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On September 28th, the Global Citizen Festival will gather thousands of people who took action to end extreme poverty. Join Post Malone, Doja Cat, Lisa, Jelly Roll, and Raul Alejandro as they take the stage with world leaders and activists to defeat poverty, defend the planet, and demand equity. Download the Global Citizen app today and earn your spot at the festival. Learn more at globalcitizen.org.com.
On September 28th, the Global Citizen Festival will gather thousands of people who took action to end extreme poverty. Join Post Malone, Doja Cat, Lisa, Jelly Roll, and Raul Alejandro as they take the stage with world leaders and activists to defeat poverty, defend the planet, and demand equity. Download the Global Citizen app today and earn your spot at the festival. Learn more at globalcitizen.org slash bots. It's on!
Hi, everyone. From New York Magazine and the Vox Media Podcast Network, this is On with Kara Swisher, and I'm Kara Swisher. This morning, Thursday, March 21st, the social media platform Reddit is set to go public, seeking a valuation of up to $6.4 billion.
So yesterday, ahead of the ringing of the bell, I spoke to Reddit co-founder and CEO Steve Huffman. I've known Steve for a long time, almost two decades, and I've interviewed him at various points in the Reddit trajectory. This IPO is a big deal for a few reasons. Reddit is one of the last original social media companies to go public, but the company is still in the red. And there are questions, including from the FTC, about the ways that Huffman aims to make it profitable in the future.
The IPO is also rare because some Redditors have been given the chance to buy stock, which could be a good thing or a bad thing. Remember, it was the subreddit WallStreetBets that fueled a short squeeze by pushing the stock of GameStop into the stratosphere.
Speaking of which, our question this week comes from the guy whose book about that meme stock frenzy was made into the movie Dumb Money. Ben Mesrick, author of The Antisocial Network. We'll have all that and more after the break. This episode is brought to you by Shopify. Shopify.
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So Steve, welcome. Hi. Thank you. Glad to be here. Thank you for taking this time. I know you're close to this IPO, about 24 hours. I'd love to know first, this is 20 years, like you're an overnight success after 20 years. Talk about what you're happy about and what you're worried about. You know, I think in this moment, I'm very much, I think, in the moment. This is one of those moments, I think, where maybe I have more anxiety than usual because it's just hard to see.
you know, how things play out even over the next 24 hours. And so I think I just kind of have that nervous excitement around that. But big picture, you know, my answer, when somebody asked me what keeps me up at night, my answer has been the same for a long time, which is one, just practically, I actually sleep very well at night. And then two, you know, I think for Reddit, you know, we've been around 20 years. Mm-hmm.
So we've seen the rise of social media. We've seen the internet totally evolve. And by and large, these things haven't affected Reddit. What affects Reddit is how we work, right? Are we executing effectively? Are we shipping the right stuff? And so it's always kind of felt like we're in control of our destiny, for better or for worse. Well, I mean, for better.
Though I think sometimes we've been better or worse at being in control of our destiny, if that makes sense. Now, this isn't the first time you've done this. You were preparing to take Reddit public in 2021. Talk about what happened then for people who don't know and what's different now. Sure. Well, technically, this is still the same process. So we got on file with the SEC back in December of 2021. And we thought we were going to go out as late as, I want to say...
February or March of 2022. And even then, if you recall, the IPO markets had been shut down. Yeah, interest rates, everything, yeah. Probably about six months at that point. And so we thought we were going to be one of the first to go out two years ago. Right. And then I want to say we were doing...
like a little bit of a pre-roadshow roadshow. I just wanted to meet some of these investors in person. So we were flying around the country. We were meeting people because we hadn't seen anybody in person because we're still coming out of the pandemic. It's like, I just want to say hello, shake some hands. And I want to say in the same week, the stock market took a real turn. Russia invaded Ukraine.
And I think interest rates went up. Like, it was really going sideways fast. And so that's when we said, hey, this is... What was the calculation? This is too much. This is too much. This is too much. Yeah. And it was like, this is too much even for us. Because our mentality was, look, it's Reddit. It is...
It'll be hard to predict either way. And so we're okay, I think, with maybe more uncertainty. So we'll talk about the uncertainty. But it was the external situation. It was really like reading the room with investors. Right.
You know, all these public company investors, they all say they're long term. But that week, they were like white as ghosts. Right. So they weren't in the mood to buy. They weren't in the mood to buy. Definitely. So what was the calculation now where sort of inflation has declined, the economy is better, but we are in the middle of a...
You know, another war in Israel, a war, the war in Ukraine continues. What is, what was, what's the feeling you get from Wall Street as you are moving into this? Well, I'll start with the feeling that's our own, which is the two years of not IPOing has been, I think, one of the best things that ever happened to us. Because? Because, you know, we've been running the company as close as we can to being a public company. So...
