How Was Reddit Founded?
Thought I'd do a little blurb on everyone's 2nd favorite content curation community. (Of course #1 is Steemit!). Here goes!
Reddit was founded in 2005 by University of Virginia (UVA) roommates Steve Huffman (studying to be a software engineer) and Alexis Ohanian (studying to be a lawyer) and for the most part, were pretty normal college kids.
Ohanian at the time, was a webizen spending his time creating clans in Quake II or starting web design nonprofits. And upon coming to the University of Virginia, was ” terrified that no one played video games in college”.
How the times have changed :p
During their senior year, Ohanian and Huffman had the idea to let people skip waiting in line by ordering food from their phone. They called this idea MyMobileMenu (MMM). Now you gotta remember, that the smartest phone at the time was the Palm Treo.
Ok, this is cool, but before the UVA duo decided to found the front page for the internet, what led them there?
Like any gut wrenching coming of age story, It all started with some good old failure. During the spring break of their senior year at UVA, the duo traveled to Boston to listen to one of Huffman’s idols - Paul Graham - speak about “how to start a startup"
So who is this Paul Graham guy?
During the dot com bubble, Graham started a company called Viaweb, which was like the first online store and dumped in on Yahoo! for a cool $50,000,000. This gave him all the money in the world to do what he loved.
Like every rich Silicon Valley entrepreneur, Graham continued to stay engaged in the tech world. Most notably, in 2005 with Jessica Livington, Robert Morris, and Trevor Blackwell, Graham formed a very special organization called Y Combinator (more on this later)
Going back to the story...
At the talk, Paul Graham was being super inpirational, filling a room of soon to be entrepreneurs with some of that startup secret sauce.
After the talk, Huffman, being a fan of Mr. Paul Graham rushed up to get an autograph. And here’s when things really changed. Because when it was Ohanian’s turn to speak to Graham he mentioned that the duo had come up all the way from Virginia and that that “it’d totally be worth the cost of buying you a drink to get your opinion of our startup” which was again the MyMobileMenu (MMM) idea.
Graham, impressed by Ohanian’s confidence agreed to meet.
So that night Graham, Ohanian, and Huffman met for coffee at Cafe Algiers from which the duo got a positive response about their startup idea. When the duo returned to Virginia, Graham and the pair exchanged emails, where Graham noted that “he was thinking of starting a program to invest in early stage founders”… a very special club… and that “since he’d already met the pair, they had a pretty good chance of getting in” Sound familiar?
Well…. remember that super special Y Combinator thing?
A few weeks after talking to Graham, he publicly announced the launch of Y Combinator, a startup accelerator which invests some money, provides guidance, so that they can help small companies becomes big!
Now, this Y Combinator thing that Graham announced that week ended up being a VERY successful organization. Since launching, Y Combinator has been responsible for the growth of some very prominent startups.. including Uber, Airbnb, Stripe… and of course, Reddit.
Ohanian and Huffman applied to the first round of YC funding, and to be expected, were accepted, gave their pitch, and raised an astounding $0.00. Nothing. They failed.
Now this wouldn’t be no startup story without a little bit failure, now would it?!
Yes, during the night of the interview, Graham called to say the MyMobileMenu (MMM) idea would not be moving forward and like the smart college educated pair they were, Ohanian and Huffman decided to handle pain in the most healthy and responsible way.
(this is 100% true)
Ahh, but the plot thickens...
Ring Ring On a train ride back to Virginia, Ohanian’s phone rang…. It was Paul Graham who’d call to say that though they (Y Combinator) didn’t like the MMM project, they liked Ohanian and Huffman, so he wanted them back if they’d be willing to change their idea to something else.
In fact, the whole idea of Reddit. The idea for a front page for the internet can be attributed to Mr. Paul Graham. When the three met, Graham said FORGET MOBILE… LOOK TO THE FUTURE… AND BUILD SOMETHING ON THE INTERNET!
Indeed, the vision for Reddit and the road ahead was consecrated when Paul Graham said “you should build a front page of the web”… and so the two got to work.
