Can you name Reddit’s CEO?
Did you guess Alexis Ohanian? You would be wrong. The famous husband of Serena Williams has cultivated a larger internet personality than the other co-founder of Reddit who is the actual CEO.
That would be Steve Huffman. The same Steve who coded the entire site in Lisp in a few weeks, after receiving a scathing email from Paul Graham as part of YC’s first batch (when it was still run out in Boston, not Silicon Valley).
Indeed, after Ellen Pao’s resignation in 2015, Steve has stepped into the CEO role and shepharded Reddit to a tremendous rise. Before the stock market’s sour turn at the start of the year, the company was set to IPO at something like a $15B valuation.
It didn’t seem like a ludicrous valuation, either. Over the course of its 17-year history, Reddit has grown to become a top 10 site in the world. It is estimated to have over half a billion monthly active users.
That makes it bigger than Twitter, Snapchat, Pinterest, and Netflix.
For being such a huge site, and one of the most important sites in tech, surprisingly little has been written about Reddit’s history. Just like no one can name the CEO, hardly anyone knows it was owned by Conde Nast for six years of its life.
That doesn’t mean the story isn’t great. It’s actually a crazy story – one filled with apocryphal lessons about product growth. I’ve spent the last few weeks using the Wayback Machine to dig it up. So, let’s dive in.
Chapter 1: Getting Paul Graham’s Support
As a college student at the University of Virginia, Alexis Ohanian was equally high-achieving and sharp tongued. He answered a first year college professor’s question of why he was there with, “I want to make the world suck less.”
A History and Commerce major, Alexis was planning for a career in law. Things were going well in that direction.
But one day, his junior year, Alexis got fed up with an LSAT practice test. He left, opting to eat out at Waffle House. There he had his “Waffle House Epiphany.” He wanted to make a dent in the universe.
One of his buddies, Steve Huffman, agreed. A computer science major, Steve was constantly coming up with software product ideas. Alexis realized building one of these ideas was a much better path to making a dent in the universe.
Their junior year, Steve shared with Alexis a problem he felt strongly about: ordering food through his phone
He had the idea at the gas station Sheetz. He had already ordered food through a touchscreen without human service. But he couldn’t order through his phone. This frustrated him, because he want to order while pumping gas to save time. He shared his frustration with Alexis, and Alexis’ response was, “we should totally build that.”
The duo hired a lawyer and got to building Reddit. Alexis had the company incorporated, and Steve got to coding. Steve was reading the programming book, “On Lisp,” by Paul Graham (the founder of Y Combinator), as he planned to build the site in Lisp.
In spring break of their senior year, Paul was coming to Harvard to speak. Steve was excited and wanted to go. He wanted his copy of “On Lisp” signed. Alexis had never heard of Paul. He wanted to go to Mexico to party with the rest of his friends. But, he supported his co-founder and followed him to Cambridge, MA. The duo hopped on a train going north, the opposite direction of the rest of their classmates going south to party.
Paul Graham’s talk was, “How to Start a Startup” (a talk he has updated and still gives.) It came at the perfect time for the college duo just having started a startup. After the talk, Alexis was helping Steve get his book signed.
But Alexis was also inspired by the talk. So he said to Paul, “It would be great if we could buy you a drink to talk to you about the startup we just started. We’ve come all the way from Virginia,” at which point he was cut off by Paul. “You’ve come all the way from Virginia?” he asked. Upon seeing them nod, he agreed to dinner.
Chapter 2: Launching Fast
At dinner, Paul liked the idea. He told the duo they should apply to a new investment vehicle he was starting, Y Combinator. The two agreed.
They prepped the presentation and waited for Y Combinator to start.
Months later, they took another train up to Boston to pitch Y Combinator. They give the pitch. They competed with the rest. They thought they would be shoo-ins. They had talked to Paul.
They were not. That night, Alexis and Steve got the call that they were not going to be accepted. They were shocked and dejected. They got drunk and decided to go home.
