A pre-IPO History of Reddit: From “front page of the internet” to billion-dollar valuation
What a momentous time to be a Redditor. The aptly-named contributors to Reddit (RDDT) , the online bulletin board and social sharing platform, got “first dibs” at company shares when Reddit made its IPO on Thursday, March 21, 2024.
Trading on the New York Stock Exchange (NYSE) under the ticker symbol RDDT, Reddit set aside 1.76 million shares for users and moderators who have held accounts on the popular platform before January 1, 2024.
This is an unusual move for a company going public, as IPO shares are usually reserved for big-name institutional investors since they buy and sell stocks in massive amounts that can help companies meet targeted capital requirements. But in its IPO filing with the SEC, Reddit CEO Steve Huffman says that since the platform was built upon the principles of community, he wanted his community to own a share of their company.
“We want this sense of ownership to be reflected in real ownership — for our users to be our owners. Becoming a public company makes this possible”
—Reddit CEO Steve Huffman, S-1 Filing, February 22, 2024
Related: ‘Dumb Money’ cast: Meet the real people behind GameStop's Reddit rally
Yet investors, reminded of the 2021 GameStop short squeeze that was largely fueled over Reddit channels, are wondering if having Redditors as shareholders will generate stomach-churning volatility.
According to company statistics, in just a few years, Reddit went from being a relatively underground news-sharing and discussion forum to having more than 430 million contributors worldwide, earning renown as a source for breaking news — and generating controversial headlines of its own.
Just how did Reddit make this evolution?
Photo by Ahmet Serdar Eser/Anadolu via Getty Images
What is Reddit & how do people use it?
While it doesn’t look anything like Facebook or Instagram, Reddit is a social media platform. It’s made up of millions of user-built communities discussing everything from news events to conspiracy theories, product reviews, and cat memes.
According to Statista, the of Reddit’s users are male (63%). 49% live in the United States, and 44% are between 18 and 29.
Reddit comes with its own terminology. Forums, known as subreddits, are devoted to individual topics. Users, called Redditors, submit posts, which get socially curated through likes (called upvotes on the platform) and dislikes (called downvotes). The more upvotes a post receives, the more popular it gets. The most popular subreddits appear on Reddit’s homepage, which was originally known as the “front page of the Internet” (this was also one of the company’s early taglines).
Examples of popular Reddit searches include a mix of existential questions and NSFW (not safe for work content), such as:
Did David Beckham cheat on Victoria?
How long does marijuana stay in your system?
Has YouTube been slow lately?
Why did Alex Murtaugh kill his family?
Who is Banksy?
Another popular forum, known by its acronym, AITA (which stands for "am I the a**hole), invites Redditors to share their personal conundrums, usually ethically ambiguous or embarrassing in nature, letting their peers decide if they were right or wrong.
Users are rewarded for participating on the site through Reddit karma, which is the sum of the number of upvotes you receive for your posts and comments as determined through an algorithm.
To contribute to Reddit, you must create a free account on the platform's app or website, reddit.com. You must submit your email address and create a username and password in order to join.
From there, you can search for and join a variety of subreddits on topics that interest you, or you can start one or more of your own.
Bloomberg/ Contributor/ Getty Images
Reddit's two-decade history: A timeline
As Reddit approaches its much-anticipated IPO (and after that, its 20th year on the internet), many Redditors and potential investors are curious just how much the popular social forum has changed since its inception.
Here's a rundown of how Reddit has transformed over the years.
2005
Reddit was founded by Steve Huffman and Alex Ohanian, who were friends and roommates at the University of Virginia. They submitted an idea for a mobile food delivery service to Y Combinator, an influential startup incubator that was created by Paul Graham but would later be run by AI visionary, Sam Altman.
Although Graham rejected their initial idea for My Mobile Menu, they pitched another idea, to create “the front page of the Internet,” and were accepted. They received $12,000 in seed funding and three months of living and office space in Boston to get their idea off the ground.
Their new site, called Reddit, came from a play on the phrase “I read it,” and was designed to become the first place people went to in order to find something new — in fact, it contained a “recommendation engine” that would reward users who posted links and shared and commented on them.
Related: An in-depth timeline of the GameStop short squeeze saga
Huffman, a programmer, wrote the site code in 20 days while Ohanian, who handled the business end of operations, designed Snoo, Reddit’s mascot, an alien with a round face and a silly smile. Embarrassed that their early site looked like a ghost town, Huffman later admitted that they populated it with hundreds of fake user profiles. By the end of the summer, they raised $100,000 in funding and had 70,000 unique daily visitors.
Back at Y Combinator, they were introduced to Aaron Swartz, a coding prodigy who helped develop RSS feed. Working at the time on his own app, Infogami, Swartz agreed to join forces with Reddit, creating a parent company, Not a Bug.
2006
Christopher Slowe, a Harvard physicist and another Y Incubator alum, joined the company as a founding engineer. He would later become the company’s Chief Technology Officer (CTO).
A mere 16 months after Reddit was founded, it was acquired by Condé Nast publications, parent company of Vogue and The New Yorker, for $10 million, giving it the resources to grow further. Reddit moved its headquarters to San Francisco.