The initial Reddit was built in just three weeks and featured simple upvote, down vote, and commenting features, to curate the best content on the internet.
But the duo wouldn’t be part of Reddit for long! Because not long after creating Reddit…
ok stay with me here…
The duo met a reporter, who introduced Ohanian to Rachel Metz, a reporter at Wired, who mentioned Reddit to her boss at Wired….. the boss at Wired was the wife of some dude doing business development (BD) at Conde Nest, a major media company, who told Mr. BD about Reddit.
In case you’re unfamiliar, BD or business development is normally the function or group within a company that deals with mergers and acquisitions/ corporate strategy type jazz. In other words, it’s the team that says "how can we deploy out capital to grow and prosper?". One of the ways of doing that is by buying.
Before we go on, What is Conde Nest?
Conde Nest is a mass media company which is in the business of owning a ton of media properties including:
Epicurious, GQ, The New Yorker, Vanity Fair, and Wired… and drum roll please….. Reddit.
So after just 16 months since founding Reddit, in Oct 2006, Ohanian and Huffman, sold Reddit to Conde Nast in a deal which was purportedly worth between 10 to 20 million dollars, making the founders instant millionaires over night.
Since the sale in 2006, Ohanian and Huffman have remained affiliated with Reddit, as not only shareholders, but serving as CEO.
Finally, this meteoric growth had attracted some very interesting investors.
In Sept 2014, Reddit raised 50 million in a series B round of funding from prominent venture capital firms Sequoia, Y Combinator, and Andressen Horowitz, but also attracted funding from Jared Leto and Snoop Dogg.
In Aug 2017, Reddit raised an additional 200 million at a 1.8 Billion dollar valuation.
Wait how much did we say Ohanian and Huffman sold Reddit for*? 10-20 million?
Ouch
But don’t feel too bad for the duo, as both have likely retained some equity during the sale to Conde Nast and have both served as CEO. Ohanian actually went on to marry Serena Williams of all people! and produce beautiful olympic athlete tech geniuses (prediction), haha
Thanks for reading!
Nice post, man. The reddit story is definitely interesting.
I read somewhere that during an early release of the platform they basically had an admin console that allowed them to specify a username, when they posted or commented and were posting comments and votes as a bunch of different fake users, to make it seem like more discussion was happening than really was.
Reddit has an amazingly loyal audience, yet their ad product is just the pits (doesn't help that redditors hate ads). It'll be curious to see if they can come up with a strong monetisation route in the future, that doesn't rely on ads.
Haha, yeah it's a trope you hear about in Silicon Valley. In fact, I think in one episode of the show Silicon Valley, one of the guys hired an "impression farm" in S.E. Asia to fake user engagement. But hey! These guerilla tactics work sometimes.
Indeed, once someone has been redditing for a while, it develops an almost cult like following. The promoted posts and sidebar ads are a start. Now we know the company mission is to democratize information and all that good stuff, and I'd argue that because that's their goal, and their founders exude a sort of free spirited/non corporate/earnings heavy mentality, that maybe monetization is not entirely what they're after. However, the founders are out and being realistic, Reddit was defintely acquired to be a cash flow machine (eventually) for their parent company.
Who knows! Maybe tokenization of their platform might be a way for them to monetize services in the future. Of course it'd probably be met with some intense disapproval for the Reddit community.
Love that show. I only found out the other day that TJ Miller's not coming back for the next season, but I guess his character had run its course.
I do love reddit... one of the reasons I haven't been posting more here is because there's just not enough content that reflects what I can find in /r/entrepreneur or /r/marketing, but I guess there's only one thing to do about that. I also found, early on, that everyone here was being really super positive. "Don't upset people or they won't give you upvotes!" - kind of discouraged real debate, or flagging of shitposts.
Hopefully both of those will resolve themselves in time.
In the meantime, tokenization for reddit might work really well. Their audience is more tech savvy in general, and there's already an established culture for rewarding posts you really like with tokens you pay for... just not tokens that have any value once you give it.
Wow, intense story, awesome post. I never did get around to using Reddit myself.
valuable post for me. thanks for your post
Of course, thanks for reading!