Reddit ft. Steve Huffman - The Making (and Remaking) of the Front Page of the Internet

Summary

Crucible Moments: Reddit ft. Steve Huffman - The Making (and Remaking) of the Front Page of the Internet

Episode Release Date: September 26, 2024

Introduction

In this episode of Crucible Moments, hosted by Rolof Huerta of Sequoia Capital, Steve Huffman, the co-founder and CEO of Reddit, shares the pivotal decisions and challenges that have shaped Reddit into one of the most visited websites globally. From its inception in 2005 to its successful IPO in 2024, Steve recounts the critical moments that tested and ultimately solidified Reddit's position as the "front page of the Internet."

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1. Founding Reddit: An Unlikely Beginning

The Genesis of Reddit

Steve Huffman and his college roommate, Alexis Ohanian, co-founded Reddit in 2005. Initially, Steve had an idea for a mobile food ordering app, inspired by conversations with Alexis and influenced by Paul Graham's startup philosophies.

Key Moments:

• Y Combinator Connection: After pitching their initial idea to Paul Graham during the inaugural Y Combinator (YC) class, Reddit was born from Graham’s suggestion to pivot from the mobile app idea to a more community-driven platform.
• First Launch: With a $12,000 investment from YC, Steve and Alexis launched Reddit, a simple platform for sharing and discussing topics.

Notable Quote:

Steve Huffman [00:01]: “The strategy of the team was we don't know how Reddit works or why Reddit works. Therefore, we're not going to change anything because we might break it. ... if we don't change, we're dead.”

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2. Scaling with Subreddits: Balancing Community and Growth

Introducing Subreddits

As Reddit grew, the need to organize its vast array of topics became evident. Steve advocated for the creation of subreddits—dedicated communities within Reddit—to cater to diverse interests without over-categorizing content.

Key Moments:

• Creation of Subreddits: The first subreddit was dedicated to programming, allowing specialized communities to thrive independently.
• Community Fracturing: This structure enabled Reddit to scale by accommodating diverse user interests, avoiding the pitfalls of a single, monolithic platform.

Notable Quotes:

Steve Huffman [07:45]: “The concept of subreddits in generally is what allows Reddit to scale because people are diverse, they have diverse interests.”

Alexis Ohanian [09:07]: “Steve was really adamant about communities and he definitely got this one right.”

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3. Acquisition by Conde Nast: A Turning Point

Confronting Acquisition Offers

By 2006, Reddit attracted attention from major tech companies like Yahoo, who dismissed its potential, and eventually received a $10 million acquisition offer from Conde Nast, a traditional media publisher.

Key Moments:

• Yahoo Rejection: Yahoo executives viewed Reddit as insignificant, labeling it a "rounding error" compared to their scale.
• Conde Nast Offer: Facing personal and professional strains, including Alexis’s family health crises and Steve managing Reddit solo, the founders considered selling to Conde Nast as a survival strategy.

Notable Quotes:

Chris Slow [11:36]: “The whole thing was just kind of wild... like all that blood, sweat, and tears had actually gone into like, we can, we can sell this.”

Steve Huffman [14:03]: “We thought that would give us the best chance at survival because resources were so scarce.”

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4. Life Under Conde Nast: Struggles and Spin-Out

Challenges Post-Acquisition

Reddit's integration into Conde Nast introduced friction between the company’s ethos and Conde Nast’s traditional media focus. Advertising models failed to align with Reddit’s unique community-driven platform, leading to operational inefficiencies.

Key Moments:

• Ad Model Misalignment: Conde Nast struggled to apply traditional advertising strategies to Reddit’s distinct user base.
• Departure of Founders: By 2009, Steve left to start Hipmunk, Alexis pursued a career in investing, and only Chris Slow remained with Reddit.

Notable Quotes:

Alfred Lin [12:29]: “We were still also a fairly lean startup. ... server costs scale with users.”

Steve Huffman [14:42]: “...the price is $10 million... I could make life-changing money.”

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5. The Great Reddit Blackout: Crisis and Leadership Change

Crisis Points and Leadership Crisis

In 2015, Reddit faced its most significant internal crisis when mass moderator strikes led to the site going dark—the Great Reddit Blackout—forcing the community's hand to demand better management and content policies.

Key Moments:

• Moderator Revolt: Discontent over content policies and the termination of a key community liaison ignited widespread unrest.
• Steve's Return: Amidst the crisis, Steve was persuaded to return as CEO, bringing the necessary leadership and moral authority to navigate the turmoil.

Notable Quotes:

Steve Huffman [25:44]: “That was really just kind of the straw that broke the camel's back.”

Steve Huffman [27:28]: “...Reddit is more important to the world than Hipmunk will ever be.”

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6. Transition to a Sustainable Business Model

Monetization and Community Harmony

Post-crisis, Reddit focused on creating a sustainable business model without alienating its user base. This involved developing an advertising strategy aligned with Reddit’s values and enhancing revenue streams.