But tbh, my mom's illness weighed on me the most. She was diagnosed with terminal brain cancer just a couple months into founding the company, so the idea of rewarding her life-long unflagging confidence in me with a $10M exit was tremendously appealing.
— Alexis Ohanian 🇦🇲 (@alexisohanian) November 1, 2020
Ohanian had also approached Washington Post Newsweek Interactive. In hindsight, Ohanian reflected that he could have secured Series A funding instead of selling the company outright, but his mother’s terminal brain cancer diagnosis had weighed heavily on his mind. Valued at $20 billion by 2020, the $10 million deal with Condé Nast amounted to Reddit’s valuation as mere pennies on the dollar.
Boston Globe Contributor/ Getty Images
2007
Swartz, an advocate for free speech, left the company in pursuit of projects that focused on his progressive activism. He founded groups such as the Progressive Change Campaign Committee and Demand Progress. In 2011, After hacking into a computer network at MIT, Swartz was arrested and charged by federal prosecutors with 11 counts of violating the Computer Fraud and Abuse Act, which came with a $1 million maximum penalty and up to 35 years in prison. He rejected a plea deal and tragically committed suicide by hanging on January 13, 2013.
2008
In its early days, Reddit was one continuous list of links, with little room for personalization, but in 2008, Reddit allowed users to create their own feeds, or subreddits, which spawned the growth of a whole bunch of NSFW content as well as other popular threads, like r/politics and r/science, which are still around today.
Reddit made its source code publicly accessible in 2008, as Reddit execs wanted to make sure that, regardless of what happened to the business, the site would live on forever.
2009
Ohanian and Huffman stepped down from the company when their three-year contracts expired on Halloween. Ohanian accepted a position at Y Combinator while Huffman launched Hipmunk, a travel website.
Related: What Is an Initial Public Offering (IPO)? Why Do Companies Go Public?
2010
Digg, a predecessor of Reddit, launched its Version 4. Fraught with bugs and glitches, Digg users hopped over to Reddit — and by the end of the year, the company boasted 250 million page views and an average time on site of 12 minutes and 41 seconds.
RedditGold, a premium, ad-free platform with its own rewards currency, launched, although it would be streamlined and rebranded as Reddit Premium in 2018.
2011
Reddit became independent from Condé Nast, although it remained a part of the Advance Media umbrella.
Responding to mounting criticisms regarding child pornography on its site, admins shut down the r/jailbait subreddit. Reddit had long prided itself on self-moderation from volunteer Redditors, but brass said this controversial space had “threatened the structural integrity of the greater Reddit community.”
2012
Yishan Wong became CEO. With his pedigree as an engineer at Facebook and PayPal— he was a member of the influential “PayPal mafia” — Wong is credited with “turbocharging” Reddit’s advertising revenues. He also launched the Reddit e-commerce marketplace, Redditgifts.
Democratic Presidential incumbent candidate Barack Obama, a friend of Wong’s, hosted an AMA (“ask me anything”), which resulted in the company’s biggest traffic day ever, as 200,000 visitors logged on at 4:00 PM on August 29, causing the site to go down temporarily.
2013
In the aftermath of the Boston Marathon bombing, which killed 3 and wounded 264, a few subreddits became hotbeds for conspiracy theories. One post, aimed to shed light on possible suspects, wrongly accused Sunil Tripathi, a Brown University student who had gone missing. Admins publicly apologized to Tripathi’s family; it was later revealed that he had tragically committed suicide.
2014
Another controversial subreddit known as r/TheFappening, in which users posted leaked nude photos of celebrities without their consent, was banned.
thanks for the shirt @reddit and @ekp ! pic.twitter.com/hJH7B4zpnC
— Sam Altman (@sama) July 17, 2014
2014
Wong met with Y Combinator’s Sam Altman, who raised $50 million in Series B funding for Reddit, amassing a "who’s who" of celebrity investors, including Peter Thiel, Jared Leto, Ron Conway, and Snoop Dogg. Altman joined Reddit’s board, while Wong was replaced by Ellen Pao as CEO.
2015
Huffman and Ohanian returned to Reddit; Huffman became CEO, and he continues to lead the company today.
2017
Reddit Video, the company’s in-house answer to YouTube, launched and quickly became one of Reddit’s most popular features. Redditors watched more than 1.4 billion videos a month by 2018.
Ohanian married tennis legend Serena Williams on November 16.
2020
In the aftermath of the killing of George Floyd, which raised awareness of racial injustice across the U.S. and reignited the #BlackLivesMatter movement, Reddit vowed to make a difference by working with moderators to “change our content policy to explicitly address hate.” Ohanian stepped down from his role on the Board with the hope that his seat would be filled by a Black candidate. Reddit banned 2,000 hate-based subreddits, including r/The_Donald, which was created by Donald Trump.
2023
Reddit went down for hours in March and June as a result of subreddit protests against API pricing changes. These changes made it more expensive for larger entities to operate on Reddit, since they used a significant amount of data. Subreddits protested the initiative by changing their community settings from public to private.
2024
Reddit filed its Form S-1 with the Securities and Exchange Commission on February 22, solidifying its plans to go public. After the company's $ 34-per-share IPO, it began trading on the NYSE on Thursday, March 21, 2024, reaching an intra-day high of about $55.39 per share (around 63% higher than its IPO price) less than an hour into the trading day.
