How Two Young Founders Turned a Dorm Project Into Internet Giant Reddit

Monthly Revenue

$8.33M

Starting Costs

$12K

Built in

28 days

Founders

Monthly Traffic

1,679,160,070

Profitable

Yes

Days To Build

Year Started

2005

Customer

B2B & B2C

Revenue Per Visitor

$0.00

Founders

Monthly Traffic

1,679,160,070

Profitable

Yes

Days To Build

Year Started

2005

Customer

B2B & B2C

Revenue Per Visitor

$0.00

Who is Steve Huffman?

Reddit was co-founded by Steve Huffman and Alexis Ohanian, both students from the University of Virginia. Huffman, a computer science major from Maryland, was the technical mind behind Reddit, while Ohanian, a history and commerce major from New York, handled its business and community aspects. They were roommates and friends in college before embarking on their entrepreneurial journey.

What problem does reddit solve?

Reddit addresses the need for a dynamic hub where people can discover and discuss a wide range of topics, providing a sense of community and immediate access to what's new and interesting online. Its success lies in its user-driven model and vast array of diverse subreddits, making it an indispensable platform for millions seeking both niche content and mainstream discussions, alleviating the isolation that can come from browsing the web alone.

How did Steve come up with the idea for reddit?

Steve Huffman and Alexis Ohanian came up with the idea for Reddit after their first business concept, a mobile-based food-ordering service called My Mobile Menu, failed to gain support at Y Combinator. Paul Graham, the founder of Y Combinator, saw potential in the pair but realized their idea didn't have the right timing or technology. Instead, he suggested they pivot and consider a web-based application, taking inspiration from sites like Slashdot and Delicious, which curated and shared interesting online content.

This suggestion sparked a realization for Steve and Alexis. They envisioned a platform where users could share and discuss the most current and interesting content from the internet, essentially creating a "front page of the internet." Steve, a programmer, started piecing together the site's fundamental functionality, while Alexis focused on the branding, including designing the iconic Reddit alien mascot.

Throughout the process, they iterated quickly based on feedback, emphasizing functionality over perfection. They faced challenges with creating an intuitive user experience and ensuring a welcoming community. Key lessons included the importance of adaptability, the value of a strong partnership, and learning from the failure and guidance of a mentor. This led to the creation of Reddit, which resonated with users and grew organically through word of mouth.

How did Steve build the initial version of reddit?

Steve Huffman and Alexis Ohanian built the first version of Reddit during a summer sprint at Y Combinator in 2005. They used Lisp as their primary programming language, leveraging Huffman's coding abilities to create the site's backend. The development process was intense as Huffman coded day and night, launching the early version of the site within a few weeks despite the pressure from Y Combinator's Paul Graham to expedite the launch. The initial product was minimalistic, focusing on allowing users to submit links and vote on them with up and down arrows, which were key to the site's functionality. Challenges during this phase included dealing with Graham's frequent feedback and criticism and the personal pressures of proving the site's worth despite its simplicity and initial lack of polish.

embed:tweet

What were the initial startup costs for reddit?

Initial Funding: Reddit was launched with $12,000 provided by Y Combinator.

How did Steve launch reddit and get initial traction?

Word of Mouth and Seeding Content

In the early days, Reddit’s founders, Steve Huffman and Alexis Ohanian, manually seeded the platform with content to simulate activity. They created numerous fake user accounts to post links and engage with the material, making the website appear active to new visitors. This gave the impression of a thriving community, which was crucial in making the site more appealing to actual users.

Why it worked: By creating the illusion of an active community, new users were more likely to engage and return to the site. The initial content also provided a framework for the type of conversation and interactions they desired to promote.

Paul Graham’s Support and Promotion

Reddit received significant initial traffic thanks to Paul Graham, the founder of Y Combinator, who was an early supporter. He promoted Reddit on his blog and in his essays, which introduced the site to an audience that trusted his recommendations. This endorsement brought in the first wave of users who were active and engaged.

Why it worked: Paul Graham had an established reputation and audience who valued his insights into new technology and startups. His endorsement helped Reddit gain credibility and initial traction among tech-savvy users who were likelier to engage with a novel platform.

Hacker Community Engagement

Reddit naturally attracted a tech-savvy crowd due to its origins and the links posted by its founders and early users, many of whom were from the Y Combinator network. The platform’s simplicity and focus on user-driven content resonated with this audience, who appreciated the straightforward, uncensored nature of the site.

