Three messages before we get started.

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Here’s the program.

Andrew Warner: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious startup. And the goal here is to interview successful entrepreneurs about how they built their business, and today I’ve got with me a guy who I’ve talked about in several different interviews and I finally get to have the man here to talk to him directly in person.

So, with seed funding from YCombinator in 2005, today’s guest, Steve Huffman, co-founded Reddit, the social news site with over eight million monthly visitors. He sold it to Conde Nast in 2007 for an undisclosed amount. He’s back with a second startup which is also funded by YCombinator, HipMunk, which makes it easy to find flights based on your schedule.

I want to know why his company, why Reddit made it. I want to find out today in this interview about why other startups failed. I know that Steve’s been around the YCombinator community for a long time. I want to get his insight about why certain startups there failed, and I want to find out what he’s up to now. So, Steve, welcome to Mixergy.

Steve: Hey, thanks for having me.

Andrew: Cool. I had Alexis on here, your co-founder. He talked about Reddit. I had Paul Graham. We talked about you and Reddit. It’s so good to meet you in person, sort of, via Skype.

Steve: Great. Well, thanks. I’ll see if I can live up to those two.

Andrew: What’s going on now with Reddit and Digg? What big mistake is Digg making? I’m hearing from people who are now at the top of Digg who are saying they’re hardly getting any traffic. What’s the big mistake that they’re making?

Steve: I think Digg seems to be catering to the wrong crowd, either they’re acquiescing to investor pressure or just trying to change their product too much. Maybe they’re trying to compete with Twitter too hard. But what they’re not focusing on is what they had. What made them valuable was their community and their users who were powering that site. And they seem to be neglecting them, and the users are upset about that. That’s why they’re behaving so unruly or leaving. It’s left Digg in kind of a sorry state for the past few months.

Andrew: So, my question is then, the next question’s got to be why didn’t you guys crush Digg? You and Alexis and the whole founding community of Reddit was always in there. Even while Kevin Rose would travel the world and try different tea, you guys were on top of your program, growing your community. Why didn’t Reddit crush Digg?

Steve: Well, Reddit is crushing Digg now. I think they’re almost twice as large as Digg.

Andrew: In what way is Reddit now twice as large as Digg?

Steve: In traffic.

Andrew: Okay.

Steve: Uniques per month and page views per month. It’s my understanding. I don’t have direct access to Reddit numbers anymore, but from what the Reddit folks are saying, that seems to be the case. Why didn’t we crush them earlier like before Digg did us a favor and totally imploded on their own? It’s a good question. There’s a lot of reasons for that.

Digg, first of all, they launched before us. They had a pretty good start. They launched with a lot of PR, and they were very good at riding the PR wave of social news. They get a lot of credit for inventing that business, and they were very good at riding that wave of PR and taking advantage of it.

Reddit, we kind of played it cool. We were building a site for ourselves. We didn’t receive a whole lot of PR as we grew. It was mostly word of mouth and kind of a slow and steady growth.

Andrew: So, we lost the connection, and you were saying something.

Steve: Okay. What frustrated us a little bit was that we were always put in this position that if we were mentioned at all, we were always mentioned as being second fiddle to Digg. But we were also at the same time happy with the way we were growing and really loved our community and proud of the direction the site was going.

So, while things weren’t perfect, we would have loved to have been on top. We were also happy to have Digg be number one and take a lot of the heat for the cheating stories and gaming stories and all of that, and let us just kind of grow quietly.

Andrew: Those were all the stories about how people were cheating and gaming Digg and Ping for higher ranking. Is that what you mean?

Steve: Exactly.

Andrew: Okay. By the way, I pulled up on Compete.com, which is what made me drop the Internet connection, traffic numbers for both sites. It looks like Digg, according to Compete, has 6.8 million visitors a month versus . . . actually, you know what? I can’t tell what’s what any more because Reddit did release their numbers, and it showed that Compete’s data was inaccurate and it showed that no one really had it right.

