Reddit is many things: the people’s forum, a repository of the dankest memes, the not-so-secret weapon against Wall Street, and “the front page of the internet”. It might also soon be known as a publicly traded company valued at $15 billion. The famed social media platform plans to take itself public sometime this year (possibly as soon as this month). Reddit has already filed preliminary IPO registration statements with the SEC and has engaged Morgan Stanley and Goldman Sachs to guide it.
As it makes this transition, Reddit has ramped up its hiring. According to data sourced from the recruiting website Greenhouse by Thinknum, our parent company, Reddit made a major hiring push in mid-2021. Its active job listings more than doubled from July to October. This effort may have been powered by the company’s latest funding round, which closed in August and valued the company at $10 billion. It began another recruiting push in the beginning of the current year, with job listings going up by 50%.
This potential IPO represents a big moment for a company that has undeniably earned itself a prominent place in the internet zeitgeist. Internet dwellers have long turned to Reddit’s online communities for loosely moderated bonding over shared passions ranging from tripping acid to admiring the CCP. Over years of playing host to strange worlds of bronies and NSFW video enthusiasts, the platform has contributed much slang to the pop culture lexicon. But the platform really showed its reach in 2021, when posters on r/WallStreetBets orchestrated a short squeeze of multiple stocks including GameStop and AMC. Until Reddit goes public, the term "Reddit stock" refers to securities hyped by retail investors on the platform. The successful effort to stick it to institutional investors sent shockwaves through Wall Street and may have inspired a DOJ inquiry into a number of prominent short sellers.
A company with a big role in internet history, Reddit has quite a history of its own. Its story embodies the spirit of Web2 entrepreneurship, with its college-nerd beginnings, minor trickery, and a corporate acquisition that left its founders feeling short-changed.
Reddit’s early days
The company traces its roots to a fateful spring break road trip undertaken by two college roommates from University of Virginia in 2005. While most of their classmates were likely doing keg stands in Miami, future founders Alexis Ohanian and Steve Huffman drove to Boston to attend a talk by internet entrepreneur Paul Graham. This ultimately led to their acceptance into Graham’s startup accelerator Y combinator, where they received $100,000 in seed funding for the ambitiously branded “front page of the internet” concept.
Soon after, Ohanian and Huffman teamed up with fellow Y-combinator entrepreneur and famed internet activist Aaron Schwartz to develop their fledgling startup. Though Schwartz joined Reddit about six months after its founding when it aquired another company he had founded, many consider him a co-founder (including Schwartz himself). However, Ohanian and Huffman have denied Schwartz this designation, and Reddit’s website currently acknowledges only two co-founders.
Reddit’s user base grew rapidly in the first months of its existence. The platform quickly came to rely exclusively on user-generated content to drive engagement (before then the founders created many posts themselves under fake usernames).
Getting acquired (and going corporate)
A little over a year after its launch, Reddit’s founders, who were then in their early twenties, sold the company to Condé Nast, unable to resist a $10 million offer. Ohanian and Huffman have since expressed regret over the deal that gave away what is now a multi-billion dollar company for such a meager amount.
They left the company some time after the acquisition to work on other projects, including the the now-defunct travel search engine Hipmunk. Both returned to full time work at Reddit in 2015. Huffman still serves as its CEO, but Ohanian resigned his executive board chairman position in 2020, asking to be replaced by a black executive, in a nod to the social justice movement inspired by the murder of George Floyd.
The free-spirited Schwartz found himself trapped in the stifling corporate environment of the new parent company. He shunned office work and was fired after returning from a prolonged vacation in Europe. Schwartz went on to work on internet activism projects devoted to advancing his vision that all court and academic data should be accessible to the public. He committed suicide in 2013 after facing criminal charges for allegedly using the MIT computer network to illegally download academic articles from the university JSTOR archive.
Though Condé Nast’s parent company still likely holds the largest stake, over the years Reddit has raised $1.3 billion from multiple investors. Among them are the likes of Fidelity, Andreessen Horowitz and, more controversially, the Chinese tech giant Tencent. The company plays a big role in internet censorship in China and Reddit’s willingness to accept $150 million from them in 2019, raised concerns about freedom of expression on the platform.
Growing, growing up, and growing pains
For a company that has gone through an acquisition and multiple changes in leadership, Reddit has been remarkably consistent in its product offering. Its website design had not changed for over ten years when it was updated in 2018.
Its forums still maintain a spirit of free expression by giving users control over which posts get amplified through the upvote/downvote system. Much of its content remains moderated in a decentralized fashion by subreddit moderators.
At the same time, the platform has entered the mainstream and continues to grow rapidly. Its monthly user count swelled to 430 million in 2019 and it now houses over 100,000 subreddits. According to data from Thinknum, Reddit’s App Store ratings have increased by almost a third in the past year. Ratings data is often used as a proxy for the number of app downloads. The growing user base has translated into increased advertising revenues. The company brought in $100 million in the second quarter of 2021, a 200% increase from a year prior.
On the hiring front, Reddit has outpaced even other popular social media platforms. Data from Thinknum tracking Reddit’s relative growth in headcount versus Twitter’s, based on how many people identify the companies as their employer on LinkedIn, reveals that Reddit’s growth track has been much steeper – though Twitter still has more employees overall.
As its reach expanded, Reddit faced mounting public pressure to be more active in rooting out toxic behavior in its communities.
The company responded by updating its hate speech policies. It has banned thousands of subreddits, among them r/The_Donald and r/donaldtrump, both popular forums for supporters of the ex-president. The latter was booted shortly after the attack on the U.S Capitol in January 2021 for its alleged role in promoting violence.
In short, Reddit is starting to act like a grown up, as the platform graduates from being a decentralized forum of internet dwellers with weird interests to a publicly-listed social media powerhouse.
About the Data:
Thinknum tracks companies using the information they post online, jobs, social and web traffic, product sales, and app ratings, and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.