Closing the books doing the audits doing earnings Really the whole kind of public company routine every quarter
Getting closer to profitability just I think running a tighter ship impose some discipline on yourselves exactly Yeah, what were you doing before just shoving it in the drawer? You know, there's there's that there's the path of growing up for any company And so it's like we got the pressure of being public without the spotlight And so look if I could do it again, I would do it this way again and if there's some young company thinking about going public
I'd say, hey, give me a call because we learned how to answer your question from before, why now versus then. Markets are still a little choppy, though there's some optimism returning. The world is still unpredictable. But one of the biggest differences is I think we've learned how to run and grow this company in choppy conditions. In choppy conditions. And so if they stay choppy, we're fine. And if things get better, we're fine.
All the better. Okay. So in the IPO prospectus, you're planning to sell 22 million shares at a price between $31 and $34. There's obviously been reports that it's oversubscribed, lots of demand. Talk about the price, how important it is, because that's one thing that's been written about. There was one story, I think it was, will the IPO kill Reddit finally? I'm sure you saw that one. Talk about how important the price is right now from your perspective. Yeah.
Well, you know, I think one of the exciting things from my point of view about being a public company is we will actually finally, after years, our last financing was in 2021, have a price. So, you know, we just effectively finished the roadshow yesterday. I'm truly, honestly excited as anybody to see where we land in the market. We can't control it. All we can do is control prices.
what we build, how we... What have you been told to expect? What do you expect and what have you been told to expect? I truly, honestly have no expectations. The roadshow process, right, we pitch, investors effectively make bids. Right, correct. And then we'll look at it. We'll look at it and kind of basically find a clearing price and
And that's how the process works. Yeah. And then it gets out into the wild. I'm only asking because there haven't been a lot of a high-profile one, so a lot of people are watching.
what happens here, although it's a unique company, so it could be very different from other companies. But you've set aside, another thing that's unique, you've set aside about 8% of the offering, 1.76 million shares to sell to board members and Reddit moderators and frequent users. They're called Karmateers. Explain what that is. And this has happened before with some tech companies and other companies too, not just tech companies. Talk about why you've decided to do this because it doesn't happen a lot.
Yeah, so we set aside a portion of the IPO for retail. So in other words, non-professional investors. And so within retail itself, there are a couple of buckets. And so for us, one of those big buckets is the directed share program or the DSP. And so this is where we've invited specific users.
to participate in the IPO. So this will allow them to buy Reddit stock at the IPO price. So before we actually start trading. And usually this is only available to professional or institutional investors. Yes, the fancy people, Steve, but go ahead. Exactly. So now look, the fancy people have a role here that actually, so as I've been learning about this process myself,
The role of the fancy people, they're a little more stable. So actually, I think it's important to have a balance. So the retail investors, the users who participate, or the retail investors through like E-Trade and SoFi and Robinhood, because they'll also get an opportunity as well. We want as many of them as we can get, but we also want the professional investors who will participate
put some stability on the price. So hopefully it's a good experience. Right. So stability is important, obviously, because you don't want it yo-yoing everywhere. But one of the, just so for people to be clear, Redditors and moderators who buy the stock aren't bound to hold it. They can sell it immediately, unlike you and other people. And they're a famous, infamously, I guess, diehard bunch. First, what I'm reading, they don't seem very excited about this IPO. Now, this is a grumbly gang. So has the reaction surprised you? Or is this sort of
the way Reddit is? I don't know if I'd say it surprised me. At this point, it's hard for me to be surprised. But I've observed the same thing on Reddit.
I certainly wouldn't describe them as excited. Mixed. Mixed is kind. I mean, they're expressing their feelings. They have a lot of feels about the situation. Yeah, I think it kind of depends where you look. But look, the IPO is one day. One of the reasons for being a public company is I would like our users, whether it's today, tomorrow, a year from now,
whenever to have the opportunities to be owners of Reddit. Right. To participate in Reddit's growth. Now, we are a company new to the public markets, so we have to prove ourselves. Right. We have to prove ourselves by running the business well. No, I get it. I get it. We'll let our work do the talking. Yeah. So one of the things, though, sometimes there's other, you know,
exogenous circumstances, Wall Street bets, the Reddit forum that helped drive GameStop stock up, which we've talked about a lot just to see if it could. They're now talking about shorting Reddit stock and basically betting it will fall for those who aren't professional investors, but I think it kind of gets that idea.
One is, does that concern you if you become one of those? And are you worried about volatility? Is that a problem for you as a CEO? I think we'd prefer stability over volatility, of course. I would hope anyone would say that. I think that being a meme stock is a double-edged sword. If that, it's probably not a good thing overall. Again,
I always try to separate Reddit the business from Reddit the platform. And look, the platform is a fun, vibrant, sometimes wild place. The business, you know, we want to be consistent and predictable. And so, like, in this moment, the two might be married. Look, we'll see how it plays out. I really...
You don't know what they'll do. I think I have very little intuition because the situation is so unprecedented for Reddit itself to be going through this. Right, right. But, you know, short sellers, there's a different thing, a meme going on with these people as investors. It's a different mentality. Do you think you understand that and them? I mean, I can see it. Yeah.
I think, do I understand them? Look, I know Reddit. There's nothing I know as well on earth, I think, than Reddit the business. It's kind of all I think about. So look, it's a free market. I think I'm excited to be a public company.
