What Reddit Could Be Worth
In the last 7 years, Reddit, the giant bulletin board made up of 185,000 + forums on everything ranging from news, photos, arguments to jokes, has taken a large leap. From being a site started by two freshmen students from the University of Virginia in 2005, originally created as an online food ordering site, Reddit has transformed into a website that attracts 500,000 visitors per month.
So what is Reddit worth?
Because Reddit was just recapitalized by Advance, having bought $20 million preferred stock and owning 2/3 of Reddit, the calculations imply that Reddit is on track to be worth more than $240 million dollars.
So what is Reddit’s secret to success?
Reddit is not your traditional website. It does not attract the upscale big name companies to advertise on its website but it does attract advertisements from movie studios, gaming companies and other smaller web based brands. It doesn’t need the big name sponsors to become a good business though. Reddit is a ‘paragon of thrift’, according to Forbe. What this is means it that the company spends only $7 million a year to support only 22 people on payroll and 75 servers from Amazon’s cloud. These expenses are covered by the advertisements it gets from the smaller companies and thus can create substantial revenue for success.
The company has a totally different business model but it seems to be working.
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