Reddit could approach Twitter in valuation? Even if the user base is similar (at least between Discord v Twitter), the target marketing for "FurryFriend558" on Discord must be impossible, whereas lots of twitter folks use their real names n such.

RadiozRadioz 3y ago
Advertisers don't need real identities to be able to advertise to people. If FurryFriend558 talks about leafblowers a bunch and browses sites with Discord integrations, advertisers will have no problem serving them the latest leafblower deals without a thought about what their real name is.
- TheCaptain4815 3y ago
  Good point, I forgot they read all our messages. I suppose in that light all you'd need is some minor classifications (estimate on age, race, sex, etc) and you could tailor ads based on that + their recent messages.
hwbehrens 3y ago
In addition to the point mentioned by the sibling comment, I think there is also an element of "go where the users are", by which I mean that if FurryFriend558 spends 10x or 50x more time on Reddit or Discord, even if the ads are less effective the total effect is still higher. Prior to dropping Reddit recently, I certainly spent more than two orders more time there than on Twitter.
lolinder 3y ago
Discord's business model doesn't rely on advertising. A company's value has nothing to do with the number of users it has and everything to do with how much money it can make, so it's theoretically possible for Discord to be more valuable with a much smaller user base if the users are much more willing to pay.

dmazin 3y ago

Reddit and Discord are private companies, yet because they are held by giant funds which publicize their internal valuations, we get something similar to the valuation heartbeat of a public company's stock price. That said, how come I'm only seeing this recently? Did something recently change about how Fidelity or other investors publish their info? Or maybe the only thing that has changed is that a lot of companies are losing value, so we're discussing it more.

beebmam 3y ago
Private valuation is a scam. Public valuation should be observed with skepticism.
werrett 3y ago
It’s the latter. Lot’s of companies loosing their zero-interest rate valuation but funds have always needed to mark down swollen private valuations. Fidelity marks down stake in pre-IPO startups Cloudera, Dropbox March 30, 2016 https://www.reuters.com/article/us-funds-fidelity-ipo-idUSKC https://www.reuters.com/article/us-funds-fidelity-ipo-idUSKC...

corry 3y ago

Hey, OpenAI - this is your moment. $5.5B + 20% premium to acquire the largest, best source of UGC community in history while it's distracted by squabbles over APIs, moderators, etc. Reverse the API bullshit, remove all the pressures about IPO'ing, and win some positive PR among users. Not sure that would be good for humanity, but it would probably be good for Reddit users.

paxys 3y ago
Where exactly is OpenAI getting ~$7B cash from?
shmatt 3y ago
I agree with this, except the "positive PR amongst users" - OpenAI is going to want to extract every single piece of information from users without compensating them a single penny. No way they allow something like permanent deletion of comments. And they will obviously be using every single database entry - public or not, to train their LLMs Back to the main subject. For me the obvious buyers in terms of makes most sense are Meta -> OpenAI -> Shady data broker. Sam Altman is also one of the investors in Reddit For Meta it goes beyond the data, which is a plus. There are a ton of similarities between FB groups and Reddit. FB groups is even more popular in terms of DAU, and some communities are bigger there than on Reddit. Plus they also utilize free moderation without any uprisings. Owning both communities would be huge for Meta in generating ad $'s

SilverBirch 3y ago

People are going into a lot of detail about Reddit here, but I'm not even certain this has anything to do with reddit at all. When you have a holding in a private company you obviously can't just mark to market, so you need a different valuation method. My guess would be that the method in this case is that they take a look at Reddit, find some public comparables (Facebook, Snapchat etc.) apply a fudge factor using the comparable metrics they have, and that's how they do the valuation. I highly doubt they're looking at Reddit each month and making value judgements on the strategy of the CEO. Most likely this valuation move (which isn't huge) is just them reflecting the move in comparables over time rather than re-thinking the valuation of Reddit. The original article writes: > giving a preview into how one of the world’s largest asset manager sees the impact of the ongoing slowdown in the public market on privately-held startups This is correct, this news is showing us what's happening in the market in general, not specific changes in reddit.

deleted 3y ago

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paxys 3y ago

Every privately held company should have its valuation slashed in today's environment. It's just that in most cases founders and VCs aren't willing to admit it and take the hit. If they were all forced to open up their books the reality would be very different to what you see publicly.