But we'll see we'll see how all this plays out and honestly And what I told the employees is there will be days where we don't like the stock price because it's too high Right, and there'll be days. We like the stock because it's very low. It's like so you
But the point is, yeah, it's going to move around. Rightly or wrongly, your platform has been accused of creating this volatility, and here you are in the middle of it. It's just in an ironic situation. But it must be strange to go on your own platform and see people talking about how you aren't a viable option. Well, look, I can tell you this. I love Reddit, the company. I'm very proud of the work we've done. I think it's a great business.
I think we were profitable in the second half of last year on an adjusted EBITDA basis, which for us is basically cash flow. So I think there's some...
qualities of Reddit that are important to understand. Well, let's talk about that. Just for people who don't know, just for full disclosure, during the GameStop crisis when we talked in 2021, you said my financial future is 99.9% Reddit. You are selling 500,000 Class A shares in the offering. Usually this is typical. Let me be clear. It's
Did most people do this, but did you worry that this might send messages more than other CEOs? Was that something that popped into your brain? Oh, certainly I considered it. But I think that's the case of any CEO selling at any time. But for I and for all of our employees...
We've been at this a long time, and I think some diversification is wise. And what we tried to do with our employees is that you can sell in the IPO at the IPO price. So this would be before any movements on trading day, which has trade-offs. It's a predictable price. Could pop. It could go up. Exactly. Yeah. Those who sold Google were very unhappy about themselves at that time. And so the thing is, the way the lockup works is the next time
employees will have an opportunity to sell will be, I think, in August sometime. And so what we're trying to do for employees is basically say you don't have to stress all summer about what the stock is doing. If you want the certainty, you can do it today. If you want to wait, you can wait.
And so I think it's a nice thing to do for our employees. But you yourself, did you, I mean, in this case, the platform's famous for stock trading, for example, or any number of things. It's famous for a lot of things. But did you think about not selling? I don't ask this of most CEOs, but in this case, you have a, everybody's watching in a very different way. Sure. And that's always going to be the case. You know, the way I thought about it, honestly, I asked friends. Mm-hmm.
I had friends who've been through similar situations. And the universal advice I received was, Steve, for your own mental sanity, you should sell a little bit. Got it. And so I followed their advice. Look, nobody believes in Reddit's future as much as I do. I think there's an aspect of that as well. I think every decision like this has trade-offs. Yeah. I think our employees, a lot of our employees use the same reasoning as well, which is,
Let's take some stress out so we can focus on the business. Just for people that know, if it goes for $34, you're going to walk away with $17 million, which makes you poor by Silicon Valley standards, but we won't go into that. I'm teasing you. Ironically, when you compare it to GameStop and other meme stocks, let's talk about the business. The concern on the subreddits that I was reading was related to fundamentals about the business. They were talking quite a bit about the fundamentals rather than making...
you know, eggplants or whatever the heck they put up there when they're talking about stock. Let's talk about this and the risk of the IPO. Now, every company has to put pages and pages and pages of risks in for people who aren't familiar with it. But one of the ones that people obviously are zeroing in is the profitability. You talked about being cash flow positive, I believe. But it hasn't been profitable in the traditional sense for companies.
20 years, essentially. And you list a bunch of ways you intend to change that. Three big buckets, advertising, data licensing, user economy, that's e-commerce. I want you to give me a pitch for each of these and talk about why it hasn't been profitable. Well, so let's start with the profitability question. So actually, we were on an adjusted EBITDA basis, we were profitable in 2021. And when we talk about profitability, you can basically talk about
profitable on an adjusted EBITDA basis or GAAP basis. For us, the difference between those two is just the stock-based comp. Because Reddit, there's not much, we don't have any capex. So we actually have more money in the checking account at the end of 2021 than at the beginning. And in 2023, we lost money in the first half, but actually made money in the second half.
And so we're very close on a adjusted EBITDA basis. And then if we keep scaling, we grew revenue last year three times faster than costs. So if we continue to grow revenue faster than costs, which is our kind of management's plan, then I think this business scales better.
very nicely. And the reason for that is our margin is so high. Our gross margin in 2023 is 86%. It was 88% in Q4, which is
the best in our space. And so that means small improvements in revenue all go straight to the bottom line. This is something that happened at Uber, just for people that understand. They had a number. They took many when they went public. They just recently started to be more profitable. But that revenue is mostly from ads. Just for people who don't know, the ad business has been growing. As you said, it was about $800 million in 2023 of
a decent thing. You've been forecasting hitting a billion dollars in revenue for a few years now. That would also be a substantial jump. Talk a little bit about the ad business first, then we'll get into data licensing and user economy and other ways. So the ad business at Reddit is almost old school. We target...
based on context and keywords. So on Reddit, our users explicitly choose where they spend time. So for example, if you're in the skiing subreddit, you will start to see outdoor ads. And so the math there is very simple for the advertiser, and it's not creepy for the user. And because every interest and passion and hobby and
purchasing decision and what you're going through is on Reddit, that means every brand's customers are likely on Reddit somewhere. And so there's actually, I think, one of the advantages of Reddit is there's no constraint. To finding them. Because the audience, our audience is so broad. And so, and because we do context-based
It's just simpler and easier to explain. We don't depend on third-party data, or we don't track your behavior elsewhere on the internet, anything like that. For people who don't know, most companies do that. Facebook is the OG of that. But go ahead. Yeah, so it's just simpler, easier, easier to explain. And I think it can scale in a really nice way. Because again, what should I watch? What should I buy? What should I wear? What car should I buy? Right?
