Reddit, home to cute cat pictures, investment advice,
niche hobby discussions, celebrity interviews, edgy
memes, wholesome memes and everything in between, has
been facilitating discussion on the internet
since 2005.
Up until 2010, I would still be talking to people,
experts in media in particular, who could not
fathom that people would want to consume content from
strangers on the internet.
But it turns out that the desire to debate, befriend
and lurk on internet strangers runs deep, and the
website's user base has grown consistently, reaching
around 57 million daily active users today, who use
the site to post and consume news, memes,
questions and even advice that can roil markets, like
when Redditors organized the short squeeze on
GameStop.
That Reddit, namely the forum r/wallstreetbets,
encouraging each other to push shares higher and
squeeze out short sellers.
And while offensive Reddit communities have
proliferated in the past, in the last few years, the
company has cleaned up its act as it prepares for an
eventual IPO.
Every single platform that's out there starts that way.
Hey, we're going to be the, we're going to be the public
space. And then the advertisers come in and say,
Oh, dude, what's that?
I don't want to be near that.
However, Reddit still isn't turning a profit, so now the
company is charging everyone from giant
corporations like Google to small third-party developers
alike for access to its application programing
interface or API.
The price hikes have led some beloved third-party
Reddit apps like Apollo to shut down, instigating an
uproar among the website's community of volunteer
moderators, who often rely on third-party apps to run
the site's 100,000 plus discussion communities
called subreddits. Many moderators say that Reddit's
official app is clunky and doesn't offer the same
functionalities.
We accepted that there was going to be a charge for API
access. Now, mostly what we were hoping they would do is
just slow down, you know, make it so that communities
and developers, if they wanted to, could adjust to
the changes that they were making. Of course, that
didn't end up happening.
Despite extensive protests in which thousands of
moderators made their communities private and
therefore inaccessible, the API pricing changes took
effect on July 1st as planned.
Once Reddit threatened to remove moderators who were
holding out, nearly all communities reopened.
But tensions remain high, and some say that if Reddit
doesn't rebuild trust, its most passionate users will
go elsewhere, threatening the company's valuation.
So Reddit is nothing without those communities.
They need us far more than we
need them.
Reddit lore traces the company's origins to a
Waffle House in Charlottesville, near the
University of Virginia, the alma mater of co-founders
Alexis Ohanian and Steve Huffman.
I walked out of an LSAT in the middle of, like 30
minutes into it, while I was there at UVA.
I think it was my second or my third year and went to
that Waffle House, realized I didn't want to be a lawyer
and realized I'd better start a company to do
something with myself.
After graduation in 2005, during Ohanian and Huffman's
senior year, startup Accelerator Y Combinator was
just getting off the ground. The two had met
founder Paul Graham at a talk and pitched him on a
mobile ordering service, which he turned down.
But they kept in touch.
and Graham eventually suggested that the recent
grads build what he called "the front page of the
internet." That would become Reddit's initial
slogan. Y Combinator invested just $12,000 at
first, and Reddit officially became a part of
its first batch of companies. But they had to
fake it 'til they made it for a while.
The first probably like month, month and a half, a
good number of the folks posting were just me and
Steve under usernames that we just invented from like
objects in the room. Just random stuff just so that it
would look like there was some activity.
But real user activity picked up.
And just 16 months after its founding, Reddit was
acquired for $10 million by Condé Nast.
That was before many familiar features of the
website had even taken shape, like user-generated
subreddits, which were introduced in 2008, or the
Ask Me Anything community formed in 2009, where
celebrities from Obama to Bill Gates as well as
interesting folks from all walks of life answer
questions from everyday Reddit users.
By 2010, co-founders Ohanian and Huffman were no
longer involved in day-to-day operations, but
the site continued to grow, eventually surpassing its
rivals like Digg, which was also doing social news
aggregation.
And once Digg kind of started circling the drain,
that's when I discovered Reddit.
And it was a lot of what I was really looking for, and
I just really fell in love with the platform.
