Reddit kind of anticipates this critique in its investor docs, and argues that it didn’t really start operating as a serious business until 2018 when it finally started “meaningful monetization efforts” — that is, trying to make money for real.
But that’s still six years ago. What has Reddit been doing since then?
One big, obvious answer: It has been hiring a lot of engineers and spending a lot of money on their salaries…
…What am I missing? I asked Reddit comms for comment but they declined, citing the company’s quiet period before the IPO.
That’s a deep misunderstanding of how that number came to be. He wasn’t paid 193 millions. He was paid something like 6 millions.
The rest is shares that he got and kept through the whole period. When you setup a company you create a number of shares that founders buy (with most kept on the side for investors). As you grow so do those shares value, and you’re also granted some as bonus/salary/et . At 10B those share are worth 190 millions. If Reddit would be worth 1 billion those shares would be 19 millions.
Basically he owns about 2% of Reddit.
Almost every IPO in history has resulted in a significant drop in value on the first weeks as early investors drop their shares on the market and hype goes down. I would be surprised if Reddit loses half of its value in the first month alone. It is much less bullish than a lot of other recent IPOs.