All of these decisions are kind of on Reddit somewhere. But it's also about eyeballs, too, because you need those people where they are. Even if you're hitting them in the context of what they happen to be, whether it's skiing or anything, any other, you know, video games, whatever they happen to be. It has right now about, is this correct, 500 million active users a month? So we have...
500, more than 500 users in a month. Million, more than 500. 500 million, excuse me. Yeah, don't say 500. But what we really operate the company on is users in a day. And so we had 73 million users on average in Q4, 76 million in December alone. And so that's really where we hang our hat.
Because that's a little more operational. Just for people of comparison, Facebook has 3 billion, YouTube 2.5 billion, WhatsApp 2 billion, TikTok 1.5 billion. Do you worry about being pushed into this bucket? Because this is where Snapchat has run into trouble or other companies. What's your pitch to them to get more of the pie when...
You're smaller. So the pitch to advertisers. Yeah. Well, first, the pie grows by five to ten Reddits a year. Just the digital ads market grows significantly. And so it's such a huge space. And call us a billion run rate company, we're still a small piece of that. Mm-hmm.
But our pitch to advertisers is, your customers are on Reddit. We have 30% to 70% of our users are not on those platforms you just mentioned. So for many advertisers, this is the only way to find a large portion of their potential customers. And so that's the core of the pitch, which is your customers are here and they may not be elsewhere. Yeah, you could count one of my sons in that.
We do very well with people I meet's kids. Yeah, yeah, it's funny. A lot of sons and daughters, and my spouse uses Reddit. I get a lot of that. My son doesn't like all the other platforms. He finds them irritating. But speaking of irritating, some Redditors are complaining about ads saturating the space, which it has to do in order for you to make money. How are you thinking about this? Because...
The more ads, the worse the experience. And these are vocal people. That's true. Look, our ad load is relatively low, and we don't increase revenue by increasing ad load broadly. So ad load is kind of another word for inventory. So better ways of growing inventory is just, for example, more users.
Just growing the consumer platform. Another way down the road would be putting ads on surfaces where there aren't ads today. So search result pages, for example. But as you point out, ads in the feed, that's what users kind of experience today. There is a trade-off there, and so we have to be considered. And so that's why I think growing users is a better way of growing inventory versus just
jamming more ads in there, which would hurt the experience. Again, you have a more vocal group of people. Now, the elephant in the room of this room, particularly, is porn. NSFW, Not Safe for Work, was reportedly the most searched term on Reddit last year. According to some sources, 1,000 NSFW subreddits drew in 14 million unique visitors in February. You don't run ads against this content since 2019. You don't talk about it as revenue potential in your filing.
Do you have any plans to monetize this? Was it, say, a subscription service or shifting the NSFW stuff around? No, no. Or ads, I mean, I guess, or ads. No, it's just, so it's very simple. We have communities for sex and sexuality. I think it's an important part of the human experience, which is why it's allowed on Reddit. But it's just easier to not monetize it. And so when we talk to advertisers online,
about brand safety or anything like that, we just say there's no ads there, you will never be there, there's no plans for ads there. And broadly, even outside of adult content, by default, when a user creates a community on Reddit, there are no ads. And then when it gets to a big enough scale that might be interesting, then a human at Reddit reviews it and says, okay, this community is appropriate for ads or not. So then when we're in the market, we can tell advertisers,
Like there's a portion of Reddit that's just very safer ads, and that's where you'll be. So not putting them there at all or make them a subscription service or anything like that? Well, and then also it's just while I think the users like the adult content and we have no plans to change it or get rid of it, it's not what we want to be known for. Right.
And so again, it's just easier to say no monetization. Because the users who look at that content also look at the rest of Reddit. And so we'll monetize those users
In the other part of it. Yeah. I mean, safety over where ads are is a big deal now, largely because of Twitter or X not caring in that regard or people being nervous about being next to either, not just that content, but also, you know, white supremacy or whatever that happens.
Well, look, we are in the happy customer business. And so we want our customers to be happy. Yeah, you don't want to insult advertisers right now or say fuck them. Yeah, look, we're in the happy customer business. We're also in the happy user business. And so we want advertisers and users to be in the places that they enjoy. And hopefully there's a lot of overlap. But I think it's very simple, I think, from that point of view. Happy customers, happy users. That's how we grow our business.