Croach moderates the gaming subreddit, now the third
largest community on the site, with about 38 million
members. The ability to join interest-based
subreddits and thereby personalize your content is
what drew him in.
And then, you know, your feed ends up being as wildly
diverse or as laser focused as you'd like it to be.
Reddit's traffic grew exponentially after Condé
Nast's acquisition, and by 2011 it was spun out as an
independent company operating as a subsidiary of
Condé Nast's owner, Advance Publications.
Reddit courted advertisers and developed a paid
membership plan called Reddit Gold, now called
Reddit Premium, which gives users access to special
features. But the company wasn't, and still isn't,
profitable.
I think it was fashionable back then to want to just
grow and Facebook had proven out so well that if
you focus on growth and then have a critical mass of
users, you could make money.
On the one hand, Reddit's niche communities were ideal
places for targeted advertising, but the
company's permissive attitude towards
questionable content also posed a problem.
Reddit is kind of a perfect environment for advertising
because the communities can get so specific and so
passionate about whatever it is that they're
discussing. But Reddit has had challenges over the
years with hate speech and other things that are maybe
not brand friendly.
So as the site began reaching a broader audience,
the company finally started cracking down.
Ohanian rejoined Reddit as executive chairman in 2014
and Huffman rejoined as CEO in 2015.
This time around, Ohanian said he wanted to rein in
some of the site's more toxic subcultures.
In 2015, a new anti-harassment policy led
to the banning of some hateful communities, but
certainly not all.
You know, coming back, my perspective on that really
had shifted. And I'd also seen, you know, over half a
decade, a ton of communities emerge, you
know, like r/watchpeopledie is one that's pretty well
documented. But like, that I was just violently opposed
to, like that had no business value, that had no
societal value.
It would take until 2019 after a massacre at a mosque
in New Zealand for Reddit to finally ban the
r/watchpeopledie subreddit.
Then, in the wake of George Floyd's murder in 2020,
Ohanian resigned from the company's board, urging
Reddit to replace him with a black candidate, which the
company honored.
I hoped that Reddit would finally get a hate policy so
that we could ban those thousands of hate
communities that were up, which happened, you know, a
few weeks after I resigned.
Reddit ultimately banned about 2,000 subreddits,
including r/The_Donald, r/ChapoTrapHouse and
r/gendercritical. Gilbert saw this as a turning point
in Reddit's sometimes tenuous relationship with
its volunteer moderators, many of whom had long been
asking for the company's help in fighting hate
speech.
Now you can action that kind of hatred now that you have
it actually solidified in the rules themselves.
And so it wasn't just that, they started supporting
their moderators in all kinds of other ways.
At this point is when they really started getting
serious about developing the tools, moderation tools
and putting sort of a lot of real effort into them.
By now, the company had raised $300 million in its
2019 Series D funding round, led by Chinese tech
giant Tencent, and was gearing up for two
additional funding rounds in 2021, which together
would net the company an additional $778 million.
With the world stuck inside during Covid, engagement
continued to increase.
The site saw a 26% jump among U.S.
users in 2020. Then in the beginning of 2021, Reddit
made headlines when users in the subreddit
r/wallstreetbets organized a short squeeze on GameStop,
the struggling video game retailer. As Redditors drove
up the price of the stock, some amateur investors made
serious money while hedge funds lost billions.
Subsequent so-called meme stocks like AMC kept Reddit
in the news for months.
By summer 2021, Reddit was valued at $10 billion, and
advertising was booming when the company filed for
an IPO at the end of the year.
So it had only $22 million in ad revenue in 2016, and
that ballooned up to $372 million in 2022.
Growth has slowed pretty significantly since then,
partially due to external factors like the worldwide
economy and just the general slowdown in social
media ad spending that we're seeing.
Uncertainty in the broader economy has also caused
Fidelity, which led Reddit's most recent funding
round, to cut Reddit's valuation by 45% to around
$5.5 billion in June of this year.
And though Reddit is the 21st most visited website in
the world, it still lags far behind social media
behemoths like Instagram, Twitter and Facebook when it
comes to revenue.