Key Moments:

• Content Policy Implementation: Steve emphasized the necessity of content policies to combat harmful content, stating, “if we don't change, we're dead.”
• Advertising Strategy: Reddit adopted a community-friendly advertising model, ensuring alignment with user values and maintaining platform integrity.
• Revenue Growth: From a modest $15 million at Steve’s return, Reddit's revenue soared to $456 million in 2021 and $804 million by 2023, facilitating its IPO.

Notable Quotes:

Steve Huffman [34:08]: “We need to survive. To survive, we have to make money. We can either raise money and be beholden to VCs forever, or we can monetize ourselves with ads.”

Jen Wong [35:37]: “We wanted to land on one [business model] that we could invest in because you can't pursue everything at the same time.”

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7. Achieving IPO and Future Vision

Reddit's IPO and Continued Evolution

In March 2024, Reddit successfully went public, marking its transformation from a community-driven platform to a financially robust public company. Under Steve's leadership, Reddit continues to evolve, focusing on user empowerment and sustainable growth.

Key Moments:

• IPO Success: Reddit's public offering was supported by substantial revenue growth and strategic business decisions post-spin-out.
• Future Outlook: Reddit remains committed to its mission of community belonging and empowerment, continuously iterating on its business models to support its expansive user base.

Notable Quotes:

Steve Huffman [37:02]: “Reddit has been bigger than I ever thought it would be since August 2005.”

Jen Wong [38:45]: “We are an extremely mission-driven company, but we are a company and a business.”

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Conclusion

Steve Huffman's journey with Reddit underscores the importance of adaptability, community focus, and strategic decision-making in navigating business growth and crises. From its humble beginnings to its current stature as the 18th most visited website globally, Reddit's story is a testament to resilience and visionary leadership.

Final Reflections:

Steve Huffman [37:25]: “Reddit should do this, Reddit should do that... Reddit should do this... Reddit should do that.”

Alfred Lin [39:22]: “Today, Reddit is home to thousands of communities, endless conversations, and an authentic human connection for all its users.”

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Credits

Crucible Moments is produced by the Epic Stories and Vox Creative podcast teams along with Sequoia Capital. Special thanks to Steve Huffman, Alexis Ohanian, Chris Slow, Alfred Lin, and Jen Wong for sharing their stories. Incidental audio created by Eleven Labs, a Sequoia partner.

Transcript

[Steve Huffman]

The strategy of the team was we don't know how Reddit works or why Reddit works. Therefore we're not going to change anything because we might break it. And so they literally, that was their strategy, was don't change anything. And then when I would talk to the team that they were so torn on this, they were like, we don't like the way Reddit is being used. There's some content on here and communities on here that are really bad. We don't like that, we hate that. But we feel powerless to get rid of it because if we get rid of it, we're going to break Reddit. What I told them is you're describing to me as like, if we change, we die. But the situation is if we don't change, we're dead. And it's like, that's why I'm here is Reddit's dying and we have to change. We have no choice.

[Rolof Huerta]

Welcome to Crucible Moments, a podcast about the critical crossroads and inflection points that shaped some of the world's most remarkable companies. I'm your host and the managing partner of Sequoia Capital, Rolof Huerta. To the unacquainted, Reddit may look like a labyrinth of message boards, but to the devoted faithful, of which there are 90 million daily active users and thousands of volunteer moderators, it is a place to converse, debate and connect. Founded in 2005 by college roommates, today Reddit is one of the biggest sources of online information and one of the most visited sites on the Internet. But Reddit's path was circuitous and riddled with points of near failure, controversies and crises, a sale and a spin out, resignations and business reinventions shaped Reddit into the juggernaut it is now. These are the Crucible moments that defined the front page of the Internet.

[Steve Huffman]

My name is Steve Huffman. I'm the co founder and CEO of Reddit. There's a long story behind the idea of Reddit. I had had an idea for ordering food from your cell phone. This was back in like 2004, 2005. And my college roommate at the time, Alexis Ohanian, I shared that idea with him and he liked it too. And so it was something that we had talked about doing at the same time. We learned that Paul Graham was giving a talk called how to Start a Startup during our spring break of our fourth year at uva. And my girlfriend at the time overheard me talking about this and suggested that we go. And so that's why we went to that talk.

[Alexis Ohanian]

I Wasn't really familiar with Paul, but when I heard about the talk, I was like, we gotta go, dude. Who cares about spring break? Like, you know, there's terrible screen glare on the beach. Let's go to Boston instead. I'm Alexis Ohanian, co founder of Reddit and former executive chairman. We go up, we hear Paul speak. Steve wants to go get an autograph for one of his books. And then I followed by inviting Paul out for a drink and he agreed.

[Rolof Huerta]

Steve and Alexis pitched Paul Graham their mobile food ordering app, and he was interested. It just so happened Graham was about to launch a startup accelerator called Y Combinator.

[Steve Huffman]

Paul encouraged us to apply with the idea that he had heard and so we applied with that idea, but we're rejected. Paul the following day, after saying we couldn't do, YC called us and said, hey, if you want to be in Y Combinator, we'd like you in it, but you need to work on something else.

[Alexis Ohanian]

Paul was really enamored with this idea of like what is gonna replace the New York Times when the front page needs to be more than just what one editorial board, what one publication can decide.

