Reddit has to say that the pricing it has is reasonable which means that they have to say Apollo can earn (at least!) USD 20M a year. If Apollo can earn USD 20M a year, buying it for USD 10M is indeed a steal. Normally, if you think a company makes 20M a year, you have to pay at least x 5, so USD 100M to buy this money printing machine.
>If Apollo can earn USD 20M a year, buying it for USD 10M is indeed a steal.
Not if you can get the same thing for doing nothing. Buy Apollo for 10M up front and make 20M/yr or dont buy Apollo and make 20M/yr. Does it really look like a steal when the alternative is free?
Even if they could only get a quarter of that from users, they'd be rolling in money after a year or two.
> and then 20M/yr
The servers don't cost anywhere near that much to run.
They claim that they would.
Sure, but that doesn't mean buying/owning apollo helps them eliminate that lost revenue. They eliminate lost revenue when Apollo stops existing, not when they buy it. What is the point of buying it if you dont want it to exist?
Take 2 options:
A> Buy Apollo for $10M, Apollo shuts down, 20M new revenue
B> Don't buy Apollo, Apollo shuts down, 20M new revenue
Spending $10M doesn't stop the losses, Apollo shutting down does.
I guess I want to emphasize that despite not being 3p client user (I was using old.reddit.com), this situation hurts sites reputation enough to bleed me as an user, enough for me to go through the trouble of actually wiping the account, in stead of leaving my content with me under <deleted>.
It is unlikely they'll feel short-term traffic effects of this, but content quality will suffer for sure, will see how that'll pan out. (From the safety of HN comments, of course).
I dont think that is accurate. Reddit doesnt make 20M a year if they buy Apollo in this situation.
If something costs 20 million/yr to operate, buying it doesnt reduce that cost. You are just out 10M upfront and then 20M/yr.
The solution is not to buy it, but to make it stop.