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