Steve Huffman, Reddit CEO, will deliver a “Reddit Redesign” speech on the third day of the Web Summit at the Altice Arena on November 8, 2017 in Lisbon, Portugal.
Horacio Villalobos | Corbis | Getty Images
Reddit has a moment.
The online network of communities came into the spotlight this week after a group of investors on one of their forums – WallStreetBets – inspired a large group of retail investors to buy shares in GameStop, AMC and other severely shortened companies. Shares rose, causing trading broker Robinhood to temporarily restrict option purchases in certain stocks, even though it reopened in limited capacity.
The Reddit community describes itself as “How 4chan found an incurable Bloomberg disease”. This is a precarious description these days. Donald Trump’s supporters used so-called “dark web” forums and others like 4chan to record the details of the Capitol Hill uprising that led to Trump’s impeachment and the death of five people. In light of these events, the idea that young, potentially disgruntled people are using a community to advance a mob-fueled issue can rub people in the wrong direction. As CNN noted, “posters revel in their rudeness; homophobic epithets are tossed around as expressions of affection.”
To ensure the Reddit communities don’t get out of hand, Reddit CEO and co-founder Steve Huffman and his team are overseeing Daily Active S — Heads, Huffman said Thursday in a forum at the audio startup Clubhouse.
Huffman described “DAS’s” as actors preventing other Redditors from enjoying their experience. As the CEO of a social media company, Huffman had to grapple with the compatibility of censorship and free speech, much like Jack Dorsey of Twitter and Mark Zuckerberg of Facebook. When it comes to these users, Reddit gives them plenty of warnings, but if they don’t tone down their language, or if they engage in threats or bullying, Reddit eventually removes them.
Then there are whole groups of people who can be problematic. Huffman said closing a forum – also called a subreddit – was “heavy hearted”. He described how he gave the r / The_Donald subreddit, where attendees endorsed Trump’s rhetoric and guidelines, plenty of opportunities to clean up their interactions with others – including Reddit staff. Reddit finally pulled the plug on June 29, 2020, about five years after it was founded.
Reddit mostly makes its money from advertising. CNBC reported in 2018 that Reddit had sales of around $ 100 million. Reddit also sells Reddit Coins, its digital currency, to reward certain items with trophies that mark their excellence. Reddit also sells an ad-free Reddit premium product for $ 5.99 / month.
Reddit has raised around $ 550 million in funding, most recently $ 300 million in a Series D round in February 2019 led by China’s Tencent, valued at $ 3 billion.
Huffman, Alexis Ohanian (now married to tennis star Serena Williams) and Aaron Swartz, who passed away in 2013 at the age of 26, founded Reddit in 2005 with support from Y! Founder of the combiner Paul Graham. The company’s original intent was to act as the front page of the internet.
Since then, Reddit has become synonymous with the free exchange of ideas and niche communities around video games, sports, politics, and finance. Reddit allows its users to be anonymous, which can lead to more honest – but also more blatant – communication. The site also became famous for its “AMAs” or “Ask Me Anythings,” where experts and celebrities asked users questions. President Barack Obama made one in 2012.
Ohanian told CNBC this week that he sees people joining forces in Reddit’s “WallStreetBets” as a victory for individuals over financial institutions that have long dictated investment policy.
“It’s an opportunity for Joe and Jane America – the retail buyers of stocks – to push back and push back these hedge funds,” Ohanian told CNBC’s Squawk Box. “This has become something much bigger. It’s very personal to a lot of people. This is a defining moment. These communities are a by-product of the connected internet. Whether it is one platform or the other, this is the new normal.”
In 2006, Conde Nast acquired Reddit for $ 10 million. Huffman and Ohanian become millionaires. Huffman stayed until 2009 when he left as acting CEO.
Both co-founders eventually returned to Reddit after Conde Nast spun off the company, with parent company Advance Communications remaining the majority shareholders. Huffman returned as CEO in 2015. Maintaining Reddit’s reputation as a forum for open communication has become particularly important from a branding perspective as other social media sites like Facebook and Twitter have censored users (including Trump) for inciting violence or spreading hate speech.
Reddit has not announced any plans to go public. Either through a deal with a Special Purpose Acquisition Company (SPAC) or through an initial public offering (IPO), its popularity starting this week could lead to a surge in users – and potentially advertising dollars.
Still, public investors would need to familiarize themselves with a company that houses communities with enough Daily Active S — heads that the CEO has a name for them.
WATCH: “This is a drastic change” – Reddit co-founder Alexis Ohanian at WallStreetBets
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