Steve: Yeah. So, I can only speak for Reddit’s numbers, and they had nine million uniques last month.

Andrew: Right.

Steve: I wouldn’t put a whole lot of stock in Compete’s Digg numbers either. So, it’s hard to say here or there.

Andrew: Okay. All right. Screw that. I can’t figure out what Digg is doing from day to day, and I don’t think that seeing what’s Compete’s telling you is going to be useful. What is going to be more useful is how did you then grow the community? For a long time, people thought that you guys were copycats, that Digg was getting all the attention on the cover of “Business Week.” How do you grow community under that kind of environment?

Steve: Well, we did get called copycats, but I don’t think we were copycats at all.

Andrew: No, you weren’t. I had Alexis on here. He talked about how the idea for Reddit came about. No question in my mind that you guys were not copycats. But how do you grow a community the way that you guys do? You have an incredible community. I’d like to be able to do that.

Steve: It was all word of mouth. All of our users came organically, so we have a lot of genuine users. And Reddit can be a little off putting at first, either from the tone of the headlines or the comments or the design of the site. It doesn’t appeal to everybody. And so, the users who stick around stick around for the right reasons. They really like the content, or they like the way things work, or they appreciated what we were trying to build, which is just a simple, easy to use thing for consuming large amounts of content. And so, in that regard every user we had was really valuable. [interference]

Andrew: Good Lord, what’s going on here with the Internet?

Steve: We’re having Internet troubles again?

Andrew: Yeah, we are. Sorry. You know what? I’m here at a Regus’ office. These guys are known for giving you incredible world class service, which they’re giving me. They’re known for giving you good Internet connection, which they’re not. I’m suffering here with great cappuccino but terrible Internet.

Steve: Let me make sure it’s not my issue. I checked this last time. I think the Internet is doing okay, but I’ll make sure.

Andrew: So, Alexis told me the initial audience came from Paul Graham’s community, that he emailed the people in his address book. He said, check out this site and they came in, and they were active. Was there another burst of members, more people? Was there another source that brought in a lot of people?

Steve: So, Paul brought us the first maybe thousand or so uniques. Then, after that I don’t remember any specific huge waves. There were times when we would be surprised like, hey look, we spiked again, but it wasn’t always clear why. Kids going back to college in the fall is generally a big boost of users for us. There’s not generally one event that’s tied to it, but we found ourselves always chasing spikes that happened in August and September.

The last big spike they had, I think, was this Digg redesign. But that’s relatively recent, Reddit and Digg both being five years old now. Over the years we’ve always grown. Our graph looks . . . it doesn’t really seem to matter what snapshot of our lifetime you’re taking. It doesn’t matter what the range of the graph is, it always looks the same. Whether it’s one month or one year, it’s kind of got the same steady growth.

Andrew: Give me a little bit more substance to this. I’m really trying to figure out what you guys did to get people in, and what I’m hearing is it just happened organically. I want to know how it happened organically. I want to know where the people are coming in and how you kept them engaged, and how you brought them back in, and how you got them to promote Reddit to their friends.

Steve: We get this question asked a lot. How do you make an online community like Reddit? My answer’s usually, I don’t know how to make it. What we did really well is not screw it up. We were very concerned when users came by, could we cram as much content on one page as possible? Is our content interesting? And if it’s not interesting, is it our fault? For example, is the algorithm broken? Are the same stories on the front page for more than a few hours, because if so, the website is now boring for most of our users because they’re already seen everything.

So, we kept a very careful watch on the churn rate of stories. On the comment ranking, was that working properly? Speed and up time were also very important.

Every time Reddit would get slow, we would have this issue where we would address the issue and make Reddit fast again. And then, all of a sudden our page views would go up. If we made our site 10 percent faster, page views would go up by 10 percent. It was always a kind of funny thing. We would joke about the only consistent thing we could do to drive traffic was make Reddit faster.

