[mbesto]

> how on earth reddit manages to be valued at $10B

Reddit is ~16 years old and was in one of YC's first batches (first batch ever?). This is an absolute dinosaur in "startup" age. It's been acquired, traded, and recap'd multiple times for (presumably) sub-$1B value. For all intents and purposes it's a distressed asset in "enchanted forest" terms (note - this is not a criticism per se, many distressed assets can be very valuable).

I'm convinced (with limited evidence as an outsider) the following drives their valuation:

- Record valuations of FB, Snapchat, Instagram, Twitter, etc. that have comparable features and "industry metrics" (DAU, MAU, etc.) that can be easily parsed by public analysts. The latest round of investors probably got a great insider deal so they could prep it for IPO and pass it off to the next sucker.

- Reddit started to receive more and more M&A attention when mobile biz models went public (Snap, Uber, etc.). The key to any financial success for Reddit is simply mobile. This an incredibly risky, because (1) reddit allows 3p mobile apps where they can't control ads/tracking and (2) their conversion to their own Reddit mobile app is extremely user hostile. But this is essentially it - you can track and sell ads on Reddit via it's native mobile apps. If somehow (I'm personally not convinced) they can get everyone on to their native mobile app, then sure, they will be as valuable as Snap/Twitter.

- It's essentially a "cost of doing business" for YC. If Reddit became essentially not valuable or not as valuable in the public eye it undermines YC's brand. This has become less and less an issue overtime as more successes have come out of YC, but during those time periods when it wasn't the value had to be continually projected as being valued (thereby creating steam that never fizzeld out). Think of this like saying one of your clients in the 90's was Bear Stearns, which gave you social proof to work with Goldman Sachs, etc. you'll hold on to that Bear Stearns logo on your sales deck until it ultimately fails, but now you have Goldman, Morgan, etc. to show your social proof.

[crazy_horse]

It's crazy to me that Reddit isn't a mark on YC's brand. I can't think of a worse site to use today. It makes it clear to me that YC's business model doesn't really care about quality because Reddit has only degraded year by year.

I mean if you want to make money, cool, but if your startup is based out of YC, I don't trust you.

[toomuchtodo]

YC sells social signaling and a network (and some good advice of course), and the wins weigh more heavily than the losses.