Reddit: Organized Lightning

One of social media's oldest companies is also its most undervalued.

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Late Checkout.

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“You ever stop to realize how fragile all this is?”

George Carlin wears a black long-sleeved t-shirt, hunched over a microphone. In the minimalism of his outfit and the starkness of his bald pate, he almost resembles a tech executive delivering a keynote. But he’s too rumpled for that, too delightfully sour, as if a satyr stumbled through Steve Jobs’ wardrobe.

“It wouldn’t take much to throw us right back into barbaric times. All you’d have to do would be eliminate electricity.”

Carlin continues, embarking on one of his trademark quite-frightening-very-funny tirades, the flashes of incandescent, articulate fury that made him a genius. No electricity means no lights, he explains. No batteries. No fuel. No water. No computers. It means jail doors springing open, crime flooding the streets.

It’s a bleak, bitter joke and serves as a coherent expression of Carlin’s particular weltanschauung: life is a sleepwalk along a knife-edge. It also shades his view of electricity and what it represents. When harnessed, it’s a mollifying, enlightening force; the thin membrane between civilization and barbarism.

If Carlin is all rapid-fire verbosity in his 2005 set, he’s an expert of restraint in a complementary line:

“Electricity is just organized lightning.”

There are a hundred ways someone might describe a company like Reddit, but this is what we think of most. In its particular energy and vibrancy, its wild potential and ugly foibles, its kindness and cruelty, the social media platform occupies the liminal space of Carlin’s electricity. Just as it is close to some of our unseemliest instincts, so too is it a vehicle for creativity and connection. In short, Reddit is organized lightning. As the conductor of cultural currents, it may have more upside than any other social media company.

In this piece, we’ll explore:

1. Reddit’s topsy-turvy history
2. Why it’s undervalued
3. Where the company is headed
4. The Galaxy Brain moves to take it to the next level

r/History

Few companies have the narrative arc of Reddit. It’s a classic hero's tale with a call to adventure, challenges and setbacks, and a triumphant return.

The beginning

The same year that Carlin delivered his iconic set, University of Virginia roommates Steve Huffman and Alexis Ohanian took a drive. They headed for Boston, where computer scientist, writer, and entrepreneur Paul Graham was scheduled to give a talk.

Huffman, a computer science student himself, was the motivating force, but he would have Ohanian to thank for brokering a meeting with Graham. As the story goes, at the end of the talk, Ohanian asked if Graham would come out to a drink with them. Over a few beers, Graham encouraged the pair to apply to his new incubator in Cambridge: Y Combinator.

Like so many others, Ohanian and Huffman didn’t get in with their first idea. The pair pitched “My Mobile Menu,” a way to order food via text. While Graham didn’t like that MMM, he invited them to come back to Boston for a brainstorm. By the end of an hour, they’d hit on a new mission: build the “front page of the internet.” Reddit was born.

It didn’t take long for the founding duo to ship v1. Written in Graham’s beloved Lisp, the site served as a fairly straightforward link aggregator that allowed for upvoting and downvoting. The first 100 accounts on the site were created by either Ohanian or Huffman to give the appearance of activity. A snapshot from the site from that period (thank you WayBackMachine) illustrates just how much of the culture was baked in early on, featuring conspiracy theories, wonkish dev chat, strong opinions, and “spez,” Huffman’s username.

‍Growing pains and the acquisition

Soon enough, Reddit added a third member. Aaron Schwartz, a coding prodigy also in YC’s cohort, merged his project, Infogami, with the company and hopped aboard. As Schwartz later told it, his reprogramming of the site from Lisp to Python coincided with a meaningful uptick in traffic:

When I first started at Reddit, growth was slow. The site was put online very early — within weeks of starting work on it — but for the first three months it hardly got above three thousand visitors a day, which is about baseline for a useful RSS feed. Then, in a couple weeks of marathon coding sessions, we moved the site from Lisp to Python and I wrote an article about it for my blog. It got a lot of attention — Hell hath no fury like a Lisp fan scorned — and even today I still run into people at parties who, when I mention that I worked at Reddit, say "Oh, the site that switched from Lisp."Around that time traffic really started taking off. In the next three months, our traffic doubled twice.