Sometimes, we’d add a lot of features and traffic would go down. Sometimes, we’d stagnate for a month or two and traffic would go up. We were always just like, who knows? Let’s just make the site faster again. That always works.

Andrew: I see. And how did that impact your decision to not have pictures on the home page and not have thumbnails of videos and so on?

Steve: So, a lot of that came out of just a desire to have something simple, something not distracting. And a lot of the original content on Reddit is in the headlines themselves. So, making the headlines the focus of the site was really important to us. And, fortunately, it was also important to the users, and it creates that sense of community. Anything that you can do to create that sense of community is super valuable.

So, allowing users to have really long headlines, for example, was one thing that we did that other sites didn’t, or not censoring swear words or not censoring anything to the extent that you could get away with it allows the community to bond and really find a home there.

Andrew: When I asked Paul Graham about Hacker News, he said that it takes a lot of time for him to manage that community. Here, you guys have a much bigger community with Reddit, and I see that you interact with people via email. You’re active on the site itself. How do you do that?

Steve: You know, when we started out, when we launched, Alexis and I would just answer every single feedback email we got. For a while, that was sustainable. Unfortunately, it’s no longer sustainable.

There’s kind of an interesting back story between Hacker News and Reddit. And one of the decisions that we made on Reddit is that we don’t want to be moderators. It doesn’t scale very well, and on Reddit a lot of the users are moderators, especially on all of the smaller sub-Reddits, the vast majority of which I probably have never even seen or neither have any of the other Reddit administrators.

Reddit’s been very good about self-policing itself and appointing other moderators and keeping things together. And also, I should say the bigger issue is that there is a distinct lack of moderation on Reddit. To a large extent, it’s anything goes. As long as it’s not spam, most content will survive.

And so, that was one of the big philosophical differences between Reddit and Hacker News is we didn’t want to remove content, or we didn’t want to tailor the site to any particular type of content.

Andrew: Where Hacker News is heavily moderated.

Steve: Right. Paul had approached us before building Hacker News and said, “Hey, can you guys make me my own Reddit where people can only upload and I can have supreme control over the content?” And then, we were like, “No, that’s not really on our agenda right now. That’s not the type of thing we want to support.”

And so, after asking other friends of ours to build it, he was like, “Fine, I’ll build it myself.” And that’s what you have with Hacker News. It’s Paul’s version of Reddit where he could control the community in the way that he wanted to get the type of content that he wanted.

Andrew: Who were the first moderators that you brought into Reddit?

Steve: That’s a good question. I know one of the first outside moderators that sticks in my mind is QGYH2. He was this insane Reddit user. Actually, I shouldn’t say he was insane. He spent insane amounts of time on the site, and we always thought he was a bot for a long time because we would look at his usage and there was never an hour during the day where he didn’t check Reddit. We were like, this guy never sleeps. He’s always on Reddit.

In my mind, he’s one of the first. Alexis would probably have a better answer to that, but I know we brought him in to just keep an eye on things because he was spending more time on the site than we were at that point.

Andrew: What was the decision like inside to allow moderators to come in and to figure out who the right moderators would be?

Steve: It was mostly out of necessity. We just didn’t have time to do it ourselves any more. I was doing development stuff. Alexis was doing his marketing stuff and flittering around the country like he does. So, we just needed help.

It took a lot of convincing, to be honest, because we felt very strongly about the direction of the site and how it should be maintained. We knew if we had gotten like a bad moderator, who just banned everybody for silly reasons, that would be a bad story for us. But we didn’t have a choice. We just needed somebody to watch things and take care of things. Go ahead.

Andrew: What were the first things that you needed the moderators to do?

Steve: Mostly keep on top of spam and vice versa. We had a spam filter that would block things that weren’t spam, and that would always create a story if the user noticed. It was just a mistake. We would try to be as apologetic as possible, but really the best defense against that is not banning things that aren’t spam. And then, also removing spam and keeping an eye out for the cheaters who the spam filter can’t catch. And so, those sorts of things, just keeping the content clear of spam is a full-time job in itself.

