He gifted himself a ludicrous $193 million compensation package.
Reddit, a 20-year-old company, has yet to turn a profit. In 2023, the platform lost a whopping $90.8 million.
Can someone explain to me how reddit can make a loss, while he pays himself MORE than the loss? Does that not mean that reddit would have made a 113 Million profit before his $193 million compensation package? What kind of business-algebra-gymnastics is at work here?
It’s a calculation popularized by fintech bro’s in the late oughties.
It’s called pulling an FYGM, a fuck you got mine, colloquially known as a rug pull.
Does that not mean that reddit would have made a 113 Million profit before his $193 million compensation package?
No. His normal salary is around 300k a year. This $193 million figure was the presumed valuation of a stock/options package he received ahead of the IPO. It doesn’t cost the company anything to pay him in stock, so it doesn’t affect the profit/loss calculation.
If it doesn’t cost anything to company to pay in stocks, why don’t they give me like 1m $ value of stock? That would make me very happy and it costs nothing to them anyway
I know you’re just being funny, but the idea is that Spez’s shares and resulting influence over a publicly traded Reddit will incentivize investors to buy stock, raising the value of the stock for all shareholders. The problem with this idea is that Spez is an idiot who is actively sabotaging Reddit’s long term viability.
Gotta love that monopoly money
Yes but where is the $300k coming from if they’re losing $90.8m a year? How can they afford to stay in business? Before they went public, who was foolish enough to invest in a company that has never turned a profit? The money doesn’t just come out of thin air. Someone has to be giving it to him.
If I was rich and started a company that lost $90.8m a year, I’d shut down after less than a year before I went broke and homeless. How can a company that never turns a profit make enough money to pay any employee, let alone the CEO?
Reddit has a lot of users that spend a lot of time there, so it is advertising potential, and a lot of Brands pay for ads on Reddit. Investors hope they will eventually make enough ad revenue to turn a profit.
However Twitter was and is in the same boat, it is a big site with many users, but was never profitable.
Before they went public, who was foolish enough to invest in a company that has never turned a profit?
You’d be surprised. The basic strategy of losing money hand over fist for years to grow yourself to as large a user base as possible, before finally aggressively monetizing that user base, is well established in silicon valley. Investors would not even raise an eyebrow at the loss numbers posted by Reddit because of how exceedingly common that is.
And it has worked several times, making some people ridiculously wealthy. Good examples are Amazon, Facebook, and Uber. So usually companies on this level have raised hundreds of millions to sometimes billions of dollars in investment capital, allowing them to operate at these levels of losses for years at a time.
Uber yeah, but the others are probably profitable overall.
Surely it costs $193 million to pay him in stock. That stock would otherwise have been sold for that amount to other people, and he’s getting it for nothing.
Because you’re exchanging stock worth $193 million for an equivalent amount of dollars, there’s technically no profit or loss involved in the transaction. In the same manner, when paying stock as a compensation, you secure services valued at $193 million for an amount of shares worth the same: the transaction is entirely equal. So you don’t make or lose any money by paying in stock.
Of course, the trick is that the value of the CEO’s work for one year can be whatever he says. If your claim is that they could have gotten more value out of the stock had they sold it in the IPO, I think you are absolutely correct in that regard.
My brain despises econ and I always struggle with it. But that first paragraph smells like “MBAs cooked up a justification for why they don’t pay taxes that doesn’t actually make any sense”.
The second bit makes me wonder “why don’t we have some authority on evaluating the worth of CEOs?”. Insert joke here about that worth being 0. And then I remember that the CEOs are the ones that would have to pay the government to make that rule.
The same argument can be had for paying in cash. Yet I still have to pay tax.
In fact I should get money back, because the services I provide to the company outweigh the cost of my wages (otherwise they wouldn’t pay me). I’m making a damn loss over here!
Sure. You’re not an accountant, neither is whoever wrote that, it’s a bunch of bullshit and the IRS made sure they got paid.
The moderator culture in America and probably abroad relies on unemployed people living in their relatives house who get paid nothing but lame perks here and there. That is the bulk of it.
Some people moderate 5+ chat rooms daily without pay.
They are digital slaves. Make no mistake about it. And they somehow have been conditioned to believe it will pay off when it rarely does.
Spez is a shitbag who never did anything but be in the same room with actual important people.
Nobody is forcing them to do it. If they are unhappy about it they should stop doing it. And preferably come to us not getting paid.
The mods just have to find a new platform that appreciates them. That’s why I left reddit, I’m giving them free content and a bunch of Spez’s are getting rich off our work.
Then they have the audacity to take away what little we actually had, like the API access. Reddit sucks and the death spiral has begun.
As a final act they will get a bunch of redditors to buy in to their IPO only to see the prices come crashing down while they all hold the bags, and the hedgies get even more of our money. It’s a rigged game we cannot win.
Well we win by not paying into the IPO. If no one buys into it it won’t be worth very much and then they won’t have huge amounts of cash.
Lol slavery
Frankly outrageous comparison
They are digital slaves. Make no mistake about it.
… we’re volunteers.
Some people do community clubs as a way to kill time with casual acquaintances. I have severe social anxiety so that’s not a desirable option. Some people do sports. I’m a cripple. Some people do church shit. I hate hymns and I don’t believe in God.
