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FWIW - at my last startup I looked at using Reddit's ad product to target sub-reddits relevant to our product. Reddit would not let me target sub-reddits with below a certain threshold of members.

While something they control and therefore could adjust, this also points to the constraint not just being number of sub-reddits, but number of sufficiently large sub-reddits. That also runs counter to being to target those smaller, but higher potential communities with a positive CAC over a more generic and diluted audience.

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This is very interesting. I am curious what's the threshold.

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Interesting to note that Reddit's DAU/MAU ratio ( 8-9 %) is significantly less than the standard for social media companies like IG/Snap (20-30%) - https://www.businessofapps.com/data/reddit-statistics/

Do you think the constraint for growth could be building in enough viral loops for users to visit Reddit more frequently? Resulting in being able to charge higher CPM/CPC rates?

Also given the edgy nature of Reddit's content & user-base along with pseudonymity probably makes it less attractive for traditional advertisers

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I think they probably tried and hey still try to improve it, but I just don't think it's the same type of engagement as SNAP and IG.

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A lot of this might be tied to how Reddit monetizes - if it's ads, it's likely via a CPM or CPC model (vs. a fixed priced for something like sponsoring a sub-reddit). If it's CPM/CPC, then a lot of monetization will depend on (1) the ad inventory available and (2) how well that is monetized. This might mean that the true underlying factor of Reddit's revenue will be things like user engagement and time spent that impacts the ad inventory (along with ad load) - something the number of subreddits is only a proxy for.

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I agree. The number of subreddits (or MAU for that matters) are only proxies for the availability of ad inventory. The time spent indeed increased around the beginning of 2022, but remained pretty constant since.

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I suspect that two value factors may dampen Reddit’s future growth metrics. The first and most obvious is time constraint. After all, there are only so many hours in a day that users can devote to subReddits, no matter how interesting new groups are. Secondly, I suspect the marginal utility of each new subReddit (and member) added decreases with scale.

Nonetheless, hats off to Reddit for presenting the most intriguing application of Metcalf’s and Reed’s Laws!

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Excellent point about time as a constraint. Maybe this is the missing factor here. While people can spend more time on more subreddits, there is a limit to how many of these can be supported given the limited time people have (both readers and mods).

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