His moves make sense when you realize that he answers to investors who are done with throwing money at a company that has never turned a profit. The cost of money is now higher than it was at the time Reddit was founded. The entire social media era is built on top of Great Recession monetary policy, and that policy is now done. These investors want to cash out, and they want to cash out now.
Bingo. He’s following a WELL KNOWN playbook of making the company both leaner in terms of expenses, and trying to add revenue, with zero care about long term viability of the company.
The goal is to make the books look better then they are, so that you can dupe investors into thinking the turd you just shined up isn’t a turd.
EVERYTHING he’s doing is logical when you look at it in that sense, they are throwing a coat of wax on a used lemon to dump it on some unsuspecting suckers for a profit.
Even under that lens, I don’t think his moves make sense. At least not now. He may have thought they would, and that the backlash wouldn’t be too bad. BUT he didn’t back down, when it became apparent that he was on the losing end. That makes him a egotistical moron, at best. They are losing advertisers, there is a lot of not flattering press, and they are bleeding users (it will only get worse on the 1st of July too). That’s not typically endearing to investors, no matter how close to the IPO they are. In fact, that’s the kind of shit you do right after the IPO, and the investor cashout.
I get it. Company isn’t making money, so lets come up with ways to generate more income. Ok, let’s charge for API access. On the surface, great idea. The issue is that he does what so many people do in that situation. He went from a good idea, that could keep him solvent, to a HUGE overreach. I honestly don’t know anyone that’s upset with reddit/spez for the IDEA of charging for API. The issue is the ridiculous price tag he applied, and the message behind it.
He truly could have been the hero if he had come up with a reasonable price. Or, alternatively, started with the ridiculous price, and then left himself an out, for if the users revolted. Ok guys, I see that I was being dumb, my $2.50 average per user IS a bit too much. Let’s go down to $1.50 per person. Suddenly he would have been a great guy, who is willing to work with the community. He’s seemingly doing the one thing in business you should never do. Bringing your emotions into it. So I guess it does kind of make sense, just not good sense IMO
There’s no scenario where he comes out of this the hero, though. Their business model going forward is ads and charging generative model owners for access to user posts. Their most invested and active users – that is, their most valuable ones from both an advertising and a model training perspective – were using 3rd party apps.
They needed to get everyone in house under a 1st party umbrella, and they needed to peg API pricing AI training pricing.
This is what a profit-driven Reddit just looks like. Their only other option is to become Facebook and track and serve ads to users off-site, and they don’t have the same kind of controls over user identity that Facebook has. Plus, it puts them in direct competition with Facebook, and Zucks will absolutely destroy them in toe-to-toe.
He’s already looking at slitting Twitter’s throat with Barcelona…
I was in no way implying he can look like the hero anymore. I was saying, had he used his brain, instead of his emotions, he COULD have made himself into one.
I believe that the actual motive behind the API pricing is the part he hasn’t totally said out loud yet, only eluded to. I don’t think it actually has anything to do with 3rd parties or AI.
One of the absolute biggest profitable businesses is information on people. So for Reddit YOU are the product. Your browsing history, click through, devices you’re using, browser, location, and a HUGE one, what parts of Reddit you’re using/your posts.
This info can be worth large sums of money, they just need to be able to capture it. Yeah, that’s where the 3party apps are really the issue, but at the core the Apollo’s of the world aren’t the actual problem. It’s that Reddit can’t collect your info with Apollo in the way. Ffs spez said in an article, which I can’t currently find, something to the effect of people post things on Reddit they won’t tell other people or only tell their therapist and it’s not fair that Reddit can’t capitalize on that info.
“There’s a lot of stuff on the site that you’d only ever say in therapy, or AA, or never at all … But we don’t need to give all of that value to some of the largest companies in the world for free.”
We’re seeing a huge shift in the economy due to the interest rates. LOTS of companies have been operating at a loss for a decade or more. That time is over.