[Steve Huffman]

And his idea for that something else was a version of Delicious. Delicious was a website at the time that among other things, invented tagging. It was a social bookmarking website. He was like, I have this idea where if it was delicious but the content was good. And so we went back to Boston and then we mashed it up with another idea I had, which was Slashdot, which was another website at the time, basically Slashdot, not just for tech news, because Slashdot was this website for tech news, but it had this really great community that was really what Slashdot was about. And so that initial idea for Reddit was a combination of the Delicious social bookmarking and the Slashdot community and conversation.

[Rolof Huerta]

Steven Alexis received a $12,000 check from YC as part of the inaugural class. They decided on the name Reddit, as in I read it on Reddit. They built a simple user friendly platform for sharing and discussing topics in one centralized place, which at the time was a novelty.

[Alfred Lin]

2005 was a lot of firsts. It was the first time bark ban was greater than dial up. And you have to also have to understand in 2005, this is pre social media. My name is Alfred Lin and I'm a partner at Sequoia Capital. So, you know, in some Sense Reddit and YouTube, which was also founded in 2005, were the first of its kind to combine user generated content and community. And so Reddit is this social content and community site that in some sense was never seen before. And they were the first to do.

[Steve Huffman]

This because of how we got into Y Combinator with that, like, extra attention from Paul. We got extra attention in the batch as well, for better or for worse. And so he was really putting a lot of pressure on me to get this thing launched. He sent this email that said, why haven't you launched yet? Is it because you can't or because you think it's not ready yet? And I don't know which is worse. And so I responded to him with a link. I was like, here it is, here's Reddit. And then he linked to Reddit from his blog, which was a popular blog, without telling me. And so that's how we launched. I was just working on Reddit, and all of a sudden the error log started scrolling really fast. And so that's when we got our first users.

[Alfred Lin]

I thought it was a pretty basic website. It had mainstream content, it had some niche content, and it was a pretty good way for you to read about anything and engage in interesting conversations around the content. The UI was very, very simple. Simplicity was part of the reason why I believe people gravitated to Reddit because of the usability.

[Alexis Ohanian]

There were moments where we'd get a spike, and then a significant number of users stuck around and it just kept growing.

[Chris Slow]

The community was starting to kind of kick off. We didn't think as a community at that point. We just thought of it as being a kind of a neat product to service interesting content. My name is Chris Slow. I'm the CTO and founding engineer at Reddit. I first met Steve and Alexis back in June of 2005.

[Rolof Huerta]

Steve and Alexis moved into Chris's apartment and threw themselves into work.

[Chris Slow]

At the time, I was also going through grad school, so I was in my fifth year of my PhD at Harvard doing experimental physics. And so my schedule was a little bit more normal in that I would wake up at like 7 in the morning and go to lab and then work on my startup at night, whereas Steve was definitely kind of rotated into kind of night hours. And so I think they were going to bed a couple hours before I was getting up. And so I remember it started off with a couple of mornings in a row where I woke up, and of course the first thing I did was check Reddit, because everyone was checking Reddit at that point. On the third day in a row where I woke up and Reddit was actually down, kind of went over and knocked on Steve's door and was like, hey, Steve, write us down. By the third day, he was just fed up with it. He just showed me how to restart it. So technically, I started working at Reddit before I actually started working at Reddit.

[Rolof Huerta]

As the team immersed themselves in building Reddit, they began to consider how best to organize content posted to the site.

[Steve Huffman]

One of the, I think ideas that was important to us is that we not over categorize things. And this is part of this kind of broader idea that we are not the editors, we are not the gatekeepers. And the categorizing things by topic is one of the things that editors do. And so we're like, that's not what we do. But what happened is as Reddit grew, what started off as a cohesive community started to fracture.

[Rolof Huerta]

This fracturing led to a defining feature of Reddit, the subreddit.

[Steve Huffman]

The first subreddit that we made, I would say intentionally to have a different community on Reddit, which is the point of subreddits, was programming. I was sad that the programming content was no longer the most popular content on Reddit because the politics was becoming more and more popular. The front page was now mostly politics. And I didn't like that. I was like, Reddit was this fun place and now it's this angry place. And so I made the politics subreddit so that the political content could live in its own place. And then I waged this like, campaign. I'm going to regret saying this, but I waged like the sock puppet campaign of me and lots of my alts. Anytime somebody posted politics outside of the politics subreddit, I said, this doesn't belong here. Put it in the politics subreddit.

[Alexis Ohanian]

At the time I had really wanted tags because I believed that was going to help the site grow faster because you could have one post tagged to multiple things. Steve was really adamant about communities and he definitely got this one right.

[Steve Huffman]

The concept of subreddits in generally is what allows Reddit to scale because people are diverse, they have diverse interests. The wider our user base's audiences are and the more diverse they are, the less appealing that single shared space is.

[Rolof Huerta]

But as Reddit continued to scale, 2006 brought growing pains and personal stress.