We estimate that it has about one seventh the
revenue of Twitter worldwide this year.
So Twitter is at about $3 billion.
And Reddit's revenue is like a rounding error on
Facebook, which we're estimating to be over $80
billion worldwide, and Instagram, which is over $40
billion.
Now Reddit wants to turn a profit.
And as companies like OpenAI and Google scrape
forums like Reddit in order to train large language
models, Reddit wants them to pay for its data.
Huffman announced in April that Reddit would start
charging for access to its API, which is the gateway
through which companies can download all of Reddit's
user-generated content.
But it's not just tech giants who use Reddit's API.
Many popular third-party mobile apps and moderator
tools also rely on API access, which was previously
free. These third-party apps are largely just
alternatives to Reddit's official mobile app, which
didn't even exist until 2016.
But when third-party developers learned about the
new pricing structure at the end of May, many
realized that they just couldn't afford it.
Most companies, whenever they have significant API
changes, they give anywhere from like three to sometimes
like 15 months for developers to acclimate to
these big changes.
And with Reddit kind of coming out of the gate and
saying, you know, you have 30 days to figure this out,
you know, to figure out such a drastic change.
I mean, that is an impossible task for many of
those third-party developers.
The new pricing structure caused apps like Apollo, RIF
is fun, ReddPlanet and Sync to shut down, a blow to
their loyal users who said they have sleeker user
interfaces and more features than the official
Reddit app, and made browsing and moderating the
site more intuitive.
The developer of Apollo said that it would cost him
over $20 million per year to operate, given Reddit's
current prices.
I think that they missed the mark on how much they
charged.
The pricing changes caused a particular uproar in a
subreddit for blind users, who relied upon many of the
third-party apps' accessibility features.
Blind moderators claim that it's very difficult to
moderate on mobile using Reddit's app, something that
Reddit says it's currently working to improve.
In total, over 8,000 subreddits participated in a
site-wide blackout from June 12th to 14th to protest
the changes. Many communities stayed closed
much longer, while others labeled themselves "not safe
for work", automatically making them ineligible
spaces for advertising.
We're absolutely seeing the worst protests Reddit's ever
seen, and Reddit's seen a lot of this sort of stuff.
Under pressure from Reddit admins, almost all Reddit
communities are open again and operating normally, with
some notable exceptions.
For example, the r/pics and r/gifs subreddits are now
limited to featuring pics and gifs of comedian John
Oliver. And moderators of the popular Ask Me Anything
subreddit said that they will no longer organize
interviews with celebrities and other high-profile
figures, which has long been a big driver of
engagement.
They're not burning things down.
They're saying, Hey, you didn't listen to me then,
can you listen to me now?
Reddit is rolling out a number of new moderator
tools for its native app, but the company's overall
response has left many moderators unimpressed.
In an interview with NBC News, Huffman compared
moderators to landed gentry, saying that the
control that they have over the communities they
moderate is undemocratic, and that the protests are
not representative of average user sentiment.
Leaving aside how ahistorical that comparison
is, that's also been, you know, incredibly damaging
and has really, really eroded the trust that
moderators have had with the administrators, like in
a way that it's, I think, hard to predict the
long-term consequences and impact of that.
Gilbert and other moderators worry that this could be the
beginning of a slow decline for Reddit, an outcome that
nobody wants.
Everyone in this situation is passionate for the
success of Reddit.
Reddit needs to realize that that passion is what's
driving all of this anger and upset at them, and they
need to work with us and work with other moderators
and work with the app developers to find a
solution that's better for everyone, including Reddit.
Because Reddit needs us to be there.
Reddit is nothing without the communities.
In June, Reddit laid off about 5% of its staff and
reduced the number of roles it was hiring for, as it
looks towards eventual profitability and an IPO.
Now, the tech world is watching to see how tensions
between the company and its own community continue to
play out. Hopefully, everyone says, they can get
on the same team.
Any kind of dissent comes from some kind of love,
because you wouldn't want to protest something you
didn't care about.