We'll be back in a minute. Okay, let's talk about data licensing because some people aren't happy about this. This is something every company is going to do. Everyone's going to be doing this. You recently cut a deal with Google to give them, quote, real-time access to Reddit's data to train Google AI. A deal probably worth $60 million per year. This user-generated content, Redditor's 17 billion posts and comments,
The FTC has launched an inquiry. What can you tell us about what's happening here? And again, I think everyone will be looking at, including media companies, by the way, their content. It's a little different because these are user-generated content. Well, sure. Let's look at the status quo. Everybody crawls Reddit. Everybody crawls everybody. So our data is already out there.
being used for who knows what. Now, historically, the biggest user has been Google and they use us for search. And I think that's been, Reddit has been a major beneficiary of that, as have our users, right? They use Google to find and discover Reddit. So that's great. But the reason I think
deals like this are important is because we're entering this world where we need to be much more considered about where our data ends up, what it's used for. And so any deal that we do includes now protections on here's what you can use our data for. You can't try to figure out the identity of our users, for example. Here's how you can display our data.
There was a simpler time when it was basically just search engines, but now you've got every AI company taking data. And in our case, and many, if not all publishers, without our permission. And so now we have to be more considerate about if you're going to use our data. And I think on the whole, it's a good thing because, again,
It's good for consumers to find and discover Reddit, to find and discover information. We believe in the open internet. But we do need to start putting guardrails on this. All right. So this is inevitable. It's essentially just saying users have been critical. One commented in Wall Street Bets, Reddit is just becoming a digital farmland for AI. How do you react to that? Again, I think of AI, the main products that we see today in the market, I think of them as Search 2.0. So Search 1.0 was...
the 10 blue links. I think of Search 2.0 as an evolution of that. You've still got a text box, consumers typing in the text box what they want and they get an answer. I think it's, if you ask me today, it is better
for Reddit to be present in there as either links to Reddit or authoritative answers on various topics than to not be in there. I think it's better for the consumer. I think it's better for the internet. Okay. As opposed to Reddit being closed off and unavailable. Because Reddit, I think, has a unique perspective on all
many manners or many topics. But the price now for Reddit being present in whether it's Search 1.0 or Search 2.0 is you have to do it on our own terms that are respectful of our content, of our users' privacy. So interestingly, when we spoke in 2019, you got a question from the audience about Reddit being scraped to create large language models.
Behind OpenAI's chat GPT, you said, quote, we do try to limit people actually scraping us, but there's no way we're going to practically prevent the development of AI, nor do I think that's even a good idea. So in this case, you want money for that data, correct? And that's a little bit of a change of heart. Well, you know, I'd say less change than you might think. We are getting more effective at preventing people from scraping us
just to enrich themselves. And look, these deals, yes, they come with dollars. They also come with costs, of course, because now we've got a Firehose product. We've got a kind of more robust data tool. But again, there's more teeth in the contract. Scraping us just unfettered
We have no control on where our data goes and what it's used for. And so, yes, as I said, I do think it's better than not for Reddit to be out there. Better for the consumer, better for the internet. But we can't just let anybody take it and use it for their own means, whether it's to enrich themselves or to violate the privacy of our users. It's copyright. Copyright is what you're talking about now. Well, it's not copyright. Well, it is. Well, is it? Well...
Legally, it's against our terms, but I think protecting Reddit, the platform, and our users, that's our ask here that I think is very important. Have you had any conversations with Sam Altman about this? Obviously, the CEO of OpenAI. He's been an investor of Reddit for a long time. I did not know this. This was a piece of news for me. He holds a good chunk of the stock. You obviously are...
did the deal with Google and not them. Have you had discussions with OpenAI and Sam about this? Yes, so Sam led our Series B in 2014. It's interesting how our worlds collide. But Sam really was instrumental in me coming back to Reddit in 2015, and he was on our board for a long time. And look, I'm very thankful for that. He helped me get my dream job effectively. He and I talk about this topic.
Nothing public to share at the moment, but yeah, he and I are close on this. Do you see yourself selling to a lot of models like OpenAI and others, or you have to do exclusive deals? What's the mood out there among the... I call them rapacious information thieves, but you can use any term you want. What's the mood in terms of having exclusive deals versus selling your stuff to everyone? We're not doing exclusive deals. And...
I think every conversation is different because I think every use case is different. And so we consider the implications for what our data is being used for. I would say in general, I think search is really important for the internet ecosystem. And I think the AI powered search, Search 2.0 as I call it, is also very important. And so I think I'd like Reddit to be a part of that.
That would be my first desire. So Google would be your first stop? Well, so, you know, we announced the relationship with Google a couple weeks ago. And so that was very practically, I think, the first stop. Now, Google's done, I think, quite a number of deals for data over the years because, you know, I think they know to be –
The best source engine you have to have real-time access to these data sources. Yeah, they need it. Absolutely. So you see wide-ranging deals in that regard throughout the industry with people with data. That's my first preference. I think this whole market's evolving kind of as we speak. Reddit is unique here in that we're the only platform that's open and open for business. The other major sources of UGC are closed off.
