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March 22, 2024 • 35min
The Underdog Story of Reddit
My First Million
In this impromptu conversation, Shaan Puri and Sam Parr discuss an essay by Paul Graham about the founding story of Reddit. They dive into the key events, decisions, and principles that shaped the company's early trajectory and ultimate success.
The Underdog Story of Reddit
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Key Takeaways
- Reddit was the first company in Y Combinator's inaugural batch and the reason YC was created
- The founders of Reddit, Steve Huffman and Alexis Ohanian, took a train from Virginia to meet Paul Graham after he gave a talk at Harvard, demonstrating high agency
- Some of the best startup ideas are discovered, not invented - Reddit was inspired by the "Popular" page on Delicious
- The name "Reddit" was initially a placeholder, with the original name "Snew" being too expensive to acquire (14:30)
- To seed early user engagement, the Reddit founders created fake accounts to submit links and comment until organic growth took off
- Pursuing niche intellectual interests like Lisp programming can be an effective filter for identifying talented individuals (19:47)
- The best products are an authentic extension of the founders' genuine interests and personality
- Embedding quirkiness and weirdness into a product early on is important before scale and risk-aversion set in (23:22)
- Chris Sacca was an early believer in Reddit's potential, recognizing the founders' technical skills and sense of humor (26:13)
- Despite selling early to Condé Nast in 2006, the Reddit founders got a rare second chance to buy back the company and grow it to its current scale
Introduction
In this impromptu conversation, Shaan Puri and Sam Parr discuss an essay by Paul Graham about the founding story of Reddit. They dive into the key events, decisions, and principles that shaped the company's early trajectory and ultimate success.
Participants:
- Shaan Puri (@ShaanVP)
- Sam Parr (@theSamParr)
Topics Discussed
Reddit's Origin and Y Combinator's Creation (1:09)
- Reddit was the first company in Y Combinator's inaugural batch
- Paul Graham was inspired to create YC after meeting Reddit's founders, Steve Huffman and Alexis Ohanian, following a talk he gave at Harvard
- Lesson: Giving talks can sharpen ideas and lead to impactful new ventures, as seen with Apple, The 4-Hour Workweek, and Hooked
Founders Demonstrating High Agency (3:42)
- Huffman and Ohanian took a train from Virginia to meet Graham, despite not attending Harvard themselves
- Graham was impressed by their initiative and invited them to join YC, contingent on changing their startup idea
- Lesson: "80% of success is just showing up" - take action and put yourself in positions for good things to happen
Finding Ideas vs. Inventing Them (8:36)
- Reddit's concept was inspired by the "Popular" page on Delicious, a favorite feature of Graham's
- Lesson: Examine your traffic sources, side features of apps, and personal fascinations to uncover potentially valuable startup ideas
- "One great place to discover ideas is look at your invoices or look at your P&L. Look at the cost section." - Shaan Puri
Naming and Rapid Shipping (14:30)
- The name "Reddit" was initially a placeholder, with the original name "Snew" being too expensive to acquire
- Graham advised the founders to ship quickly, resulting in Reddit launching within 3 weeks of joining YC
- Lesson: Don't get too attached to names early on; prioritize shipping and iterating
Faking Initial Traction (16:04)
- To seed engagement, the Reddit founders created ~30 fake accounts to submit links and comment under various personalities
- Sam Parr employed similar tactics when launching his Facebook group, enlisting friends to post and comment to create a sense of activity
- Lesson: "Fake it 'til you make it" to overcome the chicken-and-egg problem of early user participation
Talent Filters and Intellectual Curiosity (19:47)
- Huffman's interest in Lisp programming served as a filter, signaling his genuine intellectual curiosity to Graham
- Other potential talent filters include excelling in poker, board games, individual sports, magic tricks, eBay flipping, and overcoming adversity
- Lesson: Niche obsessions and achievements can be strong predictors of future entrepreneurial success
Products as Authentic Extensions of Founders (21:51)
- Reddit's focus on interesting ideas and anti-authority streak are direct reflections of Huffman's personality and interests
- "The best products are simply 'you' pushed out." - Shaan Puri's trainer
- Lesson: Build products that genuinely resonate with your authentic self
Embedding Quirkiness Early (23:22)
- Reddit's alien mascot and general weirdness were baked in from the beginning
- "If you start a little bit crazy, a little wacky, a little weird - later on, things inevitably become more tight-wound, more conservative, and so it's best to do it early on to establish that." - Sam Parr paraphrasing Jason Fried
- Lesson: Embrace and embed quirkiness into your product before scale and risk-aversion set in
Early Believers and the Power of Humor (26:13)
- Chris Sacca emailed the Reddit founders early on, predicting their future success and recognizing their technical skills and sense of humor
- "Humor should never be underestimated." - Chris Sacca
- Lesson: Humor and general affability can be significant assets, especially when cultivating early champions
Selling Early and Getting a Second Chance (29:06)
- Reddit was sold to Condé Nast in 2006, just 16 months after launch, for around $10 million
- The founders later got a rare opportunity to buy back the company and grow it to its current scale
- Despite its massive popularity, Reddit is still not profitable 19 years after founding
- Lesson: Early exits can still lead to future success if founders remain committed to the space and open to new opportunities
Conclusion
The story of Reddit's founding and ascent contains valuable lessons for aspiring entrepreneurs. From the importance of taking action and pursuing authentic interests to the power of embedding quirkiness early and cultivating a sense of humor, the decisions made by Reddit's founders offer a compelling playbook. While the company's path involved an early exit and a second chance, the ultimate outcome demonstrates the enduring impact of building something that genuinely resonates with users.