[Alexis Ohanian]

I get a call from the mom of my then girlfriend who was studying abroad. She had had this horrible accident, fallen five, six stories from her apartment. She was in a coma. I flew out there, spent about a week with her and the family. And then about two months later I get another call that my mom had just had A seizure. They had brought her in to the hospital, done a scan, and they found a stage four glioblastoma tumor. So brain cancer, terminal brain cancer. And so within the first few months of building this company, coming right out of college feeling invulnerable, I am hit with this back to back trauma.

[Steve Huffman]

It was kind of a little bit of a lonely time. By the time we got into 2006, there were four of us working on Reddit. It was me and Alexis, the co founders, and then Aaron Swartz and Chris Slow. But at the time, Alexis was going through, his mom was sick, his mom had cancer, and so Alexis was going through that. Chris was still a full time student at Harvard, and so he was working evenings with us. And at that point, Aaron wasn't working on Reddit anymore. And so for 2006, that left me basically working on Reddit by myself day to day. And most of what I was doing at that time was just trying to keep Reddit online. I was 20, I don't know what else, 21, 22, kind of learning the hard way, all the, like, systems engineering to keep a website of that scale online, you know, while the plane was flying.

[Rolof Huerta]

Meanwhile, major tech companies like Google and Yahoo began taking notice, expressing interest in a potential acquisition.

[Chris Slow]

Yahoo in 2005, 2006, was still a fairly massive player when Yahoo flew us.

[Alexis Ohanian]

Out a few months in starting Reddit, and the executive had us in this meeting room and when he asked for our traffic and I gave it to him, he just laughed and he said, you're a rounding error compared to Yahoo. What are you doing here?

[Chris Slow]

That comment ended up printed out and mounted in our bathroom as a little reminder of like it just said, you're a rounding error. And I think that helped to actually, if anything, kind of galvanize us. I mean, I'm not going to say that we continue to build out a spite, but the spite didn't hurt.

[Rolof Huerta]

Later that year, Reddit received a call from another interested buyer, one outside the tech sphere, that at first glance didn't seem like an obvious partner.

[Steve Huffman]

Kanye Nast came into the picture wanting to buy Reddit.

[Alfred Lin]

Conde Nast, they're a publisher, and so most of their content is in magazines. And they're probably looking for a way to transform their business to be a lot more Internet friendly than publishing focused.

[Chris Slow]

The pitch was actually that, hey, okay, Reddit is this increasingly large presence of being able to effectively redirect eyeballs and sling traffic, right? Like we aggregate content and we rank content and we're able to show what is the current really hot things that are present on the web without any real other way to kind of get to it. Whereas Conde was effectively, it's a media platform, right? They generate content. And so the pitch was effectively, with our powers combined, we can be unstoppable.

[Rolof Huerta]

After a series of conversations, Conde Nast made an acquisition offer of $10 million. Barely a year old, Reddit faced a crucible decision. Do you sell to an old media empire or gamble on creating a part of the Internet's future?

[Steve Huffman]

When Kanye Nast came into the picture wanting to buy Reddit, I almost felt like that was an escape because I didn't know, I didn't feel like that situation we were in was sustainable. All I could see was like, oh, I'm just kind of holding this thing together by my fingernails.

[Chris Slow]

The whole thing was just kind of wild, right? This is less than a year or a year roughly from when we had gotten into YC and we're talking about an acquisition. Like Steve was working like 16 hour days, just kind of like continuously grinding. I was doing the night shift, effectively doing grad school by day and then working on write up by night and then, you know, sleeping maybe four hours a night. It was wild to think that like all that blood, sweat and tears had actually gone into like, we can, we can sell this.

[Alexis Ohanian]

We had $72,000 in the bank at this point. It changes your perspective on things when probably six months later I'm meeting with this guy, this biz dev guy from Con and Aston, he says, hey, we'd like to buy your company and that the price is $10 million. I'm thinking, my God, I could make life changing money. My parents will not make this money their entire lives and I'm going to make it for 12 months worth of work and get to let my mom know that her unflagging support and belief in me was worth it.

[Chris Slow]

On top of it all, at that point, there wasn't really a monetization route for Reddit. We didn't advertise, we didn't have any real way to make money. We're still also a fairly lean startup.

[Steve Huffman]

We thought that would give us the best chance at survival because resources were so scarce. I had also thought more shallowly that this is what we were supposed to do. Those were the stories that I had read about during the dot com bubble when I was in high school was people starting companies and then selling them and then leaving their acquirer and starting another company. And that's more or less what Paul And YC evangelized as well. And so part of me felt like we were fulfilling the prophecy.

[Alexis Ohanian]

I remember having a conversation.

[Rolof Huerta]

Paul and Jessica, Jessica Livingston, co founder of Y Combinator, had me over to.

[Alexis Ohanian]

Their house and they said, listen, we got to talk. Because at the time we weren't shipping a ton. And this is like maybe Q1 of 2006. And they were like, listen, if things aren't going great on the engineering front and you've got this offer, you should sell this company. And they just said, they were like, look, this is a great opportunity. This company is in distress. They're not shipping. And if a software company is not shipping, it's not good. Also, frankly, I know I was just too naive to really understand what that, like, change of control could really look like.