Reddit was off to the races, though it wouldn’t follow the parabolic growth trajectory of other social media companies. Instead, the site grew rapidly but relatively steadily. Still, even after the company reached millions of visitors a month, generating revenue remained a challenge. Again, from Schwartz:

We still had no idea how to make money. We sold t-shirts on the site, but every time we made a little bit of money on those we spent it on ordering more t-shirts. We signed up with a major Web ad representative to sell ads on our site, but they never seemed to be able to sell any ads for us and we rarely made more than, literally, a couple of dollars a month. Another idea we had was licensing the "Reddit technology" to let other people build sites that worked like Reddit. But we couldn't find anyone who wanted to license it from us.

That context explains why Reddit was tempted to sell just a year after founding, giving up ownership to Condé Nast for a reported $10 - $20 million. (The deal closed on Halloween). Over the following years, that initial trio drifted away from the company: Huffman to found Hipmunk, Ohanian to a Kiva Fellowship, and Schwartz to pursue web activism. (As you may know, Schwartz would go on to commit suicide in 2013.)

Reddit continued to grow under corporate ownership, though it's hard not to feel a shadow hanging over that trajectory. What might have been had the company capitalized instead of selling? How might Huffman, Ohanian, and Schwartz have stewarded Reddit and developed the product with the right support?

The comeback

Perhaps recognizing it was not the best guardian of a social media business, Condé Nast spun Reddit out in 2011, with parent company Advance Networks serving as a passive shareholder. Yishan Wong joined as CEO the following year, leaving in 2014 after the company refused to move its HQ closer to his home in Daly City. He was replaced by Ellen Pao on an interim basis with Ohanian returning as executive chairman. When Pao was ousted in 2015, driven out of her role by a user base incensed over the firing of a popular Reddit employee, Huffman stepped back into the CEO seat. The band was back together.

It’s hard to overstate just how central Reddit was to pop-culture over the decade that saw Ohanian and Huffman found the business, sell it, and return once more. In both good and bad moments, the valorous and vile, Reddit was there. It served as the de facto town square for events like “The Fappening,” the Sony Pictures hack, the Boston Bombing, GamerGate, and Pizzagate.

Since retaking the reins, Huffman has shown a desire to grow Reddit’s product and stamp out the site’s most toxic elements. The mobile experience was improved. The site was redesigned. Video was introduced. And, thousands of hate-filled subreddits were expunged.

Concerns that a more hands-on approach to moderation would curb the anarchic good-times vibe of the platform have been emphatically repudiated this year, with Reddit the ground-zero for the epic GameStop short squeeze.

Despite being one of the internet’s most popular websites, sixteen years after it was founded, Reddit feels like it's just getting started.

r/Value

Reddit is one of the most misunderstood and undervalued companies in the world.

A little over a week ago, Huffman announced the company had raised $250 million in new capital at a valuation of $6 billion. The round was led by Dubai-based firm Vy Capital, with follow-ons from a16z, Sequoia, and Tencent.

To which we have to say: $6 billion? That’s it? ‍

In a world in which Clubhouse is worth $1 billion after a year of (impressive) traction, and Dispo is pegged at $100 million for an app still in beta, Reddit — cultural petri-dish, bastion of expression, distributed hedge-fund, meme-maker, group-therapist — is only worth $6 billion?

A thought experiment

Humor us. You’re given the chance to look at two social media companies. Your job is to pick the one that you think has the highest valuation. Here are a couple details.

Company 1

• MAUs: 353 million
• MAU growth YoY: 7%

Company 2

• MAUs: 430 million
• MAU growth YoY: 30%

Now, you’re right to be a bit grumpy with us. You don’t have much to go on, right? No revenue, no costs, no churn. How are you supposed to figure out which is most valuable without that information? But if any space is defined by user growth, above anything else, it’s social media.

So which do you choose?

Company 1 is Twitter, worth $58 billion. Company 2, with more MAUs and 4x the growth, is Reddit. From a growth an engagement perspective, Reddit compares favorably to many of social media's public behemoths with close to the same number of MAUs as Pinterest.

Yet, the implied value of a Reddit user is criminally low:

‍ Public and private market investors effectively value a Facebook DAU at 3.5x the price of a Reddit one, and a Facebook MAU at 19x of the Reddit equivalent.