His moves make sense when you realize that he answers to investors who are done with throwing money at a company that has never turned a profit. The cost of money is now higher than it was at the time Reddit was founded. The entire social media era is built on top of Great Recession monetary policy, and that policy is now done. These investors want to cash out, and they want to cash out now.
Bingo. He’s following a WELL KNOWN playbook of making the company both leaner in terms of expenses, and trying to add revenue, with zero care about long term viability of the company.
The goal is to make the books look better then they are, so that you can dupe investors into thinking the turd you just shined up isn’t a turd.
EVERYTHING he’s doing is logical when you look at it in that sense, they are throwing a coat of wax on a used lemon to dump it on some unsuspecting suckers for a profit.
Even under that lens, I don’t think his moves make sense. At least not now. He may have thought they would, and that the backlash wouldn’t be too bad. BUT he didn’t back down, when it became apparent that he was on the losing end. That makes him a egotistical moron, at best. They are losing advertisers, there is a lot of not flattering press, and they are bleeding users (it will only get worse on the 1st of July too). That’s not typically endearing to investors, no matter how close to the IPO they are. In fact, that’s the kind of shit you do right after the IPO, and the investor cashout.
I get it. Company isn’t making money, so lets come up with ways to generate more income. Ok, let’s charge for API access. On the surface, great idea. The issue is that he does what so many people do in that situation. He went from a good idea, that could keep him solvent, to a HUGE overreach. I honestly don’t know anyone that’s upset with reddit/spez for the IDEA of charging for API. The issue is the ridiculous price tag he applied, and the message behind it.
He truly could have been the hero if he had come up with a reasonable price. Or, alternatively, started with the ridiculous price, and then left himself an out, for if the users revolted. Ok guys, I see that I was being dumb, my $2.50 average per user IS a bit too much. Let’s go down to $1.50 per person. Suddenly he would have been a great guy, who is willing to work with the community. He’s seemingly doing the one thing in business you should never do. Bringing your emotions into it. So I guess it does kind of make sense, just not good sense IMO
There’s no scenario where he comes out of this the hero, though. Their business model going forward is ads and charging generative model owners for access to user posts. Their most invested and active users – that is, their most valuable ones from both an advertising and a model training perspective – were using 3rd party apps.
They needed to get everyone in house under a 1st party umbrella, and they needed to peg API pricing AI training pricing.
This is what a profit-driven Reddit just looks like. Their only other option is to become Facebook and track and serve ads to users off-site, and they don’t have the same kind of controls over user identity that Facebook has. Plus, it puts them in direct competition with Facebook, and Zucks will absolutely destroy them in toe-to-toe.
He’s already looking at slitting Twitter’s throat with Barcelona…
I was in no way implying he can look like the hero anymore. I was saying, had he used his brain, instead of his emotions, he COULD have made himself into one.
I believe that the actual motive behind the API pricing is the part he hasn’t totally said out loud yet, only eluded to. I don’t think it actually has anything to do with 3rd parties or AI.
One of the absolute biggest profitable businesses is information on people. So for Reddit YOU are the product. Your browsing history, click through, devices you’re using, browser, location, and a HUGE one, what parts of Reddit you’re using/your posts.
This info can be worth large sums of money, they just need to be able to capture it. Yeah, that’s where the 3party apps are really the issue, but at the core the Apollo’s of the world aren’t the actual problem. It’s that Reddit can’t collect your info with Apollo in the way. Ffs spez said in an article, which I can’t currently find, something to the effect of people post things on Reddit they won’t tell other people or only tell their therapist and it’s not fair that Reddit can’t capitalize on that info.
edit:
https://www.nytimes.com/2023/04/18/technology/reddit-ai-openai-google.html
“There’s a lot of stuff on the site that you’d only ever say in therapy, or AA, or never at all … But we don’t need to give all of that value to some of the largest companies in the world for free.”
We’re seeing a huge shift in the economy due to the interest rates. LOTS of companies have been operating at a loss for a decade or more. That time is over.