And so I'd like to preserve that about Reddit. But it is more work now than it was a year ago because people are using our data. That would be X, Facebook. Yeah, you're right. They're using our data without our permission and for things that maybe we're not aligned with. And so there's more complication here. So we do have to be more considered. Okay. The third bucket is user economy. Never been a big bucket for you. This is users making money on Reddit. In a prospectus, you talk people offering services or product.
If this is a way of growing your business, let's talk about the cut you would be expecting to take from content creation or services. This is a new area for you all. Right. Well, we're a little ahead of the cut part. Okay. There's no...
There's only small dollars here at all. So as with any product that eventually generates revenue for Reddit, the consumers have to use it and love it first. And so we're in the building phase. But big picture, the user economy is users making money from other users on Reddit. So whether that's gifting or user-to-user transactions, user-to-community subscriptions,
Paying for digital goods and services. For example, there's a subreddit on Reddit called Photoshop Request where users pay $5 or $10 to get somebody to crop their X out of a picture. Calling Kate Middleton, but go ahead. Yeah, or put Kate Middleton into a picture. I think we should keep her out of manipulation of photos at this moment, but go ahead. Agreed. Okay. Long story short, our users in a portion of Reddit have been trying to create businesses on Reddit.
The way I look at the world is there are a couple of big forces that motivate people. One of those is community. People create friendships. They create communities. They create cities. It's like a byproduct of human beings being together. And that's a tale when that power is read it.
There's another big force, which is like the economic force or like the business force. People try to create businesses. We can see that in Reddit. Our users are trying to do that. But Reddit at its essence is a conversation platform. It's fancy forums. And so they don't have the tools on Reddit to do that. And so we're just trying to give them those tools. I hope it works because I think it can be...
really empowering for our users. And that's the word empowering in our mission. Our mission is community, belonging, and empowerment for everyone in the world. This is the empowerment part. So right now it's almost a nothing business. It's nascent. We're still building. We're at the very beginning. I can see the potential, but we're at the very beginning of it. All right, let's talk. One of the things that...
you have as unique risks in the way other companies don't. And companies list long, long, long lists of these when they go public because they have to for legal reasons.
One that gets a lot of attention, I think it's actually a good thing to get attention, is its unique selling point is also seen as a risk, which is these user-led communities you just discussed. 100,000 subreddits moderated by what are diehard users, really. Last summer, there was a moderator revolt after you decided to start charging third-party app developers to access the API. Moderators said those apps helped them do the work they were doing for free, and they protested. They staged a blackout.
And you called the moderators at one point landed gentry. One, are there any regrets for using that term? And talk about that moment and what's your relationship right now with the mods? Well, that term and me saying it certainly did not help in the moment. But, you know, broadly in that moment and today,
the vast majority of our moderators just want to create communities and run communities. And they were wonderful then and they're wonderful now. In that moment, we had some moderators and other users who were really mad about the API pricing change.
And with those words, I was responding to a question. The question was interesting. The question was like, effectively, have you taken democracy too far on Reddit? And my reply was, no, I think we haven't taken it far enough. And so in that moment, well, this has been a longstanding issue, which is like, we'll have, we want to, we need to better empower the mods who are doing the actual work of running communities.
And we had an issue that I think we've gone a long way towards solving, which is you could have a moderator who's not doing any work, but who's in a position of power over the rest of the mod team.
One of the things we did after that moment was empower the mods who are doing the work day to day to be in control of the subreddit. They can't be fired by the top mods anymore if the top mods aren't actually running the community. And so really closing that gap, I think, is very important to our communities. Now, more broadly...
Will our users be upset with us from time to time? Of course. Always, I would say. But we work through these things. And look, I'd say in that moment, we made a business decision about the API pricing that I felt we had no choice on. And so we're going to have to accept that anger.
But some of the mods were angry about the mod tools, as you mentioned, or what we call accessibility. So like those reddit work for the visually impaired. And those, I think, we have no excuse there. But in that case, you have a very unique risk in that, and investors do too, is this is, you call it a conversation platform, but it's something else. There's something else. I don't think, I think Mark Zuckerberg makes decisions. He doesn't care what the group thinks. But in this case, you have to care very much what...
your community thinks compared to other CEOs? I don't just have to care. I do care. And Reddit isn't Reddit without... But you're making business... My point is you're making business decisions that they're not going to like. And this is an area that others don't think about in any way. They just do.
Sure. And like we make decisions that we believe always are in the long term best interest of the platform. And the business being sustainable and profitable is an important part of that. But Reddit is communities. There's no non-community part of Reddit. It is the essence of Reddit. And those communities
are made of people and we believe in the agency of people. Okay, so would you like to take back Landed Gentry? Or you stick with it? I thought it was a fair term for some of the mods in that moment. Okay. So...
I'd say to the other 99% of mods, I wasn't thinking of you. Okay. All right. Let me ask you a question about the moderators in that work. A 2022 study showed that Reddit's volunteer moderators and their volunteer, their work is worth more than $3 million. Now, we're in an area when content creators are increasingly asking for attribution and compensation as they should. How do
How do you view that in terms of your moderators, even the high karma super users? Are you considering compensating them or even hiring them now that you've raised the IPO? Is that going to change these volunteer moderators? Moderators, first off, they're not Reddit employees. They use Reddit to create communities. But this is the user economy. Yeah.