Explanations and misconceptions

What is the rationale behind this aggressive discounting? We think it stems from outdated historical data and an anachronous view of the product.

Sure, historically, Reddit has done a poor job of bringing in revenue on a per-user basis. In 2019, Reddit was said to have an average revenue per user (ARPU) of $0.30, much less than Facebook at $7.37, Twitter at $9.48, Pinterest at $2.80, and Snap at $2.09. But the revenue figure this calculation was based on was over 8 months old at the time, and the succeeding two years have seen strong strides in product and advertising. For example, advertising revenue was up a reported 90% year-over-year in Q4 of 2020. ARPU is likely considerably higher today.

Another common argument is that Reddit users are less valuable because of the pseudonymity of the platform. Previously, you could sign up for an account without registering an email. That meant the company had less personal information about you, making targeted advertising more difficult and less valuable. But this is no longer the case. You now need an email to sign up, and as for relevant information...well, Reddit is quite literally a mapping of your interests. Joining r/Bitcoin is a pretty good sign you might be interested in a BlockFi advertisement while hopping into r/entrepreneurship makes you a good target for Stripe.

Ultimately, the valuation displacement may come from misunderstanding and the stubbornness of outdated perceptions. Reddit is not a new name. And, in its design — despite improvements — it feels antiquated, still more similar to Craigslist than TikTok. But there are signs management is, finally, thinking big.

r/Roadmap

That more expansive thinking wasn’t necessarily expressed by Huffman after the recent round. Instead, the CEO noted that “our strategy isn’t materially changing.” At the same time, he outlined the company’s desire to expand geographically and push its video efforts.

In addition to those stated interests, management also seems invested in crypto. Before making a few recommendations of our own, we’ll dig into these three initiatives.

Video

Reddit was slow to bring video onto the platform, only adding native capabilities in 2017 (video ads were available for several months prior). Since then, it’s become a more prominent feature with the homepage often showcasing popular clips.

The company followed that up with the introduction of live streaming in 2019, through a program called the Reddit Public Access Network. RPAN, as it is now known, allows select broadcasters to stream for 2-3 hours each, with time extensions earned through user rewards. Certain subreddits (r/talentShow, for example) offer live streaming outside of those windows.

RPAN is still relatively new but it represents an interesting experiment for a few reasons.

Firstly, because it provides a default for users. For so long, Reddit has been the platform of information overload: newcomers to the homepage are overwhelmed by the sheer density of information. RPAN changes that calculation. Instead of having to pick your way toward an interesting post, you can drop into a stream that’s been chosen for you. By restricting, Reddit offers a less cognitively-complicated way to browse.

Secondly, RPAN reinforces spending behavior. In addition to selling ads, Reddit monetizes by selling “coins” to its members. These can then be used to tip or “gild” other users for their contributions to the platform. Data from Subreddit Stats illustrates that gilding per subscriber is highest in communities with RPAN availability.

‍ Intuitively, this makes sense. Live performances have a certain intimacy and allure that encourages spending. To the extent that Reddit wants to create a culture of user generosity and build an endemic economy (think Roblox for snarky adults) RPAN may serve as an educating force.

Beyond RPAN, those interested in the company may wish to keep a lookout for more interactive video features to emerge. In December, Reddit announced it was purchasing Dubsmash, a short-form video platform similar in tone and functionality to TikTok. As part of the deal, Dubsmash will remain independent but Reddit will begin to integrate the company’s video filtering.

Perhaps just as critical as this new functionality is the audience Dubsmash brings. While Reddit skews male, Dubsmash is 70% female. It’s also a markedly diverse platform, with a reported 25% of black teenagers in the US on the app.

Our takeaway from all of this? Video has historically been an amphetamine for social media platforms — speeding up growth and supercharging engagement. That Reddit is so far behind here is worrying in some respect, but the recent moves and acquisitions show a desire to take it seriously. The upside of that decision could be significant.

Geographical expansion

For all of Reddit’s domestic popularity, the Gospel of Snoo has a rather limited following outside its native land. Of its roughly 430 million users, 222 million come from the US, over 50%. The drop-off after that is severe, with Australia providing the next largest tranche at 17.5 million, and India in third with a bit over 13.5 million.

