Reddit CEO praises Elon Musk’s cost-cutting as protests rock platform
https://feddit.de/post/877915
feddit.deReddit CEO praises Elon Musk’s cost-cutting as protests rock platform - FedditTwitter owner Elon Musk may have had an influence on Reddit’s CEO ahead of
changes to the website that have resulted in a user-led rebellion on the
platform. In an interview Thursday with NBC News, Reddit CEO Steve Huffman
praised Musk’s aggressive cost-cutting and layoffs at Twitter, and said he had
chatted “a handful of times” with Musk on the subject of running an internet
platform. Huffman said he saw Musk’s handling of Twitter, which Musk purchased
last year, as an example for Reddit to follow. “Long story short, my takeaway
from Twitter and Elon at Twitter is reaffirming that we can build a really good
business in this space at our scale,” Huffman said. “Now, they’ve taken the
dramatic road,” he added, “and I guess I can’t sit here and say that we’re not
either, but I think there’s a lot of opportunity here.” Musk shocked Silicon
Valley peers with his deep cost cutting at Twitter and began his ownership of
the company last fall by axing most of the company’s employees in a chaotic
series of decisions that left some people doubting whether Twitter would be able
to stay online. Huffman is trying to turn Reddit profitable after decades as a
money-losing website punching above its weight in internet culture. This week,
influential volunteer moderators who manage the communities that make up the
site walled off large parts of Reddit, making them inaccessible to most users as
part of their demonstration. The protest is a response to part of Huffman’s
business plan, which includes potentially charging other tech companies large
fees for access to Reddit data. Huffman said there’s one concrete area where
Musk’s example has been clear: job cuts. He said he had often wondered why
Twitter under its previous management had struggled to be profitable on a
consistent basis despite revenue in 2021 of $5.1 billion. “As a company smaller
than theirs, sub-$1 billion in revenue, I used to look at Twitter and say,
‘Well, why can’t they break even at 4 or 5 billion in revenue? What about their
business do we not understand?’ Because I think we should be able to do that
quite handsomely,” he said. “And then I think one of the non-obvious things that
Elon showed is what I was hoping would be true, which is: You can run a company
with that many users in the ads business and break even with a lot fewer
people,” Huffman said. Musk ended up hiring some employees back, but corporate
headcount has remained well below where it was before the acquisition. Musk has
also imposed other severe cost-cutting measures, such as not paying some of
Twitter’s bills including rent, leading to an eviction order in Colorado. “They
had to do some pretty violent changes and violent surgery to get there,” Huffman
said. It is not clear if Twitter is profitable because some advertisers have
left, cutting into revenue, but Huffman said the lesson was on the other side of
the ledger. “People are talking about a lot of things on Twitter, but I think
that’s the part that’s the most interesting from my point of view as a business
person, is that there actually are good businesses at this scale,” he said.
Reddit’s recent layoffs have been far more modest than Twitter’s. The company
said June 6 that it was laying off about 5% of its workforce, or 90 employees.
Huffman did not say how often the chats with Musk have taken place or where
they’ve happened. Twitter and Reddit are both headquartered in San Francisco,
and the privately held companies both share Fidelity as an investor. Reddit is
majority-owned by Advance Publications, the parent company of Conde Nast,
according to CNBC. Musk’s representatives at Twitter did not immediately respond
to a request for comment Friday. Huffman said that many ordinary people do not
realize that there are “two classes of company” in the world of consumer-facing
tech businesses: There’s internet heavies such as Google and Facebook, and then
there are much smaller but still well-known companies such as Twitter, Snapchat,
Pinterest and Reddit. “From a user’s point of view, you’re like, ‘Oh, they’re
just as big. They’re just as successful. You know, maybe a little less so,’”
Huffman said. “But you wouldn’t realize that it’s like a 20, 30x difference in
revenue. And, you know, not really profitable — maybe a quarter here or there,”
he said. Twitter had $5 billion in revenue in 2021, the year before Musk’s
acquisition. Meta, the owner of Instagram and Facebook, reported revenue that
year of $117.9 billion. Alphabet, the owner of Google, reported revenue that
year of $257.6 billion. Huffman said he has not adopted Musk’s thinking across
the board. “There’s a lot of other things where our platforms are just different
— how they think about moderation versus us,” he said. He didn’t cite examples.
A Reddit spokesperson Friday declined to cite any specifics but said Reddit is
different in multiple ways, including that ordinary users have the power to
upvote and downvote posts. One specific difference is their handling of former
President Donald Trump and his supporters. While Musk reinstated Trump’s Twitter
account, which prior management had suspended after the Jan. 6 assault on the
U.S. Capitol, Reddit has kept in place its ban on the subreddit r/the_donald, a
gathering spot for Trump’s supporters. Elsewhere in the interview with NBC News,
Huffman criticized the organizers of this week’s blackout, saying he wanted to
pursue rules changes that would allow ordinary Reddit users to vote them out. He
compared the long-tenured, difficult-to-oust moderators as “landed gentry,” and
some moderators fear Huffman may force them out.
