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Aliens in the Valley - The complete history of Reddit

Aliens in the Valley


For months leading up to his resignation, Yishan Wong looked beaten down. Employees say he was noticeably stressed and no longer enjoying his work. One business associate who stopped by the office in October thought Yishan was just having a bad day, but the bad day never seemed to end.

Running any company is stressful; running Reddit is stressful on another level. 

Stashed in: User Generated Content, Founders, Reddit!, Digg, YCombinator, Curation, Startup Lessons, Awesome, @paulg, Monetization, History of Tech!, Delicious, Mashable!, Bookmarks!, Virginia, Reddit, @alexisohanian

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Running Reddit must be stressful.

Yishan took over as CEO in early 2012 after Reddit was spun out into an independent company, knowing it would be a tough job. According to those who know him, Yishan felt a sense of purpose to make sure no one ruined the social news site he had been using since its early days. It was Yishan who was in charge while Reddit dealt with controversies over users posting jailbaitcreepshotshate speechgun sales and participating in an infamous witch hunt for the Boston Marathon bombing suspects.

Traffic was never the problem. Everything else was.

This is the story of how a bootstrapped startup with a funny name and no initial ties to the tech scene outlasted better-funded competitors, survived founder drama, endured tensions with its parent company and later navigated life as a standalone business — all in order to build the front page of the Internet. Traffic doubled year after year, even in the worst of times, with the site now reaching 175 million users per month. 

Reddit is a case study for how a website can attract a large and dedicated user base, in spite of some chaos and lack of direction inside the company, and then struggle to convert that popularity into a viable business. It’s a reminder that sometimes the hardest thing for a tech company isn’t building a devoted community, but figuring out what to do with it.

Alexis O and Steve H talk about how Reddit began:

Reddit's main goals now are to make the user interface simpler and more usable, and really embrace mobile:

The vision Alexis has since laid out for Reddit focuses on figuring out mobile — ironic, considering Alexis and Steve originally wanted to build a mobile app a decade ago, but were told not to — and improving discovery for new and existing users. Reddit is expected to put some of that $50 million it raised to hire more mobile developers and community managers to build better tools for users. The funding also gives Reddit a deeper war chest to make strategic acquisitions like Alien Blue, a third party app it acquired in October.

“We need to do a better job with things like mod tools and discovery to make the lives of these varied community moderations a lot better,” he said in an email. “It’s a failure of UX that so many people don’t even understand how reddit works.”

Kristina Lerman, the USC professor, echoes that point. For all its influence, Reddit is still a niche service. “Reddit’s weakness is demographic,” she says. “There is the perception that it doesn’t reflect the mainstream. That it’s very specialized.”

One thing Alexis did not touch on in his initial announcement, nor in his comments after, was monetization. Industry observers we spoke with expect Reddit to introduce more services like its gift exchange and its recently launched crowdfunding platform, which could bring in more revenue. Just how much Reddit can rev up its advertising efforts, however, remains to be seen. Ad execs note the challenges of Reddit’s limited targeting tools, basic ad formats and tough user base.

"The Reddit audience has probably the most honed bullshit detector of any website,” says Ben Winkler, chief digital officer at OMD. “And Reddit has no interest in moderating comments. So not only will your inauthentic advertising get savaged, but that savagery will stay there for all to see."

What Reddit needs to do, according to execs we spoke with, is double down on mobile ads, improve its target efforts and think beyond ads, perhaps providing marketers with a paid insights platform that would help them identify stories and topics that are about to go viral on the web.

On monetizing Reddit:

When Reddit first launched, the founders assumed it would generate revenue the same way most social websites did: through advertising. But they didn’t exactly put much thought into it.

"In 2005, we thought, 'We're going to get lots of traffic and advertisers will take care of the rest,'” Alexis told Mashable in an earlier interview.

Alexis and Steve had the luxury of ignoring the monetization side. They raised a little funding, secured a licensing deal, then sold Reddit fast. For the first few years it was part of Conde Nast, revenue wasn’t the top concern. The real reason Conde Nast acquired Reddit, according to two execs close to Conde Nast then, was so the ad sales team could lump Reddit’s audience together with the audiences for their other tech-focused digital properties, including and Ars Technica. Reddit significantly increased that segment’s number of uniques. It was also a ploy to get the attention of advertisers by showing Conde Nast had a hip, innovative tech property.

The strategy worked — to some extent. Reddit was a conversation starter with advertisers, but many of those advertisers were skittish about placing ads on Reddit.