The next day, they hopped on a track back to Virginia. While they were on the train, Paul called them. He said if they got off the train right then, and came right back, Y Combinator would fund the pair.
The catch? It would be a different idea. It was an amazing ask from Paul. And the young college students did it. Alexis and Steve got off at the next stop, to head right back.
When they finally got to Boston, Paul explained himself further. “Don’t do mobile phones,” he said. At the time, there were no app stores. So, distribution was very tough. Instead, he suggested the duo build a web app.
The three began talking about what web app to build. They realized that content was being built by such a broad array of surfaces, that the internet needed a new front page. In the discussion, Paul crystallized it, “you guys need to build the front page of the web.”
The idea was to cross del.icio.us, with its social bookmarking features, with Slashdot, which “actually had good content,” according to Steve. It would be a community driven news website, with the fate of the content decided by anonymous user votes.
After graduation, the two moved into an apartment in Cambridge, MA. With the $12,000 from Y Combinator, they set out to build the front page of the internet. They had been working on it for two weeks when Paul sent them a scathing email. He questioned why they hadn’t launched yet.
A week later, in June, Steve wrote back that the basic service was up and running. Without any notice, a few days later, Paul published his next essay.
He explained his hypothesis that it cost less to start a startup than most thought. In it was a link to Reddit as an example of a product that had already launched. He mentioned the team had worked “ridiculously hard.” That got Reddit its first 1,000 visit day. By force of will, Reddit was started.
In the early days, to seed content, Alexis and Steve were the top posters themselves. They built fake accounts to give users the impression the site was bigger than it was. They were doing things “that didn’t scale.”
They wouldn’t need to do so for long. By August, they no longer had to seed content. The site was growing on its own.
This capture from the Wayback Machine highlights the state of Reddit. It was a quirky site with lowercase tab menu text: eg, ‘hottest’ instead of ‘Hottest’.
Subreddits did not yet exist. The login box took up 15% of the real estate, and there were not embedded pictures or videos.
A few months after launch, Steve and Alexis were soon joined by another Y Combinator graduate, Aaron Swartz. A prodigious programmer, he helped the duo accelerate feature releases.
One of those features was comments, which was released after a contentious debate. The comments section quickly became an integral part of Reddit.
Chapter 3: Subreddits
At the end of 2005, a Yahoo executieve invited the founders to Silicon Valley for a meeting. He asked them about their traffic, to which the duo replied truthfully. In turn, the executive said:
You are a rounding error compared to Yahoo.
The duo felt punched in the mouth, but used the harsh words as motivation. Alexis printed out, “You are a rounding error” and pinned it on the wall.
It became fuel for the team to release new features. One of those was Subreddits, which the team released in October 2006,. It would prove to be a turning point for Reddit. r/science and r/programming became particularly popular.
Chapter 4: Conde Nast
Perhaps because of the inadequacy the team felt with comments like the Yahoo exec’s, and perhaps because Alexis’s mom was dying of cancer, the duo began acquisition talks in mid-2006. The talks culminated in a sale to Conde Nast just weeks after the launch of Subreddits. It was for $10M. As Alex put it:
I thought I was getting away with something, because, for 16 months of work, I was getting more money than my parents had made their entire working lives.
Remarkably, the duo stayed at the company for three years. This ensured the nascent website kept growing at a tremendous pace.
But, it was not all easy. Reddit had to outgrow some of the team. Aaron blogged complaining about the new corporate environment. In January 2007, he was fired (he tragically died of suicide in 2013).
Despite the corporate environment, Steve and Alexis stayed on. They actually felt they were given tremendous latitude, with just quarterly check-ins.
In 2008, the company released the ability for anyone to create a subreddit. This led to an explosion of new subreddits and news about them.
Despite the growth in Subreddits, the company’s fate was not yet clear. In early 2008, TechCrunch wrote a piece saying, “it is not easy being No. 2.”