[Rolof Huerta]

In October 2006, Conde Nast acquisition of Reddit closed. Steve, Alexis and Chris moved into the Wired offices in San Francisco.

[Alfred Lin]

Acquisition in some sense, it is a crucible moment because it is a milestone of some sorts. Somebody gets some level of liquidity and in many situations when that happens, people's revealed preferences show up. Their stated preference might be that they want to focus on the vision of the company. And when an acquisition happens and some people get a little bit of liquidity, their reveal preference might be, you know, I made X dollars, that's enough for my bank account and therefore I'm done versus following through on their vision. And so it's a little dangerous if you don't have an aligned team on the vision. Both Steve and Alexis were still focused on their vision. And so when they were acquired by Conde Nast, they still continued to stick around and continue to build the product for a couple more years beyond the acquisition.

[Chris Slow]

One of the mistakes of the acquisition was this idea of that advertising was transferable to Reddit and Reddit is a drastically different product than style.com or especially then it was more on the kind of like snarky, techy, nerdy kind of access. And so it was very hard to have the same sort of transferability of ads onto Reddit. And so we weren't even quite breaking even with that modest staff. In fact, if anything, the tricky part was, hey, server costs scale with users.

[Alfred Lin]

The property had matured to a level where they needed different DNA inside of Conde Nast to run with the business. And it was hard to attract the type of talent that they were looking for when it was inside of Conde NAS.

[Rolof Huerta]

In 2009, with the media industry under pressure and Reddit struggling for resources inside of Conde Nast, Steve Left to start the travel site Hipmunk. Along with Adam Goldstein, Alexis left to start a career in investing. Chris, however, stayed on.

[Steve Huffman]

Deciding to leave is another story that I've changed a lot over the years. And so I'll tell you what I think was, my reasoning was that's what I was supposed to do. Now there was also the fact that I wanted to start another company. I was no longer an owner of Reddit. I was an employee of Conde Nast working on Reddit.

[Chris Slow]

We couldn't take on VC to grow. Like we couldn't take on capital to invest in the growth engine. And when the product is succeeding by every kind of growth metric, but not succeeding as a business, that's kind of the meaty startup spot, right? And so it's almost like we were kind of stuck in. I usually joke, we're like, we're kind of stuck in Carbonite.

[Rolof Huerta]

In a last ditch effort to jumpstart the business inside of Conde Nast, a small but determined Reddit team decided to take their survival into their own hands.

[Chris Slow]

We launched Reddit Gold in summer of 2010. But this was just about the time where I was considering departing Reddit. And so I definitely had a little bit of a like effort, we're doing it live feel at that point in my career. 10 and frankly, it was out of a certain amount of desperation. It was like, okay, if we can't sell ads or we can't sell enough ads and our self service product is advertising, product is still growing, let's just see if we can sell subscriptions. And the original pitch was actually kind of funny in that we didn't even offer anything back. We were just like, if you all go through with this, we will find products to build you. And so we got a fantastic first pass of donations to the point where we opened up a PayPal account. And the reason for it was, well, New York summer hours, people generally leave and kind of go to the Hamptons or wherever they go during the summer on Fridays pretty early. And so if we launched it later on a Friday, maybe no one would notice until Monday, at which point we'd have a giant pile of cash. We could say, but look, it worked. And so we kind of turned it on. And I remember we went out to lunch and we were just sitting there the whole time on our phones, reloading the PayPal box, watching the counter just go up in a way that was like, I think we raised more in the first day than we had made in ads for that month.

[Rolof Huerta]

When the Conde Nast executives returned on Monday morning. They were impressed, if a little annoyed, by the Reddit gold gambit. But ultimately, the subscription model couldn't generate enough revenue for Conde Nast to justify keeping Reddit under its umbrella. In 2011, in an unusual move, Conde Nast spun Reddit out into an independent company once again.

[Alfred Lin]

In general, these acquisitions and spin outs are rare. In my career. I've probably seen a few of these, but they're very rare. There are very few of these situations where a company gets acquired, then they get spun out.

[Chris Slow]

Spinning it out a couple of years later really, I think, was an opportunity to really take a proper Series A, really to go through the awkward middle years of, of a startup that we all have grown to love and hate of. Like, you know, everyone has to have their awkward Series B, otherwise you don't really realize exactly what the what the product is for and what the business is for. In Reddit's case, that just happened to happen like close to 10 years after the founding of the company.

[Rolof Huerta]

The spinoff from Conde Nast allowed Reddit to fundraise and bring in new talent, including CEO Yishan Wong, who had previously led engineering at PayPal and Facebook. In 2014, Sam Altman led Reddit Series B, which included an investment from Sequoia. Alexis also joined the Reddit board, bringing a co founder's perspective back to the company. But from 2012 to 2015, a series of crises plagued the company, from toxic subreddits and harmful content to moderators in open revolt.

