Alexis Ohanian is the co-founder of the social news aggregation website Reddit. Shortly after graduating from UVA, he and classmate Steve Huffman founded the company with startup capital from Y Combinator, and in 2006 it was bought by Condé Nast. Ohanian stayed on for three more years until he retired to pursue a Kiva fellowship in Armenia. In 2009 he founded Breadpig, an "uncorporation" that creates and sells "geeky products" and donates all its non-sustainable profits to charity.
Question: Why is Reddit so hard to monetize? Is it hard to sell ads on Reddit?
Alexis Ohanian: I think there’s a lot of education that comes with a site like Reddit. And it is also – it is a different sell. So not only do you have to go to the agency and say, “okay, here’s how this site Reddit works.” And when they ask a question like, “Well what happens if some user votes up a story that says, ‘this brand is lame.’ And you have to say, “Well the smartest thing they can do is have someone reading reddit or who is willing to be notified when this happens and gets in on the comments and says, -- they create the user name that’s like BrandXRepresentative, and then they get into the comments and don’t – you know, they don’t stoop to like trollish flame war levels, but they actually have a discussion. And what’s so frustrating is so many small companies, I’m talking one or two you know small business – one or two person small businesses have done this so incredibly well on Reddit. I mean, soap companies, hot sauce companies, random software, hosting companies have done this brilliantly, brilliantly. And the only reason they – I mean, their benefit to dollar ratio is phenomenal, and the only reason they can get away with this and the only reason they can do this so effectively is because they actually use Reddit. Like they actually understand the community, they are participants in it.
And it really frustrates me whenever some social media guru gets on stage or tries to convince some company that they need to be hired when, even in the – especially in the large companies, there must be someone there who is spending a good part of their day actually in the Reddit community, make her your social media guru. That’s it. Just tell her, listen, you’re getting some new responsibility now, here are the things you’re allowed to say, here are the things you’re not allowed to say. Anytime our company comes up, have a discussion. Say it and give them the freedom and I’m sure that’s scary as all hell for some every publicly traded company, and I don’t know jack about running one of those. But it’s been great watching smaller businesses have a field day because they are – businesses are being saved on Reddit because people come onto that site with candor and there are business people just like some suited or publicly traded company. They are working for a for-profit company, but they’re doing it as Redditors. And the difference that makes is just phenomenal.
And so even though we try to work really, really hard to work with these advertisers and some of the much better than others and been willing to go that extra level to do a bit of leg work on their end or have a bit of more openness on their end. And I think it’s paid off tremendously.
Question: What was it like working with Condé Nast?
Alexis Ohanian: Okay. So for the three years that I was there and that Steve was there, we had a ludicrous amount of autonomy. And I mean, we would come in for quarterly meetings and we would present a couple of slides that showed traffic and that showed, fortunately, that went up and it showed what we were going to work on, what we did work on and what we will work on. And that was it. We’d have some discussion and then we’d go back to California. And that was wonderful. That was really, really splendid. I think we, you know, we made an agreement and the reason why it was such a palatable acquisition for us was because he had heard so many horror stories. You can’t walk two feet in the Bay Area or at Silicon Valley or in any startup community rather – any startup community and not hear about a horror story about some acquirer crushing the souls of the company the bought. And this oftentimes happens at tech companies.
So imagine what we were thinking when a publisher, like **** wanted to acquire us. We thought, well what do they know about tech? you know, they have no idea about how deal with, you know, engineers how to deal with all of that stuff, but to their credit they said, “Listen, you guys are doing something well, that’s why we want to buy you. So logically, we’ll let you continue doing what you’re doing under the auspices of our company now. You’ll get health insurance; you’ll get a salary, which was nice. And you’ll actually operate as you did before except you know, you’ll have a nice office instead of your crappy living room. And we said, “Okay. That seems like a good deal.” And for the most part, absolutely lived up to it; absolutely lived up to it. And I think – I can assure you, Steve would; not have stuck around for three years if that weren’t the case, and he did. And I did too.
So, what I think – when I think things got tricky though is when – when it came to actually monetizing Reddit. That is something they’ve still not been able to figure out. The team has come up with some great stuff in the way of self-serve sponsored headlines, Reddit Gold, different other ways to bring in revenue and merchandise, but it is a tricky proposition, but also a really frustrating one because Reddit has a fantastic audience. One with 300 million page views a month. I mean, it’s absurd how much traffic Reddit has. And so it’s just a matter of finding a way to say, “all right, we have 300 million impressions of a very, very like connected, like very thoughtful, very just impressive audience, how do we advertise to them in a way that isn’t screwing them as a user and at the same time providing enough value to an advertiser to want to do it.
And I think it can be done, but we’re still working on that.