Digg seemed to be winning the war for the front page of the internet. While Digg had millions of unique monthly visitors, Reddit was still toiling below one million.
It’s especially not easy being No. 2 as a founder in a corporate parent. In January 2009, Steve and Alexis left Reddit.
But the team did not give up. The chairman of Conde Nast, Steven Newhouse, understood technology businesses. Conde Nast tried its best to leave Reddit alone and let the company pay attention to its community. Steve held quarterly meetings with the company, but more or less, left it to grow on its own.
And, grow it did. The same month Alexis and Steve left Reddit, the Ask Me Anything Subreddit was created. It was an instant hit, with famous people participating regularly. Meanwhile, the company moved from physical servers to Amazon Web Services and relaunched its mobile experience to fit the changing times.
From a product point of view, the company was singing. It was also pushing forward on monetization. In 2009, the company launched sponsored content and a self-serve ads platform. Then in 2010, it launched Reddit Gold, a premium subscription without ads.
Chapter 5: The Yishan and Ellen Years
It was a company operating on most cylinders, and a website growing like wildfire. However, in 2011, it became clear Reddit was being hamstrung in the competition for top engineers and tech talent under its Conde Nast parent. So, it spun out in September 2011.
The search for a new CEO would take over 6 months. After turning every stone, the next leader for Reddit would be former PayPal mafia member Yishan Wong.
Yishan would lead a tumultuous few years at the company. At one point, after an employee was fired, he jumped into the thread to offer reasoning that started with, “incompetence and not getting much work done.”
But not all was bad in Reddit Land. In 2012, President Barack Obama held a landmark AMA on the platform. It would be a big boost to the company’s numbers. The president’s use of the platform legitimized it to a much older demographic than was typically on the site.
However, Yishan’s see-saw leadership style would culminate in a demand to move the office from San Francisco to Daly City. When he was unable to garner support for the proposal, he stopped showing up to the office.
To the board’s surprise, they had to replace him. It was a tale so bizarre it could only be true. As board member Sam Altman wrote:
To be clear, though, we didn’t ask or suggest that he resign—he decided to when we didn’t approve the new office plan.
In typical Yishan fashion, he showed up on Quora to verify the news.
Things were hardly all bad under Yishan’s tenure. The site grew more than 5x under his leadership. While sites like Digg and Mixx fell to the wayside, Reddit kept on growing. Yishan was, despite his flaws, a great builder.
So, the board listened to what he had to say. On his way out, Yishan recommended his VP of business development, Ellen Pao, as his replacement.
Wary to hand over Reddit to someone who hadn’t been there from the beginning, the board agreed, but also brought back original founder Alexis Ohanian. Alexis became full-time executive chairman, responsible for marketing, communications, strategy, and community.
Although Alexis had a stabilizing presence, Ellen had a tumultuous tenure at Reddit. She made several decisions to remove people and communities accused of harassment. Her decisions to ban controversial reddit communities ultimately led to her stepping down in July 2015.
Chapter 6: The Return of Steve
It was an existential moment for Reddit. The site was growing, but it needed a strong leader. Somewhat reluctantly, to save the company, Steve returned as CEO.
Reddit’s original engineer had an immediate impact as CEO. After 9 years, one of the company’s original founders was at the helm. This motivated employees and Redditors alike.
Steve placed a heavy focus on monetization-related product features. The company re-launched Reddit Gold as Reddit Premium. He also made significant efforts to improve the site’s advertising platform.
Like any Reddit CEO, Steve’s was marked by tough debates on moderation and a bit of controversy. A year into the gig, Steve apologized for anonymously editing comments of Donald Trump supporters (“trolling the trolls,” he called it).
But, the site kept on growing. Donald Trump actually appeared on the site for an Ask Me Anything.
Throughout the 2016 election, r/theDonald grew to be one of the most active and noisiest Subreddits on the site. If democrats had been paying attention to Reddit, they may not have been as surprised with Clinton’s defeat on election day. They practically took over the platform.