[Steve Huffman]

The moderators had a lot of grievances over safety, the content policy, or the lack of a content policy. Some mods thought Reddit didn't do anything on safety, and others thought Reddit was doing too much. Up until that point, Reddit's content policy was basically we don't remove things. The reasoning was the reasoning we had used since the beginning of Reddit, which is we are not the editors, we are not the gatekeepers. This is community run. We did and still do believe in free speech and free expression. But one of the lessons we were learning at that moment is it's very easy to take a kind of absolutist free speech position when you don't have any issues. When you start to be confronted with like, real issues, then you have to start making hard decisions.

[Chris Slow]

What do you do when the trolls start to win is really what was starting to happen. I think what I've learned over my very long career at Reddit now is that 98% of people are actually good and funny and just want to be left alone to do their thing and just, you know, are pretty overall going to be good actors if you set up the situation to allow them to be good actors, that other 2% are just jerks. And the game, if there is a game, is to make sure that that 2% of jerks doesn't dominate the discourse for the other 98%, because they're going to try. And I think that, you know, the story of the Internet has been how those jerks have oftentimes taken the narrative away and taken the story away.

[Rolof Huerta]

These incidents begged the question, what belongs on Reddit? The platform was built on the ideals of free speech. But where do you draw a line? What is the role of community moderators to take down harmful content? And when does the company itself need to step in?

[Alfred Lin]

Ever since the spin out of Reddit, it was clear to the community that Reddit was going to grow up and become a business. There was this friction between the company and the community. The Reddit community became increasingly belligerent towards Reddit. The company and Reddit employees were such active users of Reddit, they felt like they were not just employees of the company, they were also Reddit community members and some of them were moderators. And so the Reddit employees had difficulty delineating the community's wishes and the company's objectives. It was a unique problem that I don't think I've ever saw in any other company that I've worked with.

[Steve Huffman]

For the first half of 2015, Reddit kind of lurched from crisis to crisis. And then we just got to the point in it was July of 2015 where Reddit was going through its basically biggest crisis to date, which felt to me like the final crisis, like this is going to kill the company. The local cause was Reddit had terminated an employee who did mod relations. So basically she was the main liaison with the moderators.

[Chris Slow]

There was a well loved community team member, a Reddit employee who was the main kind of coordinator with moderators who was let go. And so that departure was like the match that lit the tinderbox of the community. Just being upset with, we're changing the rules, you fired our favorite person.

[Steve Huffman]

That was really just kind of the straw that broke the camel's back. The users were in basically open revolt and then they had shut their subreddits down. And so Reddit was basically offline at that moment. And it was the first time we had seen anything like that. Reddit was like truly offline. If it stayed offline for too long, it would just be Gone.

[Rolof Huerta]

In July of 2015, Reddit went dark. Thousands of moderators made their subreddits private, meaning no one could post and no one could comment. The site came to a standstill. This moment would come to be known as the Great Reddit Blackout of 2015, or AMA Geddon.

[Chris Slow]

It went from, you know, a couple of these little sparks led to 50% of communities on Reddit blacking calling for the departure of the CEO at the time. And just like basically calling for people's heads full pitchforks and torches, which again, it's Reddit, so pitchforks and torches are effectively one of the things that people love the most on Reddit. Just tough when they directed back at.

[Alfred Lin]

Reddit, the friction just became worse and worse. And, you know, if the company doesn't exist, the community will also not exist.

[Rolof Huerta]

Ellen Pao had replaced Yixhan Wang as CEO after he resigned in 2014. She stepped down after a user petition called for her resignation just a week after the site went dark. Pow then published an op ed in the Washington Post called the Trolls Are Winning the Battle for the Internet.

[Alfred Lin]

I think the challenges for Ishan and for Ellen was not that they were not good as being a CEO of a company of the size of Reddit at the time. It was they didn't have the founder moral authority to push back on the community. So Sam called Steve, I called Steve, and we started to put the full core press on getting him to think very seriously about leaving Hipmunk and coming back to Reddit.

[Steve Huffman]

I was super absorbed with Hipmunk and that was like really the only conversation I had about Reddit in years. And we were in the middle of an M and a process for Hipmunk. So we were trying to sell the company. So I promised Adam, I said, I'm not going to leave. Adam knew I was having conversations with Reddit and I was like, adam, I'm not going to leave. While we're in the middle of this process.

[Rolof Huerta]

Steve faced a crucible decision six years out. Should he leave one company he'd founded to save the other?

[Steve Huffman]

Literally every single person I knew called or texted or emailed and said, what is going on? You have to go back to Reddit. And I had a conversation with Michael Seibel, who's then and still now a very close friend of mine now is on Reddit's board. And he told me I should go back. It was a long conversation. I think it was the Saturday morning I called, I called Sam and said, hey, like, I'll do this, and called Adam and had to break that promise to him to not leave Hipmunk during that time. This was and still is, I think the hardest decision I've ever had to make is to break that promise to Adam and to Hitmonk. My reasoning was Reddit is more important to the world than Hipmunk will ever be, and it'd be a real shame if Reddit didn't live up to its potential or even worse, died.

[Rolof Huerta]

Just a little over a week after Reddit's biggest user revolt, Steve officially stepped back into the role of CEO.