“There aren’t very many advertisers who want their ads to be seen by atheist, libertarian, porn-loving Ron Paul fans,” says Kourosh. “It sucked. It was a difficult sell… But it got us in the door.”


“A lot of people felt that we were sort of caretakers,” says one former employee who worked there at time. “We were always very reluctant to make changes.”

In that sense, Reddit found itself in a similar position to Twitter, another company in the social space that launched one year after Reddit and lost its founders one by one (though for very different reasons). Like Reddit, Twitter continued to grow its user base and influence despite internal dysfunction. Like Reddit, Twitter’s team was often nervous about making big changes to the product in the absence of its creators — at least until it went public and investors began pushing for changes.

Reddit launched with link sharing. Commenting was added later.

It would take time and new features for Reddit to emerge as a real rival. At the end of 2005, after a long argument between the founders, Reddit introduced what now seems obvious: the option to post comments. Fittingly, the first comment posted was critical of the company.


Then in early 2008 they decided to let users create their own custom reddits, or subreddits. The move ignited the Reddit community and truly differentiated it from Digg. Alexis had been in favor of a more traditional tagging system, but Steve pushed for subreddits.

Over the years, users have created subreddits for Technology, Books, Atheism, EarthPorn, GIFs, Shower Thoughts, PhotoshopBattles, FoodPorn, bra fittings, squirrels eating pizza, RetroGamePorn, and many, many more. These would serve as more intimate and engaging forums for users and, in some cases, offer new opportunities for advertisers to reach users with specific interests.

Joshua Schacter, founder of, says he proposed creating a similar feature called Islands, but Yahoo, which acquired the startup in late 2005, was against the idea. The same was true at Digg. “I actually advocated for something like subreddits,” says Owen from Digg. He had planned to call it “Personal Digg,” but founder Kevin Rose, who he refers to snidely as the “arbiter of coolness,” balked at the feature for fear of “potential chaos that would bring.”

Rose was right: It would bring chaos. Reddit users later created subreddits showing pictures of minors and creepshots of women. It is what makes Reddit vibrant, but also what makes it volatile. For Steve, the thinking was simple enough: Let the users decide for themselves. Or as Erik Martin, Reddit’s former GM, describes Steve’s thinking, “Make the users do the hard part.”

“I think that was the feature that made them beat us,” Owen admits.


There was no single defining Reddit moment, employees say. Traffic just kept growing.


It's a long article but worth a read:

This article is great for the stories of early Reddit:

Steve had only been building Reddit for a couple weeks, but Paul Graham was already pressuring him to launch the website, arguing Steve shouldn’t try to make it perfect right away.

“Paul was so up our ass,” Steve says. But he soon acquiesced. In late June 2005, he and Alexis launched Reddit — a “super shitty” version that was the shell of a website with three links submitted. The first link ever posted to Reddit, a story about the Downing Street memo shared by Alexis, was downvoted by Steve.

Once the website launched, Paul published an essay on his influential personal website linking to Reddit. The traffic spiked and so did Steve’s temper. “I didn’t know he was going to do that,” Steve says. “The Slashdot comments were panning Reddit. This one guy wrote a blog post about how shitty Reddit was. It was a frustrating day.”


When Reddit first launched, the founders were focused on, but their peers at Y Combinator saw a more direct competitor: Digg. Like Reddit, Digg aspired to be the homepage of the Internet. Unlike Reddit, Digg was founded by a minor celebrity in the tech world, Kevin Rose, and raised asignificant round of funding in October 2005. Within weeks of launching, Steve and Alexis became aware of the real competition — and the competition became aware of Reddit.

“When they first came out, I remember looking at them and saying, ‘They are a copycat, they’re a clone,’” says Owen Byrne, the Canadian developer who built Digg’s original website. “It became fairly obvious fairly quickly that they were more than just a clone. They were a viable competitor.”

It would take time and new features for Reddit to emerge as a real rival. At the end of 2005, after a long argument between the founders, Reddit introduced what now seems obvious: the option to post comments. Fittingly, the first comment posted was critical of the company.


At the end of that first summer, Alexis and Steve left their Medford apartment and moved in with Y Combinator class member Christopher Slowe in Somerville, Massachusetts.

Chris was 25, a few years older than the Reddit guys. Memamp, a startup he began working on as a side project while in grad school, had been accepted into the Y Combinator program, but soon enough it hit a wall.