So I moderate. And post.
You both have good points. One interesting aspect is that this volunteer labor is actually contributing to what is making the product valuable in the first place.
You could volunteer to do QA for a software company, or volunteer to clean the floors at a bank, or volunteer to work on an assembly line… And we’d likely criticize those businesses for taking advantage of that labour if it were systemic and widespread.
On the other hand you have open source projects which are freely licensed for huge corporations to make tons of profit from, and all we expect is that they give something back (but we don’t even hold them to that).
It’s interesting to think about where moderation work sits among these.
The reward for the work is the result of the work. For these communities to exists, there must be moderation and for many people the existence of said communities is worth the cost in time/server costs. Reddit selling stock off the backs of people who perform free labor for them is a problem, but someone who sets up a lemmy/mastodon/whatever to host discussion about the things that they care about is not a slave just because they don’t demand monetary compensation or sell your data. The lack of monetization isn’t a bug it’s a feature.
Thank you for your service
o7
Don’t you dare compare Reddit mods to slaves. Slaves don’t have the option to quit work, mods are doing it by choice.
No, no… slavery, like knitting or moderating a small forum space, is obviously just a hobby, or at worst, a side hustle. It’s just a way to grow your personal brand, not the single worst atrocity across all of human history.
They get paid in moderator power trips. “What did you say? Banning…”
I think some of the mods are power tripping, but when I was a mod on one of the subs I think I only ever banned one person. If somebody else had been prepared to motivate the sub then I’d have been happy to let them do it, but it ended up me me doing it.
Somehow I misread “Not Paying Mods” as “Beating His Wife”
This is the norm for any big business. The top dogs will be wildly paid even if the company is struggling. They’ll get a big fat payday even if they get kicked out (golden parachute). Hell, even the bosses in the NYC Public LIbrary system are pulling in close to a million bucks a year even as they talk about cutting services.
The NYC Library is a huge organization. They deserve that money.
Blame Mayor Adams for the budget. He paid millions for new radios for his police buddies. The old ones work fine, also… radios? That’s top priority?
How much does he make? I don’t want to open the article
$193m according to the blurb.
I’ve said it before and I’ll say it again (not on Reddit): Fuck Spez.
Tim Cook makes 1/3 of that and Apple is worth about 200 times what reddit is.
Millions of dollars of pay are always absurd but this really puts it into perspective
I always gear that money vorrupts everyone at some point, and i really wonder if that is true. Like i couldn’t imagine making a few million dollars a year and don’t say fuck it after a year to never be seen again
Same. I’d take my $30 million or whatever it was after the first year, quit, buy a modest house, put the rest into savings, and live off the interest. And you can live really well off the interest of $30 million.
Hopefully EU and US regulators will stomp that site to the ground as selling user generated data for AI companies sounds like something most people on Reddit did not sign in to.
EU and maybe gdpr and other similar regulation matter. The US hasn’t updated our regulations on the tech sector, we’re like 30y behind.
Will they fuck 🤣🤣
They almost certainly “agreed” to terms letting reddit do whatever they want with their posts, and this would likely been seen as reasonable if challenged in court as they were getting a free service in return.
You can’t sign away certain rights under EU law, and any terms that attempt to do that are considered void.
Do you have any reason to think that this is one of those rights? Especially given that signing over copyright absolutely is something you can agree to in a contract.
I modded r/beholdthemasterrace, which was specifically for making fun of literal Nazi inbreds.
Oh, gotcha, so you were legit dealing with degen Nazi wannabes. Apologies for doubting you, I shouldn’t have made assumptions.
More power to ya, cheers
Very notorious Nazis threatened me several times…they hate their picture on Reddit lol.
But why would they hate that? If they’re so confident in their worldview, why aren’t they glad for the publicity? /s
Honestly, Nazis and Confederates are tied for “thinnest-skinned” at this point. And at all the other points too, but especially at this point.
Reddit founder and CEO Steve Huffman gifted himself a stunning $193 million compensation package — while mods get nothing.
Reddit CEO: Suck it plebs.
Probably.
If the company does well, I will do well
And if the company doesn’t do well, he gets to fuck off and retire on more money than ten people can reasonably spend in a lifetime
Tbh he should get the money if he somehow convinced all those mods to work for free
Wall Street investors gave him the money. Him knowing that they would be dumb enough to give it to him is the reason he got it. Which is a weird way of “earning” money but it kind of is.
Despite our feelings on the company, Wall Street ate that shit up, thus his equity package is worth all that money. Why did Wall Street like Reddit stock so much? I sure don’t fucking know, which is why I never thought to ask them for hundreds of millions of dollars for a company that loses money hand over fist.
Fuck Spez. I left Reddit and I’m here now and happier for it.
Just take some popcorn and watch their IPO crash spectacularly.
I wonder if people in r/wallstteetbets don’t decide to short it out, but on the other hand, U/spez will do all in its power to block people calling for it.
The entire thing could burn to the ground tomorrow, he’ll still have the $190 million.
I don’t think that he’d have the $190 millions because he paid himself a fair bit in stocks, that would crash alongside the others.
I’ll never have $190 million. Even all the money I ever earn will never equate to that!
Since he took back over, Spez has been making reddit an objectively worse experience. Doesn’t deserve that pay.