[Alfred Lin]

Steve returning to Reddit was a crucible moment because he had the moral authority to state where the company began and end and where the community began and end. So put some distance between the company's objectives and the community objectives and making sure that when you're an employee, you work for the company, you're focused on completing the company objectives. And the community may mostly be right, but there are certain situations where they're not right and the company has to make the decision on when to make a call on that. And I don't think that that was an easy line to draw.

[Steve Huffman]

There's a few things that I thought needed to be done that weren't being done, the most important of which is Reddit needed a content policy, because that was kind of the beginning of Reddit starting to ban subreddits and content. Prior to that, Reddit didn't really do that. When I would talk to the team, they were so torn on this. They were like, we don't like the way Reddit is being used. There's some content on here and communities on here that are really bad. We don't like that, we hate that, but we feel powerless to get rid of it because if we get rid of it, we're going to break Reddit. And so it was extremely demoralizing for the team. What I told them is, well, like you're describing to me as like, if we change, we die, but the situation is if we don't change, we're dead. Like, it was like, that's why I'm here is Reddit's dying and we have to change. We have no choice. So I and the team wrote the first content policy.

[Alexis Ohanian]

The way I like talking about it to non Internet people is it's kind of like Javits Center. So imagine an infinite convention center where Reddit's a place where you can come and host conventions and they all happen right next to each other. Now sometimes they show up in Pikachu costumes for the R Pokemon community, sometimes they show up for the Mets community. You are also implicitly validating those communities when you're the Javits center and you're saying, hey, there's a bunch of people loving the Pokemon and then here's a bunch of people doing some really awful racist stuff. And that's where I draw that line.

[Steve Huffman]

We did make one mistake there, which is there's no such thing as a perfect line. There's always gray area. And you always need to be interpreting and kind of adapting and changing the policies and interpreting the policies and kind of growing as the problems change. But we got that first content policy out there and we started enforcing it. Pissed a lot of people off, but I would say it made the vast majority of people feel a lot better. That got us on the path to eventually like recovery.

[Chris Slow]

And I just remember there was a change in about 2018 where we were kind of working our way down this list of communities that were extremely toxic and we banned another one. And the response we got was like, geez, about time, guys, what took you so long? And it was like this big shift all of a sudden now like the kind of like the good users could speak again and they were like, we were waiting for you to finish cleaning that up.

[Alfred Lin]

When Steve came back and he was undeterred, he pressed forward, he hired a new management team, he redesigned the site, he moved Reddit onto mobile, and more importantly, he built the business.

[Rolof Huerta]

With Steve back at the helm and the crises abating, Reddit turned its attention toward operating as a self sustaining business, finally seizing control of its own destiny.

[Chris Slow]

One of the other major things in the last epoch has been to try to convert Reddit, the community social science project, into Reddit, the actual sustainable business that happens to run a community social science project. It's not possible to run Reddit without money.

[Steve Huffman]

The revenue everybody knew sucked. There just wasn't a whole lot of revenue. Reddit wasn't measuring users accurately in 2015. So we also had 12 million DAU, but Reddit reported MAUs. And so they reported MAUs in the like 200 millions or something, which is like huge. But advertisers really care about dau. And I remember calculating it with our head of product at the time, Alex. He was like, dude, there's only 12 million users here. So we're like, oh, that was the oh shit moment. I was like, oh, this platform's actually smaller than I think people think. I'd say we started with the beginning of Reddit being a real business was when Jen Wong joined us in 2018.

[Jen Wong]

When we first got to Reddit in 2018, my first priorities were to think about what business model we wanted to pursue to become a self sustaining business. My name is Jed Wong, COO of Reddit. I think we still believe there are a lot of different business models hiding within Reddit, but we wanted to land on one that we could invest in because you can't pursue everything at the same time, and one that would be reasonably quick in scale with users. And we landed on advertising because it keeps Reddit free and open, which is really important. Reddit really believes in the open Internet and allowing users to have access to information. And we knew that that could scale really nicely as we grew users, as we've seen with other businesses.

[Alfred Lin]

While we wanted to build an advertising business, there's lots of conversations inside the boardroom to make sure that when we built the advertising business, we did not upset the Reddit community because the community is the reason why the users are so sticky and they come back again and again.

[Rolof Huerta]

Reddit faced another crossroads. Could it scale an advertising based business model without alienating its community?

[Steve Huffman]

I wrote a post that said, hey, look, we need to survive. To survive, we have to make money. We have two ways of making money. We can either raise money and be beholden to VCs forever, or we can monetize ourselves with ads.

[Rolof Huerta]

That's the choice.

[Steve Huffman]

And the users got it. They got it.

[Jen Wong]

It was important to us to build an advertising business that was in harmony with our values. And that's what I spent a lot of my time thinking about, is like, okay, you know, how would we have an advertising business that our community, you know, who has strong feelings on lots of things, was in harmony with the values of our community? And so being a business and being clear about that to our community was more intentional than probably other companies. We are an extremely mission driven company, but we are a company and a business. And so having that dialogue with our community and users was important. It had to be explicit. We had to bring the community along with it.