His apartment became the new Reddit headquarters and Chris effectively became the third member of the team. “We had two mornings in a row when Reddit would crash at 6:30 and I’d wake up at 7,” Chris recalls. “After two mornings of me waking Steve up, he showed me how to restart Reddit.” Chris was hesitant to join the startup officially because he was still in grad school, but Steve finally convinced him to become their first employee in November.

The three would work together on the site from 9 p.m. until 1 or 2 a.m. while sitting in chairs that had to be taped to the floor because the entire apartment was slightly slanted. Then Chris, the old man of the group, would go to bed while the others played World of Warcraft until 6 a.m. When he left for grad school in the morning, the founders had just gone to sleep. Then Alexis and Steve would wake up at 2 or 3 in the afternoon and begin the routine all over again.

“You don’t even notice the fact that you don’t have a social life because you don’t have time to have a social life,” Chris says of that time.

Then they got their fourth teammate: Aaron Swartz. Aaron was only 19 when he joined the Y Combinator program, but he had already developed a reputation. In his teenage years, he helped create RSS, the ubiquitous tool for news feeds, and later worked for Creative Commons. He joined Y Combinator to work on Infogami, a website for building websites, and later agreed to merge his company with Reddit, helping the founders on their site in exchange for some help on his own.

He eventually squeezed into the three-bedroom apartment with Chris, Alexis and Steve in February 2006. They would be the only four employees of Reddit until the site was acquired later that year.


The first time Kourosh Karimkhany looked at Reddit, he was struck by a post someone had written about how R2D2 and Chewbacca were actually the central characters of the Star Wars series.

“I was a Star Wars geek and thought it was fantastic!” he says.

Kourosh had heard about Reddit from his wife who had heard about it from her friend Rachel, a writer at Wired, who had met Alexis. At the time, Kourosh was in charge of mergers and acquisitions for the media giant Conde Nast. “My mandate was to find cool digital companies that could help Conde Nast digital grow,” he says. “My bosses wanted me to go find something in hot new areas like social networking and community-driven stuff.”

Reddit seemed promising. It had a growing community, though Kourosh admits now he may have been fooled by the fake accounts. It had a platform and technical team that could potentially help Conde Nast’s other platforms. And it would probably be cheap to buy, at least by Conde Nast standards.


Most of the team were ready to take the Conde Nast deal, but sources say Aaron didn’t want to sell and work for a corporation. He held up the talks by nitpicking the contract. With no other serious bidders, though, it was just a matter of time.

Conde Nast announced on Oct. 31, 2006 that it had acquired Reddit for an undisclosed sum, only 16 months after the social news site had launched. Those familiar with the deal say it was for less than $20 million, a fraction of what Reddit is valued at today.

“I was so jealous,” says Emmett Shear, their friend at Y Combinator who would later go on to sell Twitch to Amazon for nearly $1 billion. “I thought it was amazing. They had done the thing that we had come to Y Combinator to do: They had built a successful company and sold it.”

“When we sold, I was very, very happy. I wanted to be a millionaire,” Steve says. As the years went by, he would have regrets. “I wish I knew what I know now. It was just starting to click. It still felt very dysfunctional. It’s frustrating that we never quite made it.”

“We didn’t know what we were doing,” Chris says. “There was no 30-year-old among us.”


The layoffs came in November 2008. With the recession raging and the publishing industry spasming, Conde Nast cut positions at, and other publications. Kourosh, the exec who had spearheaded the Reddit acquisition and helped manage the team after, was let go too.

“There was a hiring freeze that lasted for years,” says Mike Schiraldi, a veteran Reddit user who was hired right around the time of the layoffs. Reddit didn’t generate enough revenue for Conde Nast to justify new hires. “It was basically the worst thing that Conde Nast did to Reddit. It was a time when the site was going through incredible growth.”

Steve echoes this complaint. “I couldn’t hire. I would find these candidates and [HR] would never send an offer letter. I remember being really pissed about it.”

A source close to Conde Nast at the time offered a different take on the situation: Most of Reddit’s team were fresh out of college with little experience in the process of requesting resources at a major corporation. Reps for Advance Publications, the media company that owns Conde Nast, did not respond to our request for comment.

Either way, the effect on Reddit was the same. The frustration over hiring combined with a desire to move on to something new after four dramatic years drove the founders to leave as soon as their contracts with Conde Nast expired.

“Our contracts are coming to an end this Halloween and we're leaving reddit,” Alexis wrote in a blog post on Oct. 27, 2009, announcing his and Steve’s departure. “The most important thing we both want you to know is that the reddit you know won't be any different.”

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