Steve Huffman CEO, Reddit, comments on ‘Redesigning Reddit’ during the third day of Web Summit at Altice Arena on November 8, 2017 in Lisbon, Portugal.
Horacio Villalobos | Corbis | Getty Images
Reddit has a moment.
The online community network was put in the spotlight this week after a group of investors on one of its forums – WallStreetBets – inspired a large group of private investors to buy shares of GameStop, AMC and other high short companies. Shares surged, causing brokerage Robinhood to temporarily limit the buying of options in certain stocks, although it has reopened in a limited capacity.
The Reddit community describes itself as “Like 4chan found a Bloomberg terminal illness.” That is a precarious description these days. Donald Trump supporters used so-called “dark web” forums such as 4chan to map out the details of the Capitol Hill uprising that led to Trump’s impeachment and the deaths of five people. Given those events, the idea that young, potentially disaffected people are using a community to promote a mafia-driven theme may rub people the wrong way. As CNN noted, “Posters enjoy their rudeness; homophobic swear words are thrown around as terms of affection.”
To keep Reddit communities from getting out of hand, Reddit CEO and co-founder Steve Huffman and his team are checking “Daily Active S — heads,” Huffman told a forum on the audio startup Clubhouse on Thursday.
Huffman described “DASs” as actors who keep other Redditors from enjoying their experience. As the CEO of a social media company, Huffman has faced a balance between censorship and free speech, similar to Twitter’s Jack Dorsey and Facebook’s Mark Zuckerberg. When it comes to these users, Reddit gives them a lot of warnings, but if they don’t soften their language or engage in threats or bullying, Reddit will eventually get rid of them.
Then there are whole groups of people who can be problematic. Huffman said that shutting down a forum – also called a subreddit – comes “with a heavy heart.” He described giving the subreddit “r / The_Donald,” where participants expressed support for Trump’s rhetoric and policies, plenty of opportunities to clean up their interactions with others – Reddit contributors included. Reddit finally pulled the plug on the group on June 29, 2020, about five years after its founding.
Reddit’s reputation: open communication
Reddit mainly makes its money from advertising. CNBC reported in 2018 that Reddit generated approximately $ 100 million in revenue. Reddit also sells Reddit Coins, the digital currency used to reward certain posts with trophies, marking their excellence. Reddit also sells an ad-free Reddit Premium product for $ 5.99 / month.
Reddit has raised approximately $ 550 million in funding, most recently raised $ 300 million in a February 2019 Series D round led by China’s Tencent with a valuation of $ 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, started Reddit in 2005 with support from Y! Combinator founder Paul Graham. The company’s original intention was to function as the front page of the Internet.
Since then, Reddit has become synonymous with its 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 fairer – but also more clumsy – communication. The site also became famous for its “AMAs” or “Ask Me Anythings,” where experts and celebrities would answer questions to users. President Barack Obama did one in 2012.
Ohanian told CNBC this week that he sees the interplay of people in Reddit’s “WallStreetBets” as a victory for individuals over financial institutions, who have long dictated investment policies.
“It’s an opportunity for Joe and Jane America – the stock retailers – to bend and push back on these hedge funds,” Ohanian told CNBC’s Squawk Box. “This has become a much bigger thing. It’s very personal for a lot of people. This is a groundbreaking moment. These communities are a byproduct of the connected Internet. Whether it’s one platform or the other, this is the new normal.”
In 2006 Conde Nast bought Reddit for $ 10 million. Huffman and Ohanian become millionaires. Huffman lingered 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 communications has become particularly important from a brand perspective, as other social media sites, such as Facebook and Twitter, have censored users (including Trump) for inciting violence or the spreading of hate speech.
Although Reddit has not announced any plans to go public. either through a deal with a special purpose acquisition company (SPAC) or an initial public offering (IPO), this week’s popularity could lead to an increase in the number of users – and possibly advertising dollars.
Still, public investors should feel comfortable with a company that houses communities with enough “Daily Active S — heads” for the CEO to have a name for them.
WATCH: ‘This is a drastic shift’ – Reddit co-founder Alexis Ohanian on WallStreetBets
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