Statista

If anything, these figures reinforce the importance of a viable video strategy. Reddit has two disadvantages in terms of internationalization when compared to other social networks:

Text-first

Why does TikTok export so well? Because video is universal (or at least relatively so). A funny clip in one country is often funny in another. Moreover, music — at the heart of a platform like TikTok — has global appeal. The result is that content in an English-speaking country can go viral just as easily in a French-speaking one. Reddit doesn’t have this luxury. Since most of its content is written in English, its appeal is fundamentally limited in non-English speaking countries.

Group-based

But, we hear you say, what about Twitter? Isn’t that fundamentally text-first too? You’re right. But the social graph on Twitter, as with many other networks, is organized on the individual level. Yes, you can follow “Topics” if you want to, but mostly you subscribe to hearing the thoughts of a particular person. That’s great for you as a user: the minimum viable number of users required to create a new source for your feed is 1. By following a single person, you start seeing their content. That granularity and low user to source ratio makes it easy to construct a feed of interesting information in the language of your choosing.

Reddit is a little different. You don’t follow an individual (you can, but it’s not the default), you choose to follow a community, and a community is only valuable once a certain number of users are involved. As a result, the minimum viable number of users required to create a new source for your feed is higher.

This is a challenge for internationalization. If I’m an Urdu speaker interested in history, the r/history subreddit is of limited use to me. Sure, I can translate if I want to, but that's a cumbersome, time-consuming experience out of line with the frictionlessness of consumer internet products. Instead, I have to segment by both interest and language, hoping there's an equivalent community available. And even if it is, for it to be sufficiently attractive, that community needs a user count (n) > 1. Realistically, it may need n > 50.

With those challenges in mind, it’s intriguing to think about where Reddit might want to grow its presence. Looking at the company’s Career page offers a few hints. ‍

These are intriguing choices. Both France and Germany are affluent and have large English-speaking populations, making it easier to get off the ground and grow or maintain ARPU. Moreover, building a dedicated presence in these countries allows Reddit to accumulate native content in German and French. Neither are large markets today: Germany has a little under 4 million Reddit users while France has a meager 1 million. There's an opportunity to realize meaningful revenue from both markets.

Thinking about what comes next provokes more excitement. France and Germany may serve as testing grounds for pushes into Spain and Portugal. While the first two languages have roughly 150 million native speakers worldwide, the latter two boast 701 million. By establishing an active base in Spain, Reddit accumulates communities that can be accessed and enjoyed by users in Mexico, Argentina, Colombia, and so on. The same applies to Portugal and Brazil.

For now, Reddit’s expansion looks fairly cautious. But in due time and with the right selection, it may greatly expand its reach.

Crypto

While Facebook fumbles through the wreckage left by the artist formerly known as Libra (now Diem), Reddit has rolled out some promising integrations of on-platform cryptocurrency. Built on top of Ethereum, Reddit has minted endemic currencies for two subreddits: r/CryptoCurrency and r/FortNiteBR.

For participating and creating content on r/CryptoCurrency, users are rewarded with “Moons,” which can be subsequently used to purchase special badges, or additional functionality (like responding to posts with a GIF). The size of your holdings also affect your influence on polls held by the subreddit: the richer you are, the more your vote matters. A similar system exists on r/FortNiteBR with fans of Epic’s game receiving payment in “Bricks.”

As it stands, this effort is not particularly revolutionary, with both currencies functioning similarly to loyalty points. But it lays the groundwork for a more extensive push into creating a native economy. And, in the meantime, it further normalizes the tipping culture that Reddit uses to monetize.

While Huffman might downplay Reddit's dynamism, it’s apparent from these projects that plenty is going on beneath the surface.

r/GalaxyBrain

Former CEO Yishan Wong said, “In the context of social media, Reddit is more about the media than the personalities.”

As part of the Huffman revolution, the company should rethink that positioning. Moreover, it should make no-brainer improvements to the core product, make it easy to transact, lean into its most ludic elements, and ultimately, unbundle itself.

Here are our nine suggestions, organized from easiest to trickiest, simplest to most profound.

No brainers

Reddit has never been the most adventurous product organization. When Huffman returned in 2016 the company had one iOS developer. For years, Redditors used third-party clients to access the site on their phones. And while a comprehensive redesign was rolled out in 2019, it leaves plenty to be desired. There are three no-brainer improvements Reddit should make.

