Reddit Case Study: How Personality Impacts Product Success Essay

Why profiled on Startup Review Reddit is a social news site that was launched in June 2005. As of April 2007, Reddit is generating ~170,000 unique visitors and 1. 9M page views per day. The company was acquired by Conde Nast Publications in October 2006 for an undisclosed sum. Reddit is thus far the most successful graduate of Paul Graham’s Y Combinator program, reaching a successful exit with just four employees and $100,000 in total angel funding. Interviews conducted: Steve Huffman, Reddit co-founder. Aaron Swartz, early employee/co-founder via merger with infogami. om. Key success factors Easily accessible, interesting content the key to product appeal Reddit’s success from a product perspective can largely be attributed to the site’s interesting content that is made easily accessible right on the home page. The Reddit team stuck with a design philosophy that focused on the content, as opposed to site features. The user submitted links to articles occupy the majority of the real estate on the site, and Reddit did not clutter the content with registration forms, ads, or features.

Equally important to the accessibility of the articles, was the quality of the content itself. Reddit articles can best be described as news for tech-oriented people, but not just technology news. The articles tend to be intellectual and witty, largely shaped by the personality of Paul Graham devotees and the Reddit founders’ themselves. Because Reddit competitor Digg launched off the basis of Kevin Rose’s TechTV audience, one could theorize that the Digg community is more tech gadget oriented and mainstream, while Reddit has the personality of a high-end hacker.

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Regardless, of the origins, I think it is fair to say that Reddit’s success has a lot to do with the articles being interesting. I think you would be hard pressed to visit Reddit and not find at least one article where you learned something pretty cool or did not crack a smile. Initial community of Paul Graham devotees An important factor to Reddit’s success was its affiliation with Paul Graham; this is aside from the seed financing, support, and business advice that Y Combinator provides to it’s start-ups.

Paul Graham was directly responsible for helping to launch Reddit, by sending traffic from his website over to Reddit. As detailed in the Launch Strategy section below, a link from Paul’s site generated a consistent 3,000 – 4,000 visitors per day to Reddit immediately upon site launch. Another event that aided the growth of Reddit was a blog post about Reddit changing the Reddit site from Lisp (correction: created by John McCarthy but was evangelized by Paul Graham) to Python. This stirred a bit of controversy in the blogosphere, and exposed more Lisp fans to the Reddit site.

Partnership opportunities led to exit Reddit’s successful exit to Conde Nast was due in large part to an OEM relationship that Reddit had developed with Conde Nast. Reddit adapted its technology to power a site called LipStick. com, launched by Conde Nast and targeted at the celebrity gossip market. The Reddit team and technology impressed Conde Nast during this interaction, ultimately leading to its acquisition. The lesson learned here is perhaps obvious, but successful partnerships do lead to successful exits.

Reddit did well to maintain its flexibility in regard to business model choices, making itself available to OEM opportunities, rather than just building Reddit as a destination site. Launch strategy and marketing Reddit was launched on June 22, 2005, and saw fairly steady growth from that point forward. Initial traffic was provided by referring traffic from Paul Graham’s website to Reddit, resulting in 3,000 – 4,000 visitors per day upon launch. This provided the initial spark to grow the community.

Reddit seeded the initial content on Reddit almost exclusively through the efforts of the Reddit team in the early days. For the first few months of Reddit’s life, Reddit co-founders Alexis Ohanian and Steve Huffman scoured the web to find interesting articles to post to Reddit. They were able to create the illusion of more contributors by submitting articles under different user names. As Reddit developed a loyal readership (due to the content hand-selected by the team) other users began to submit links, although the Reddit team was still responsible for 80% of the submitted links for many months.

Reddit was able to spur contributions from the readership by creating a point system around a concept they called karma. By keeping a scoreboard of top contributors, this sparked a healthy competition amongst Reddit users to be a top contributor. Today, the community does provide all of the submissions rather the Reddit team. Reddit was able to grow its site traffic from 3,000 UVs per day to 170,000 UVs per day in just under 2 years time. The Reddit team did very little traditional advertising. They attribute the majority of the site’s growth to positive word of mouth about the product, and good PR coverage.

In my interview, Steve explicitly credited Alexis for doing a good job of garnering press coverage. Aaron pointed to re-writing the site in Python from Lisp as a key turning point, roughly 5-6 months after launch. This sparked a bit of controversy in the blogosphere among Lisp (and Paul Graham) devotees, but the net result was a good bit of traffic for Reddit. Up until that point (November 2005), the site experienced slow but steady growth, from 3,000 to 7,000 UVs per day in about 5-6 months time. Growth started accelerating more rapidly after the LISP vs.

Python blog post according to Aaron. Exit analysis Reddit was acquired in October 2006 by Conde Nast Publications, which owns approximately 30+ distinct brands between its print magazine and online sites. Conde Nast’s more well-known brands include The New Yorker, Wired, Vogue, Vanity Fair, GQ, and Glamour. As mentioned above, Conde Nast approached Reddit to license Reddit technology for use in a Conde Nast site, LipStick. com. Reddit was able to sustain itself (its team of four) on the licensing revenue generated from the LipStick. om deal and $100,000 in angel funding. Thus, at the time of acquisition Reddit was generating very little revenue (sub $50,000 per month). While I have no inside knowledge of the size of the acquisition, the purchase price was likely sub $10M. Still a nice pay day for four people in less than two years time invested. Conde Nast will continue to integrate Reddit technology and approaches to social news into their branded online publications, as well as licensing the technology to other publishers. Food for thought

Inevitably, Reddit is compared to the larger social news site Digg. com. I wrote a fairly lengthy case study on Digg here. I believe that one of the main reasons Digg grew much larger than Reddit was because of Digg’s advantage in natural search rankings. The Reddit founders acknowledged to me that they invested very little time or effort into SEO (search engine optimization). According to Steve, less than 10% of Reddit traffic today comes from Google. I find it pretty remarkable that Reddit has grown as fast as it has without more referral traffic from other sites.

Speaking with the Reddit founders you get the impression that Reddit’s success was not so difficult. Steve credited a few factors: 1) being friendly and likeable to users, investors, and business partners, 2) keeping the website up and running and responding to the community, and 3) garnering positive press coverage. Aaron would claim that persistence was the key. I have read some interviews with Reddit co-founder, Alexis, where he credits being passionate about the product and serving the needs of users as the key.

I would say that all these factors were no doubt important, but there are plenty of entrepreneurs who are passionate, hard-working, persistent, and generally “nice guys” that don’t have success. My explanation gives the Reddit team a little more credit for their personal uniqueness. For one, they did a great job of seeding Reddit with fun and interesting content. It was their own personality that set the tone for the site – the things that they found interesting and fun. Afterall, they did the majority of the submitting in the first few months.

They also had a relentless focus on simplicity and ease of use for every aspect and feature of the Reddit site. This combination of personality and product execution, plus initial site traffic courtesy of Paul Graham were the key ingredients in my opinion. Reference articles and further reading A passion for your users brings good karma: Alexis Ohanian, co-founder of reddit. com, Startupstories. com, November 2006 Reddit Acquired: Interview with Founders, October 31, 2006, TalkCrunch


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