The Prof G Pod with Scott Galloway
First Time Founders with Ed Elson – The Story of Reddit
Sun, 04 May 2025
Live from YPO’s Global Entrepreneurship Summit, Ed sits down with Reddit co-founder and CEO Steve Huffman. They discuss the company’s IPO journey, his unique approach to investor relations, and how Reddit navigates the complex world of content moderation. Learn more about your ad choices. Visit podcastchoices.com/adchoices
Chapter 1: What is the story behind Reddit's founding?
Well, I got out of her basement and I'm still a power user. We all have to start somewhere.
We'll take it. And thanks for having me here today, folks.
So this is going to be a regular First Time Founders episode as usual, but we've also collected some questions for you that we gathered on Reddit. So I'll be doing a regular interview, but we'll also sprinkle in some of those questions as well. And I want to start at the beginning. The year is 2005. You're a senior at the University of Virginia. You're studying computer science.
And you and your roommate, Alexis Ohanian, have this idea not to start an online message platform, but to start a food delivery app. Which is strange. So tell us the story of Reddit. How did we get here?
So, yeah, this was early 2000s. I had had this idea... of people ordering food from their cell phones, which I think would later become a good idea, DoorDash and what have you. But back then, there were some pretty big limitations on it. One is not everybody had cell phones. Two, cell phones didn't really run software. And three, restaurants weren't on the internet.
So something we pursued, and that led us to Y Combinator. And so Y Combinator had kind of, during this beginning part of the story, became. YC didn't exist at the beginning. A few weeks later, after we met Paul and the team, YC did exist. We applied with a food idea, but we were ultimately rejected.
But Paul and the YC teams, this is Paul Graham, and the Y Combinator team invited us back to basically figure out what else we could work on. They liked us, but not that idea. And so that something else would end up becoming Reddit. And so I think it was a good call on YC, I hope. One, on not doing a food thing, and two, on bringing us back. It seemed to have worked out for everybody.
But I think it goes to show that... you know, ideas are not necessarily the hardest part in, in, in getting things off the ground. I think great teams can bring, uh, uh, can, can, can do a lot with many ideas and, and not great teams can, you know, ruin the best of ideas. And it's really hard to tell in the beginning, what's a good idea and what's a bad idea.
And the food, the food one's a great example because You know, we could argue both sides of it. I don't know if it's a good idea eventually. I don't know if it was a good idea then. I don't know if we would have been able to get that one off the ground then.
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Chapter 2: What were the challenges of Reddit's early growth?
That was kind of half the idea for Reddit. And the other half of the idea was from Slashdot. And so I was a big Slashdot user. And Slashdot's still around. You can go to Slashdot.org. The website is a list of links, basically, headlines to tech news. But what was really magical about Slashdot was the community that lived in the discussion about the news.
And the news was really just the prompts for conversations. And so it's really these two ideas, this kind of like bookmarking, user-powered dynamic platform with a community that lives in the conversation about these things. And so that really was the genesis of what would turn into Reddit.
And that really still is the core of Reddit today, which is communities of people having conversations about things on the internet.
So you start the company, around 12 months go by, things are going well. And I don't think people realize this, but you sell the company. And I would call that an extremely early exit. You stick around for a few years, but take us through your decision to sell. Why did you sell the company so early on?
Paul started a company in the bubble called ViaWeb. ViaWeb pioneered e-commerce. Their company got bought by Yahoo. It became Yahoo's store. And so it was one of the first kind of big e-commerce plays on the internet. And Paul would write essays talking about startups and evangelizing startups as a path to creating wealth.
And so that was kind of the spirit of Paul and the spirit of Y Combinator is you start a company, you know, your advantage is you can, you're young, you can work really hard. You don't have any preconceived notions about what products should or shouldn't exist. And the end of the story is, and you sell your company to a bigger company. And so that was just kind of the prophecy.
And so NYC, we started this thing, Reddit, And then Condé Nast, also known as Advance, I'll use those words interchangeably, but Advance is the technical name of the parent company, offered to buy us. And so we thought we were just fulfilling the prophecy. And when we ultimately, you know, when the offer came in, I was still 21. I didn't know... what success looked like.
The advice I'd give to founders now is never sell a winner. But Reddit didn't feel like a winner to me. I think if we went back and looked at our numbers, there'd be signs of that, like we were growing and we didn't know why. That's a great sign, right? If you have so much product market fit, you don't know why your product is working. But we didn't really know that at the time.
At the time, it felt like we were dysfunctional internally. we didn't really know what to do. We didn't really know how to fundraise. There's just so much, I think, ignorance and naivete that like when a company came and offered us real money for this thing, we were like, we would be really silly not to take it. I think we would have been silly not to take it.