Redesign browsing

When you visit the homepage or a subreddit, you’re faced with a list-view of different posts. To see one of them, you click it. To see comments, you have to click again. To go to the next post, you have to page back, scroll, and click again.

In theory, this isn’t so different from Twitter. But because of the relative information density of a Reddit post, it quickly becomes cumbersome. To get to the part you care about, you have to click twice. To see something new you have to click another two times.

Compare this to something like Imgur. The platform was started as a way for Redditors to host photos, another example of Reddit allowing others to fulfill core functionality. Today, when you visit Imgur, a card-based feed organized by virality appears. So far, this isn’t so dissimilar to Reddit. Once you click a card though, things change: you’re thrust into consumption mode. By paging left or right, you automatically see the next post, along with all associated comments. This a powerful change, making it easier for the user to quickly find the content they care about instead of clicking in and out of different posts. It also makes serving ads more compelling — instead of a sponsorship taking up a fraction of the page that a user can quickly scroll past, ads on Imgur look exactly like a post and you default to seeing them in your browsing flow.

Why hasn’t Reddit done this already? It may speak to a lack of confidence around the broad appeal of “hot” posts or insecurity around the company’s recommendations. This brings us to our next point…

Improve recommendations

Even after a user subscribes to a particular subreddit, recommendations are unengaging. Just as importantly Reddit doesn’t do a good job of suggesting newsubreddits to check out and join.

This is hard to quantify, so let’s look at one of our profiles. Now look, I’m something of a lurker on Reddit, enjoying the comments of others but rarely participating myself. To that extent, perhaps the company doesn’t know that much about me, even though I belong to a couple of dozen communities.

When I visit the homepage today, here’s what I see:

What do I have to choose from? Two r/wallstreetbets posts (very rarely visit), one r/CareerSuccess post with 0 comments and 1 upvote (can’t remember ever visiting), a r/VenturedCapital blog with 0 comments and 1 upvote, a r/science post with an insanely long headline that I will certainly not read while browsing, an even longer headline from r/uselvid, a live stream with no information, and something from r/ThatsInsane that looks vaguely entertaining.

These are the best eight posts Reddit could find to grab my attention?

Now, let’s look at the suggestions the homepage makes. It shares the day’s “Top Growing Communities” and “Trending Communities.” As a user, it’s unclear what the difference is between the two, and it’s also obvious they haven’t been chosen for me.

Does it make sense that I’m being encouraged to check out the German Netflix community? How about r/CasualIreland, r/Munich, or r/StadtEssen? (Looks like they may have found that German country manager after all…)

The dreadfulness of this page is infuriating partially because it would take so little to make it better. Why not show me communities similar to those I’ve signed up for? (And message that in copy). Or show me subreddits that people I’ve interacted with belong to?

Make search functional

The final no-brainer improvement Reddit should make is improving its search function. Again, it’s somewhat mind-boggling that the company has reached this point without a better solution.

Reddit is one of the largest compendiums of fascinating information on earth. It has over a decade of nuanced, interesting, informative conversation to be discovered, each embedded within a distinct community. But finding information within a community is nigh-on-impossible because Reddit’s search cannot be limited to a certain subreddit. That means if I want to know what people on r/politics have said about Gavin Newsom, my only choices are to browse and hope I come across something, or search across the entirety of the Reddit platform. That means wading through posts from r/atheism, r/conservative, and others that I don’t care about.

Beyond allowing search to be filtered by subreddit, the company should weigh results by context. Right now, results can only be filtered by engagement and timeframe. There appears to be no priority for posts from users I’ve interacted with.

Meaningful upgrades

Ok, we’ve got the easy stuff out of the way. Now, it’s time for Reddit to tackle three more meaningful projects: elevating the profile, empowering creators, and making it easy to buy (and sell) on the platform.

Elevating the profile

In 2012, Barack Obama came on Reddit for an AMA. Interest in the event was so popular it crashed the site.

But has Obama been back since then? Has he (or more reasonably, his team) posted once in the intervening nine years? When you search for him as a user, there’s no sign of him. Compare that to Twitter: he has 129.5 million followers and last tweeted 21 hours ago.

As it stands, high-profile people have little incentive to maintain a presence on the platform. No social capital seems to be granted for a large following, and the ability to influence is limited.