Why it worked: The users drawn to Reddit were interested in technology and online communities, similar to the types of content and discussions happening on the platform. This alignment helped sustain engagement levels and contributed to organic growth as these users invited their networks.

Metrics:

Paul Graham initially brought in about 1,000 unique visitors.
Reddit experienced a steady increase in traffic, consistently growing without large spikes but rather through continued word-of-mouth and user engagement.

What was the growth strategy for reddit and how did they scale?

Word of Mouth and Organic Growth

Reddit's growth largely stemmed from word of mouth and organic engagement. Co-founders Steve Huffman and Alexis Ohanian initially drove traffic by personally engaging with communities and sharing content. This approach created a genuine user base as people who visited were attracted by their interest in the platform's unique content and functionality. Unlike some competitors, Reddit didn't rely heavily on PR but grew through users appreciating its content and simplicity, leading to steady, organic growth over time.

Why it worked: The authentic community focus resonated with users, fostering loyalty and encouraging them to share Reddit with others. The platform’s simplicity and user-driven content ensured that visitors found value and kept returning.

Seeding Content Manually

In the early days, Huffman and Ohanian were active users themselves, manually seeding content to create the illusion of a bustling community. They used fake accounts to populate the site with content, making it look active and engaging when new users arrived.

Why it worked: This approach helped overcome the challenge of no initial user base. By providing initial content, they gave users something to interact with, encouraging real users to stick around and contribute further, which eventually drove organic growth.

Community Engagement and Features

Reddit's flexibility with features like user moderation and creating subreddits was pivotal. Allowing users to make and manage their own communities (subreddits) in 2006 was a major turning point, leading to specialization and deeper community involvement.

Why it worked: This user empowerment created investment in the platform, as people could shape their own communities. The subreddit model allowed Reddit to scale content and interaction without a central group needing to manage everything, making it sustainable and diverse.

Limited Moderation and Open Dialogue

Reddit prioritized a platform where content wasn't excessively censored, allowing users freedom (within limits) to express themselves and engage with one another. This level of openness was a key differentiator from other platforms.

Why it worked: This approach cultivated a sense of ownership and vibrant discussions among users, encouraging them to return and engage deeply with the content, which further aided viral growth through shared interests and debates.

What's the pricing strategy for reddit?

Reddit employs a freemium model with its core features being free, while offering Reddit Premium at $5.99 per month for ad-free browsing and additional features.

What were the biggest lessons learned from building reddit?

Adapt and Pivot as Needed: Reddit initially started with a phone-based food-ordering idea but pivoted when it was clear the market wasn't ready. They switched to creating a web app and eventually the “front page of the internet” idea, showing flexibility in focus leads to success.
Build and Grow Communities: Early on, Reddit manually seeded content and created fake accounts to simulate activity, demonstrating that doing things that don’t scale at first can help build traction.
Simplicity Sells: Reddit kept their design simple and focused on text and content, rather than flashy graphics, ensuring speed and functionality, which resonated with users.
Encourage User Contribution: Allowing user-generated content and the upvote/downvote system created a sense of community and ownership, drawing people back to the site and encouraging organic growth.
Stay Resilient Through Criticism: The founders faced early rejections and harsh feedback but persisted. This resilience and ability to handle criticism enabled them to launch despite initial setbacks and skepticism.

reddit Acquisition: How much did reddit sell for and what was the acquisition price?

Reddit was acquired by Condé Nast for approximately $10 million in 2006, just after they launched Subreddits, significantly impacting the site's growth trajectory.

Discover Similar Business Ideas Like reddit

How I Grew A Niche TikTok Account To 155K Followers

Dohyun Kim shares his journey starting as a software engineer on YouTube and pivoting into short-form content on TikTok and Instagram with 155,000 followers and 11,000 subscribers, currently averaging $3000/month across ad money, sponsored content, and course sales.

$2.5K Monthly Revenue

Read by 4,253 founders

How I Make $120K/Year As A Travel Filmmaker And Photographer

A nomadic Canadian filmmaker started their creative business six years ago and now has over two dozen loyal clients scattered across six different countries, earning between $7000-15000/month, with a website built on WIX and no traditional marketing approach, relying on word of mouth and social media, they operate like an agency these days aiming for more meaningful work.

$10K Monthly Revenue

Read by 4,128 founders