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Chapter 3: How did Reddit handle content moderation?
When you came in to today, what would you say are the biggest changes that you made that had the biggest positive effect on the company?
There are a lot. The big ones... The big ones I think are relevant to any company. Maybe all of these are relevant to any company. The biggest one is we have to use some common sense. And so this is back to the story I was just telling, which is it's not change and die, it's change or die. And asking the question of what is this platform for? What experiences do we want people to have on it?
And what do we need to do to get to the best version of ourselves? And you have to be willing, I think, to throw out things that you once believed. And you have to be willing to evolve and grow and look at the world through the lens of reality, not the lens that we maybe had when we started the company, you know, whenever that was 10 years prior.
Yeah.
And that's still something I tell the company. It's like, you have to have common sense, you have to use good judgment, and you have to think about like, is this product good? Is this a place people want to be? What is the difference between where we are and where we want to be? And you have to be willing to change things to get there. That's the biggest one.
It's just common sense and being practical. Another big change for Reddit was we weren't running as a business. we were really idealistic. And I think in many ways, the idealism has been very good, but we're also idealistic about not being a business, which is not a great way to run a sustainable business. And so we had to figure out, okay, what is our business model? Ended up being ads.
And how are we gonna do this in a way that fits with what we want this platform to be, fits with our values and so forth. Um, and then there was a kind of similar, um, minded things, which is like the company just wasn't, they were so afraid to make changes and to ship. And that wrapped up in some of that idealism was also like not working very hard.
Um, you know, and it's just like, look, we have to work really, really hard. Um, we're in a competitive space. What I think what Reddit provides people, the sense of community and belonging is really important.
And if we don't work really hard and work really smart and make this thing successful, both from a user's point of view and business point of view, then we don't get to do this and we'll never achieve our mission.
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Chapter 4: What lessons were learned from Reddit's IPO?
We'll be right back. I don't think you knew anything. I knew very little. Tell us a little bit about your company for people who don't remember, Rogo.
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The issuance price was $34 a share. It's now sitting at around $100 a share. So it's been a pretty good year for you. It was this morning. Things are changing. Last I checked, You're at around 100. What have been some of the main learnings about going public? What are the biggest differences between running a private company versus now today running a public company?
The biggest differences are really obvious. We have a public share price. We have certain requirements that we have to live up to in terms of disclosures and transparency and so forth. And we have now a massive shareholder base versus having just a handful of private institutional investors. Now, Because of all of those requirements, we are a better business, for sure.
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Chapter 5: How does investor relations work at Reddit?
And so I wanted that sense of ownership to be actual ownership. And so one of the reasons we went public is I thought being public actually fits the spirit of Reddit, right? Transparency and public ownership, like those are really important concepts to Reddit. And so we wanted our users to be, or have the opportunity to be owners, shareholders.
So throughout the entire IPO process, from including our user base in the IPO, as in we made it accessible to every user of the platform to buy Reddit stock at the IPO price. Not the first trade price, but the price that we've sold stock to, to the bankers and professional investors, we also sold to our users.
So that means every user who took advantage of that got to enjoy the pop, which is not usually the case in an IPO. Usually retail comes in after the pop. which is why the pop feels so unfair.
So we said, we wanna bring them in at the pop and we wanna give them as much information as we can the same way we would to the professional investors so that they can make smart decisions there or make the best decisions for themselves. So we did that in the IPO process and we continued to do it every quarter now.
So we do our earnings, we do our investor callbacks and then we go onto the platform and we solicit questions from the community every earnings. And then we answer as many of those questions as we can. So I, our CFO, Drew, and our COO, Jen, we try to do it in one take. We'll do a 30 minute to an hour, one take.
We'll just rip through as many user questions as we can and giving them the most fulsome answer that we can. Their questions are, I do think yes are a little more interesting than what we get on the earnings calls. And I think both are valuable though.
So we get a lot of the kind of technical quarter to quarter, you know, what's your revenue, what's your traffic, what's the next quarter going to look like calls on the earnings calls. And then from our users, they're like, why'd you fuck up this feature? And like, what are you doing next? And like, blah, blah, blah. It's like super interesting stuff. And I really enjoy doing it.
I love talking about Reddit. Yeah. And we're seeing traction in that community pick up, so we've been doing it a year. And we'll just keep doing that. I think it's the right thing to do, and it's a lot of fun.
We had a listener question about the subject from user OccamsRacer. They say, what lessons did you learn from including Reddit members in the IPO, and would you do it again? Sounds like the answer is definitely yes.
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