Now, this is part of what makes Reddit unique. Faceless accounts can share fascinating tidbits with impunity. But to encourage usage from compelling personalities (and encourage the social jockeying that makes social media work), Reddit needs to make profiles a bigger deal. Let’s looking at Huffman’s profile, u/spez:

While there are some nice additions here (we’ll talk about avatars in a minute), it doesn’t feel like a particularly compelling profile. There’s no follower count (Karma is too fluid and ineffable a currency to gauge influence), bios are limited, there are no pictures, no location, no obvious place to link outside projects.

The result is a portrait of what seems like a fairly non-descript user — not the CEO of fascinating company. As it stands, users are unable to adequately benefit from the work they do on the platform. The solution may be in leaning into the creator economy movement.

Creator-first

There are signs that Reddit is thinking through the profile issue and taking the creator movement seriously. This past week, Peter Yang, author of a newsletter called “Creator Economy” announced he had joined Reddit to lead their efforts in this field.

Again, Reddit’s “Careers” page further validates this interest. The company is hiring a Social Media Partnerships Manager in the space, along with a Product Manager.

While neither description gives a great deal of insight into what will be built, they do note the desire to facilitate true creator engagement and monetization. That may involve revamped profiles as well as better moderation and community management tools.

Rather than hosting a community on Slack or Circle, this new team should work to have them build on Reddit. This could prove incredibly powerful. Not only would users be able to join (and pay) within an experience they’re familiar with (a real reduction of friction), Reddit could drive traffic to chosen creators. For paid communities, that would improve top-line revenue in a way that tools like Slack couldn’t.

Create an economy

Reddit is already a place people look for jobs, homes, and second-hand items. Today, those transactions occur off-platform, but there’s no reason why Reddit shouldn’t bring that in-house.

In particular, Reddit should make it easy for subreddits to pay-gate their community, sell merchandise (physical and digital), and post jobs. In effect, moderators work for free right now, but if supported correctly, many might be able to make a living from it, allowing them to devote their time to improve their corner of the platform. (There are a few subreddits which allow for some degree of pay-gating).

The contours of this strategy are beginning to manifest with Reddit’s encouragement of tipping and its cryptocurrency experiment. In time, we’d love to see the company run an economy equivalent to Roblox: users would buy Redditbux with cash and spend it on Reddit Marketplace, buying access to private subreddits, purchasing swag, and acquiring new flair or NFTs.

This final category is worth lingering on. Non Fungible Tokens (NFTs) are having a moment, with NBA Topshots constantly selling out, Mark Cuban tokenizing and shilling his tweets, and a remastered GIF of Nyan Cat selling for nearly $600K. Reddit is perfectly positioned to capitalize on this momentum. After all, Reddit is the place memes are made. It would make sense for it to become the place to sell them, too.

Finally, adopting an intrinsic currency would create a virtuous free cash flow cycle (as discussed in our Roblox piece) and further entwine Redditors with the platform with users loathe to forfeit Redditbux or the items purchased with it.

Galaxy Brain moves

If Reddit achieves everything we’ve listed so far, they might see their value appreciate 5-10x. But the company feels uniquely ready to take on some truly radical projects thanks to Huffman’s hand at the tiller and the capital they’ve brought in.

Our final three ideas are on the more wild side: embrace the metaverse, own the conversation from end-to-end, and unbundle its winners.

The Snooniverse

Ohanian is said to have doodled up the design for Snoo, Reddit’s mascot, in his senior year of UVA. Over the years, Snoo has taken on different forms for major holidays, and become an essential part of Reddit’s brand. But it was only in December of last year that users were given the chance to deeply customize their own Snoo.

The “Avatar Builder” allows Redditors to customize their Avatar with freely available styles, or upgrade to Premium to unlock other forms of expression. It’s a savvy way to create more engaging profiles (though there’s still work to be done) and encourage members to sign up for a paying membership. It lays the groundwork for Reddit to move more directly into gaming-style environments.

Over the years, Reddit has used April Fools’ Day as an opportunity to test out new functionality. These almost always take the form of a game.