After the election of 2016, 2017 was another growth year. One of the notable occurrences on Reddit was r/ThePlace. The collaborative drawing caught on like wildfire on April Fool’s Day. Redditors across the world battled to plant and place flags, cultural landmarks, and other elements important to them. In the end, the US flag managed to maintain a central position.
These viral hits, the platform’s ability to tow the line with Trump supporters, and improved ad platform combined to drive revenue at the company. By 2018, Reddit had generated $100M in annual revenue.
Steve continued successfully shepherding Reddit to the big leagues throughout 2019. The company surpassed social media peers Twitter, Pinterest, and Snapchat, reporting 430M monthly active visitors.
Under Steve’s tenure, Reddit became the world’s largest social network not owned by Facebook. He had helped it gain over 200M monthly active visitors.
And that was all before Covid-19.
Chapter 7: Covid Fueled Boom
Fueled by pandemic lockdowns, Americans turned to internet entertainment during 2020 and 2021. Few companies benefited more than Reddit.
r/WallStreetBets became a global phenomenon. As consumers turned to the ebullient stock market for entertainment, Robinhood became the app of trading hours and Reddit the app of afterhours. The subreddit helped spur the huge rally of stocks like Gamestop and AMC.
Reddit also became a central place to discuss the cryptocurrency and NFT bubble. One study could accurately predict the price of Ethereum and Bitcoin by 70+% by analyzing Reddit network sentiment. Reddit also launched its own crypto, tokenizing its community points.
Aside from stock and crypto traders, the covid influx of traffic brought with it an attendant rise in scammers and trolls. As Steve told a Clubhouse channel, he monitored the behavior with a metric, DAS: Daily Active Shitheads, which represented people who prevent other Redditors from enjoying their experience.
As DAS grew and the Reddit users of r/The_Donald grew increasingly cantankerous, Reddit pulled the Subreddit from the platform on June 29, 2020. In the same month, Alexis stepped down from the board.
Despite the loss of some r/The_Donald supporters and Alexis, Reddit just kept on growing. In 2021, the company managed to post 30% user growth, defying the law of large numbers. I estimate it reached roughly 780M monthly active users. That’s an insanely large figure.
The reason behind Reddit’s success was that it became a destination for enthusiasts of nearly every stripe. Everything from young kids’s toys to girls’ makeup and boys’ anime found a home on the site. With over 100,000 active Subreddits it crossed over from niche anonymous posting site to the de facto forum on the web.
Whereas the 90s and early 2000s were dominated by niche fora for specialty topics, by 2021, the vast majority of niche discussion groups were being created and hosted on Reddit.
Chapter 8: Recent Retreat
After such a phenomenal pull-forward effect of demand in 2020 and 2021, Reddit has recently pulled back. As 2022 has progressed, estimates put Reddit’s active users down on average 10-20% from the 2021 peak. It might be Reddit’s first down year ever.
The decline in visitors has coincided with unfortunate market timing. In December 2021, the company filed confidentially for a March 2022 IPO. Then the market turned. Six months later (June 2022 as of publishing), and that IPO has not materialized.
The company’s latest chapter is looking relatively dire. It was expected to go public at something like a 100x price/ sales multiple. Peer fast-growing companies that are actually profitable like Snapchat and Pinterest have seen their valuations cut down 70-80%.
There’s no telling what valuation Reddit would fetch today, but the world doesn’t look nearly as rosy as it did in December when the company filed for IPO.
The Future of Reddit
If anything has been shown time and again with leading technology companies, it’s that the leading men matter. From Jack at Twitter to Steve Hafner at Kayak and Elon at Tesla, founders exert a type of influence that seems rare amongst other executives. Steve Hufman has had the same type of influence at Reddit.
Reddit’s best times have been while he was at the helm. Whether it was Reddit’s initial few months when he was the sole engineer behind the site, or post 2015 since he rejoined the company, Reddit has seen its best days under his leadership.
As long as he remains at the helm, the future remains very bright at Reddit.
