We'd become ramen profitable from our licensing work with Conde Nast before the acquisition and had enough to live (modestly) on for another year.
We were slow to put ads on reddit, putting FederatedMedia on only the comments pages, and generating a few thousand a month from just those pageviews (a small% of our traffic).
That said, if that deal had fallen through, we'd have likely just powered on. I can't speculate whether or not we'd have gotten acquired by someone else, but I'd been discussing the idea with a couple other properties.
Maybe we would have gotten serious about selling merch sooner ;)
For reasons I hinted at in the interview, it really was the right time for an acquisition.
We built lipstick.com (now http://weheartgossip.com) for them. I received an email one day from their head of biz dev, he'd heard about reddit through a mutual friend. I called him that day and we spoke for a good while about an idea he had for a celebrity gossip version of reddit. I told him it sounded like a fun project to work on and things went from there.
We've never spoken publicly about the terms of the contract we signed with them, but it put us in good ramen-eating shape for the next year or so. In hindsight, this great deal was likely part of the wooing process. But it worked :)
Would they have been bought by someone else? Would they have worked out advertising models etc and become a profitable business, or something else?
Did they have a 'plan B'? Get more funding and go after more users?