• The Button, 2015. A one-minute countdown timer that reset every time a new user pressed it. It finally ran down to zero in June of 2015 after a user failed to press it within the 60-seconds.
• Place, 2016. At r/place, Redditors could choose to color in a single pixel of a large canvas. Before coloring another pixel, users had to wait 5 to 20 minutes. Eventually, groups began to collaborate to create pixelated flags, pictures, and even a rendering of the Mona Lisa.
• Circle of Trust, 2018. Users could create private, password-gated communities that showed up in a subreddit with a special animation. To grow the group, users shared the password. But if a new member wanted, they could “betray” the community, meaning no new members could be added.
• Sequence, 2019. The closest Reddit has ever gotten to a “Stories” feature, Sequence allowed groups to vote on sentences or GIFs to add to a "sequence." Bit by bit, a story formed.
• Imposter, 2020. Users answer the same set of questions. An AI, the “imposter,” reads these answers and comes up with an answer of its own. Then each player is tasked with determining which of five possible answers is computer-generated.

The mechanics in several of these are not so dissimilar to hit games like Among Us. Could Reddit host a game like that? Or give tools to users to create new games of their own?

Already, the company seems interested in monetizing like free-to-play mobile games do, incentivizing the purchase of coins to buy badges and cosmetic upgrades. How much could Reddit juice this aspect through simple subreddit-specific games? As a starting point, it would be interesting to see the company experiment with spatial audio and video, giving communities the ability to open “rooms” which avatars could use to roam around and socialize.

In the long-run, Reddit could build out the richness of these spaces to become synthetic social environments, similar to those on Roblox. The result might look something like a metaverse.

Own the conversational pipeline

What is Reddit exceptional at? Facilitating conversation. But its current structure is only set up for one particular type of asynchronous dialogue. That’s allowed places like Discord to flourish on the back of the platform’s community-building work.

Take the case of someone like u/DeepFuckingValue (DFV), the Redditor at the heart of the $GME short squeeze. To spread his gospel, what did his user journey look like?

He bought his position in $GME on ETrade. Then he discussed it on Reddit. He followed that up with videos on YouTube. And perhaps, like so many others from the r/WallStreetBets forum, he jumped over to Discord to discuss his research.

Except for DFV’s first step, the purchase, Reddit should own every aspect of this pipeline. The fact that it doesn’t speaks to some of the failings we’ve already enumerated: if Reddit had rich profiles, true creator support, and better video, DFV wouldn’t need to go to YouTube. If Reddit supported voice rooms, the migration to Discord would be superfluous.

As it stands, Reddit is letting a lot of the value it creates leak into other platforms. While it seems to understand the importance of video, the company should pay attention to the emergence of platforms like Clubhouse, too. Audio should become a core part of the Reddit platform. Let’s hope we see something voice-related for 2021’s April Fools’ experiment. (Btw, I think this will be the case. If someone wants to take the other side of a $50 bet, respond to this email. The first person to respond, we have a deal.)

Unbundle itself

There’s no better place to end. To unlock the next step-change in valuation and protect against niche competitors, Reddit should unbundle itself.

What does this mean practically?

Again, Imgur provides inspiration. In 2019, the platform announced that it had created “Melee” an offshoot app designed specifically for gamers. While much of the core functionality is the same, it made it easier to trim your game highlights and import content from Xbox, Playstation, Switch, Nvidia, and other platforms. Imgur recognized they had a strong interest-specific community and decided it was worth building a home and toolset just for them.

Reddit can do the same thing with its most popular, active, and lucrative subreddits. This doesn’t mean the company has to create new apps for each community, but it should create dedicated teams to build for its winning communities like r/science, r/gaming, r/investing, r/photography, and more. The cryptocurrency work Reddit has done with r/CryptoCurrency and r/FortNiteBR suggests management is thinking about this — we hope there’s much more to come.

“It's like electricity - we don't really know what it is, but it's a force that can light a room.”

Ray Charles was talking about the “soul” when he uttered those words, but he could have been talking about Reddit. A decade and a half after its inception, it still feels like the world doesn’t really know, doesn’t understand, what Reddit is.

And yet, it is still here, at the center of culture, influencing our markets and politics, lighting up the room. To structure Reddit too rigidly, to overly organize its lightning, would kill some of the magic. But in its quest to realize its full power, Huffman and company may wish for a little less illumination and a little more definition.

Thank you to Alex Kuang, Yashar Nejati, Peter Yang, Greg Neufeld for their thoughts on this subject.