I don't know if anybody's talked to more moderators than I have over the years. I've asked this question many, many times. And the answer I overwhelmingly get is, "I don't do this for money." Now, I've seen the meme of mods. I see it on Reddit, "Mods should be paid this or that." I always talk to them about this. But this is why I believe in the user economy.
I think there's an incredible amount of value created by our users that doesn't get captured by Reddit Inc. It doesn't get captured by them. It's unaccounted for in the ledger of the economy. And so I would love them to capture that.
So this is the if we can have user to community subscriptions if communities can capture some of the value they're creating I think that would be a great thing and whether they use that money to subscription interesting You just said that in yeah, like whether they use it to pay mods or or donate it or invest in something else But we're trying to get that economy going so you would allow subscriptions those kind of things sure now with a caveat
In the safer work communities. Because I said before, the NSFW thing is just not... Yeah, you can't hire. We'll just keep it out of the money. But you wouldn't hire them as employees? I mean, look...
Some of our employees are and were mods, and I mod as well. But by and large, I think it's really important that mods not be employees. They don't work for me. They run their communities the way they want to, not the way that we ask or dictate them to. All right. Speaking of some influential users, and this is a left turn, just so you know. Every week we get a question from an outside expert. I do not have any control of what they ask. So have a listen. We brought someone in.
Hi, I'm Ben Mesrick. I'm the author of The Antisocial Network, the book that was made into the movie Dumb Money. The story revolves around, you know, the GameStop drama, which was fueled on Wall Street bets. But my question would be, the giant rise, the short squeeze was stalled by a one-two punch. Wall Street bets going dark, and then, you know, shortly after, boom.
Robinhood taking away the buy button. And my question would be whether you felt there was anything nefarious in the cozy relationship between Ken Griffin and Robinhood. And maybe you could shed some light on why Wall Street bets went dark and the timing of that. And then if you had any comments on whether you think there was anything nefarious going on that killed that short squeeze.
All right, can you answer Ben's question? It is speculative, of course.
So the only part I can answer definitively is WallStreetBets going dark. So what happened is WallStreetBets has a bunch of fancy bots that the moderators of WallStreetBets have created to run WallStreetBets. In that moment, one of the bots got overloaded and it effectively shut down the subreddit. So far from shutting down the subreddit, we worked with them to get it back online as quickly as possible.
As soon as that story broke, my first message to the team was, keep this subreddit online. So they had some technical difficulties in that moment that we worked through together. And you can verify that by asking the mods there. As for the other stuff, I truly...
You know, I don't know. But the dark part wasn't nefarious. Not nefarious. It was a bug. It was an unfortunate bug that we worked with them to fix. But timing for conspiracy theorists. You know, all conspiracy theories have, unfortunately, coincidental moments like that around them.
But our goal is to keep it online, and we worked hard to do so. Right, great. Okay, I'm going to finish up talking about content moderation. We've talked about that a lot over the years, you and I have, and Reddit has changed rather drastically. I often point to it as, and you have discussed how much smaller it is than a lot of these bigger social media sites, and probably does, you have less resources, but probably have focused on it the most, largely because of controversy at the beginning. Obviously, GameStop was also a big spotlight for Reddit, but so was the Donald, and
So it's been a big issue, especially this year. Elon Musk went up against Twitter's free API last year and did a lot of cost cutting at Twitter. He also has gotten rid of a lot of content moderation staff. So has Facebook meta. You've had layoffs last year and
And some are saying this is what you're doing by removing content moderation. Talk a little bit about that because you were very bullish on content moderation and tools to do so, including automated tools. Are you worried about having a content moderation shortfall in the critical collection year? And how do you look at that? I don't know where a claim that we're cutting content moderation is.
has come from. Safety is super important to Reddit. We're a community platform. So Reddit doesn't work if our users don't want to be there or our potential users don't want to be there or don't feel safe. And so
Moderation at Reddit, more broadly safety, is critical for our existence. And so whether it's users voting, in essence every user is a moderator on Reddit, or if it's our user moderators moderating, or if it's our own safety team enforcing our rules at scale, those are all super important. Yes, AI helps. And so we're building AI tools both for our teams and
been giving our user moderators access to the same tools, which I think can actually help reduce their workload. But look, there's again, no, there's no Reddit without moderation. Sure. And that's not an area that
we're looking to cut back on. Talk about the challenges right now of doing that, though, of content moderation, because it's something we did talk about. You do have less resources. You do have less ability to handle things. The others seem to have just abandoned it, and they have the sheer volume. I think Elon and the Don Lemon thing said we have 500 million posts versus 20 stories. How are you looking at it now, and has it changed since we talked about it earlier? Yeah.
So it hasn't changed. I mean if anything we've gotten much better at it. Because the tools keep getting more advanced.