[Chris Slow]

Though Reddit is a social product, it's not really as social as many of the other social products. Right? Users have Personas, but they don't really have personal information. We don't know who the users are, we know what they like. And so a lot of the work in building and scaling the product that we've had to figure out has been how do we explain to advertisers the value proposition of Reddit as distinct from the rest of the social space where you have maybe a much more direct line of like, we know who this person is, we know where they live, we know where they went to high school.

[Jen Wong]

We are an anonymous platform. We've never changed that. We've never forced login to get access to information, even though other platforms do. And that makes for a richer login graph. But we don't do that. Another part was allowing for all parts of the human experience. Reddit covers adult nsfw. We're very thoughtful about, you know, hey, that content is part of the human experience. It has to stay. We don't run ads there. That's very important to our advertisers. We have human review of all subreddits, make sure they're appropriate for ads. So I think we found a way to allow for all parts of the human experience to persist on Reddit and yet have a really brand safe advertising business.

[Rolof Huerta]

From a Starting point of $15 million when Steve returned, Reddit grew to $456 million in 2021 and $804 million in 2023, clearing the way for a successful IPO in March of 2024.

[Steve Huffman]

Red is always going to change. Our number one value is evolve. We're always going to try to change for the right reasons. Now sometimes we get it wrong historically, sometimes we haven't done a great job. But what's really fun about working at Reddit today is we're doing, I think, a much better job. The quality level is much higher and we're really delivering on stuff that users have wanted for a long time.

[Alfred Lin]

Reddit would not be a public company today without having scaled revenue to the size that it is today. I don't think the company would exist today if they had not made these changes post ipo.

[Rolof Huerta]

Reddit continues to consider ways to iterate on its business model to support its user base and strengthen its financial profile.

[Jen Wong]

Reddit is one of the biggest content corpuses on the Internet and for every topical area it has incredible expertise and insight that people want, you know, sports mavens, beauty mavens, you name it. And some of that content is so good that it is the equivalent of a media company. And so creating an opportunity for some of those people, those creators, those thought leaders who are sharing their thoughts, to be able to earn money from that I think seems sensible. That's just one business model of many that could be on Reddit. It is our duty to be a self sufficient business because if you believe in our mission, then we should endure. We've been around 19 years, another 19 years at least. And the only way to do that and control your own fate is to control your economics and whether you can self fund all the things that you want to do.

[Steve Huffman]

Like our relationship with the moderators is a forever work in progress. I think it's always important to first and foremost keep our eye on the prize. And so for us, that's our mission. Community belonging and empowerment for everyone in the world. Now more day to day. We want Reddit to be great, we love Reddit, we all use Reddit, and we want to be proud of our work. And so in any moment there's a lot of noise outside, external noise. Reddit should do this, Reddit should do that. Reddit shouldn't do this. That was so stupid. Look what the CEO said. In those moments, we just have to tune most of it out.

[Alfred Lin]

Today, Reddit is home to thousands of communities, endless conversations, and an authentic human connection for all its users. And Reddit is today the 18th most visited website in the world. And I think that's a pretty big deal.

[Chris Slow]

I think that at every step along the way for Reddit, we've thought, how could this get any larger? It's gotten larger and getting a chance to watch. Some of our very early decisions on how communities should be built have proven out to be highly scalable across several orders of magnitude of traffic and across that. That kind of increase in user base is just fantastic and humbling.

[Steve Huffman]

Reddit has been bigger than I ever thought it would be since August 2005. The fact that we have any users at all is sometimes a little bit of a surprise. Now, what has surprised me, truly surprised me about Reddit, is we've always believed in the agency of people, right? The users create the communities, the users submit the content, they rank the content. Their conversations like, are the community. They are the community we've always believed. It's like the people will do amazing things. But what's so fun is that what I didn't realize is people's capacity to do amazing things every day is like 100x greater than what we thought of. And we were optimistic people in 2005, but we just see people helping each other, supporting each other, being funny, doing interesting things, changing the world, because that's just how people are. But it's actually been even more good and powerful than we ever, I think, than I ever imagined. We've been through at Reddit a number of crises that have been challenging for me and the team. I often in those moments remind the company that we've been through crises before and gotten through them. You know, this, whatever, this, whatever's going on right now, it's not going to last forever, but we have to work our way out. Also, there are times when things are relatively peaceful where I'll remind the company, hey, things have been peaceful before, and then something happened. So enjoy it, do your work, rest up. Appreciate this moment for what it is. Because there's something coming. There always is. And so I think try to be measured in those moments and just constantly remind people that we get to work on something really special. And even if it's hard, even if we're in a difficult moment, at the end of the day, we get to work on Reddit. And that is something that we should never take for granted.

[Rolof Huerta]

This has been Crucible Moments, a podcast from Sequoia Capital.

[Chris Slow]

Crucible Moments is produced by the Epic Stories and Vox Creative podcast teams along with Sequoia Capital. Special thanks to Steve Huffman, Alexis Ohanian, Chris Slow, Alfred Lin, and Jen Wong for sharing their stories. Incidental audio created by Eleven Labs, a Sequoia partner.