So one of our sayings at Reddit is the only thing that scales with users is users. And so I think the defining characteristic of Reddit is that our users create it, but our users also moderate it. At the core level, people in the context of communities want to create nice spaces. They want to create nice experiences for each other, not because I ask them to, but because they do. Far and away the most common user-created rule on Reddit is,
So the number one most popular rule across subreddits is some form of be civil, be nice, be respectful. And they enforce this without me asking them to, without us doing anything. I think this is extremely powerful. This is a bigger part of the decentralized content moderation where you take, not everyone's arguing about Donald Trump, not everyone's arguing about of all kinds. Is that the only solution to this? Look, I think the power of community is what makes Reddit work. But on a bigger level, on a bigger level.
Well, that's the idea. The only thing that scales with users is users. And so if users aren't empowered, then I think you're constantly on the wrong side of this scaling and growth problem.
And so users have to have agency. I mean, that's our belief. Otherwise, you're trying to build either massive teams or smarter and smarter AIs. And look, big companies can do both of those things. But I think it's potentially a losing battle. And so...
I think empowering users is the only way to scale with users. Okay. You've had to close down subreddits in the past. Very controversial. And you called them, what did you call them?
intentionally malicious people. You just said you had enough of them. You're like that they're intentionally trying to make trouble. I think we had a conversation once upon a time about malicious compliance. Malicious compliance. That was a great term. I really enjoyed that term. Yeah, look, we have our rules and the, you know, no hate, harassment, bullying, no spam, nothing illegal, no inciting or glorifying violence, no involuntary sexualization, nothing involving kids. We enforce those things. There's one rule at the end that I think is very important.
I think we say it kinder, but it's don't fuck with Reddit. Basically, don't ruin Reddit. That's your dopey evil, presumably. That's the dope. Well, we're a community platform. It's a space where we want people to want to be. And so if you're working against our mission to create community and belonging...
You're not welcome on Reddit. Okay. I have two very quick questions. You're sure you're watching what's going on in Washington surrounding the potential ban of TikTok. Tencent is one of your larger shareholders. They're also invested in TikTok and a number of other social media platforms. How do you look at the ban very briefly? And then I have a final question about your tenure. Look, I think TikTok has the ability to, at scale, put ideas into people's heads and
And so then I think you have to look at who runs TikTok and should anybody have that sort of power? My belief is no.
And so I think it's a, I've long tried to point out the risks in that platform. Never mind the privacy violating activities at a scale I think that we've never seen before. I know we love to pick on kind of big American social media companies. I think TikTok is amazing.
Far worse. Okay. All right, last question. You turned 40 last year. Sorry to give your age out, but it means that Reddit has been around for almost half your life. I'd like you, and the final question to reflect, is how your vision for the site changed since you launched with Alexis Ohaney and Aaron Schwartz 19 years ago. So what hasn't changed is our belief in the agency of people, our belief in communities.
What has changed, like in 2005, Reddit was just links. We just linked to people. We didn't even have commenting. And one of the most fun and profound experiences I've had in life, but through my work on Reddit, is seeing...
how people in the context of a community, how supportive and helpful and kind they are to each other. I think it's really made me an optimist about people in humanity because when you strip away all the real world motivations and baggage or misincentives, I think people are amazing. And that's what Reddit, I think, reveals.
Every day in big communities and small communities. I think it's it's truly special How have you changed because I if my reflection I thought you all were too cavalier about bad people as you know That's my thing. Well, look, I believe in free speech. It's the founding principle of this country It's easy to take a position as we did in the early days of reddit We don't ban anything if you don't have anything to ban and
We didn't have any hard decisions to wrestle with for the first few years. And then we did. And so we had to confront that principle. We felt like that was the right principle. But look, your values and principles don't mean anything unless you use them. And so, look, we had to, I think, see that there's more complexity here and more nuance here. Look, we still go back to, I think, free expression, right? And again, the agency of people. But Reddit's not a country.
We live in a country where free speech is the law of the land. But on Reddit, we do have standards of decorum. And we do have rules. And there are lines. And look, we have to work very hard to define those lines. And we're constantly learning and evolving. In the early days, we didn't have a line. We just said we don't ban things. But we had to, I think, learn and grow and mature out of that and find, I think, a path.
more realistic and practical equilibrium. Ah, it's called adulting. Anyway, I appreciate it, Steve, quite a bit. Thank you so much and good luck. This must be a real emotional moment for you. We'll see when the emotions come out. I'm not there yet, but it's always a pleasure. Thank you.
On with Kara Swisher is produced by Naeem Araza, Christian Castro Rossell, Kateri Yochum, Megan Burney, and Sheena Ozaki. Special thanks to Mary Mathis, Kate Gallagher, and Andrea Lopez Cruzado. Our engineers are Fernando Arruda and Rick Kwan. Our theme music is by Trackademics.
If you're already following the show, you get $17 million in the Reddit IPO. If not, you're still poor by Silicon Valley standards. Go wherever you listen to podcasts, search for On With Kara Swisher and hit follow. Thanks for listening to On With Kara Swisher from New York Magazine, the Vox Media Podcast Network, and us. You can subscribe to the magazine at nymag.com slash pod. And we'll be back on Monday with more.