Andrew: You mentioned that Alexis was traveling around, frittering his time, I think you said. He basically said the same thing. I asked him how the relationship between the two of you worked, and he basically said that he was the one who hung out and you were the one who coded. He had to have done more than just hang out. Tell me more about him, because he’s going to be modest about himself the way you’re modest about yourself.

Steve: So, I would say he very strategically hung out.

Andrew: Tell me.

Steve: So, the first summer of Reddit, I basically coded when I was awake. That’s all I did was code on Reddit. So, Alexis did everything else. He did the lawyers, managed the rent, took care of every little detail of running a company of which there are tons. That was his role.

And then, as we grew, he also had a kind of train wreck of a summer. I don’t know if you know any of that story. His mom got sick, and his girlfriend got sick. It was a tough time, and so I always got the impression that he was using Reddit as kind of a way to almost like escapism, to stay in his Reddit world to stay happy and keep moving. It was always kind of amazing to me to watch from the outside him going through this and also working on Reddit.

And then, as we grew, his role has changed over the years. When Conde Nast bought us, Conde Nast had all this infrastructure that did a lot of what Alexis used to do. And that was kind of a little bit of an evolution for Alexis to figure out what his role was now that Conde Nast had PR and marketing and sales and all that stuff, what Alexis would continue to do.

It turns out he just did that stuff better than what Conde Nast would do for us. I always describe his job as making us seem cool, and that is what he would do. He would basically maintain our good will which was one of our strongest assets because he’s good with people.

Andrew: How did he do that?

Steve: You know, if somebody sent us a nice email or if somebody found a bug, Alexis would send him a T-shirt or a handwritten note or get the team to all sign something. He was just always just being super generous on behalf of Reddit, or if a user went above and beyond the call of duty. Sometimes, they would make little alien pictures or things. Alexis would always make sure to promote it and give these people credit and basically just make Reddit seem warm and welcoming, especially through personal relationships, real life relationships.

Andrew: Did you ever feel that it was unfair that he was hanging out with the community, and you were coding 24 hours or, at least, all the hours that you were awake?

Steve: No, no. He’s really good at that, and I’m not. And so, I didn’t ever really feel like that was an issue with us. The only times that I was ever frustrated with Reddit when I couldn’t code is if I was spending too much time managing other programmers or dealing with Conde Nast bullshit. Then, I would get frustrated. But Alexis was good at his job, I think, and I was good at mine, I think. We complemented each other well in that regard.

Andrew: What about all the attention he was getting for being the founder of Reddit? I don’t know that I would agree that you’re not good at being the face of a company. I saw you on Jason Calacanis’ show. You came on, first of all, with a propeller T-shirt which I thought was hysterical.

Steve: That was Alexis’ idea, to be fair.

Andrew: Oh, was it? All right. You pulled it off. The propeller was his imitation of your site. I thought you were really funny. You were quick-witted. You were quick with information. I liked you as the leader of a company.

Steve: Well, I feel like I get plenty of credit for being a founder of Reddit. I use that every day, especially with HipMunk. I feel like I got all the credit that I could handle, or I do as many interviews as I can handle which is about one per week. Alexis, he excels at that sort of thing. That’s really where he likes to shine.

Andrew: There’s also a trust there that some companies don’t have where they’re two different people. One person gets a little attention, even if it’s just for a few months, and the other person gets jealous. And you guys don’t have that, which is why I felt comfortable asking the question the way that I did. I know, when my brother and I were partners, we didn’t have that. But I’m wondering why, why that is. Why you don’t have that where other people might?

Steve: Well, the only thing that would cause me to raise my eyebrows would be like if Alexis acted like he was the only founder of Reddit or that he built it himself, which he doesn’t do. He’s always quick to reference me or the rest of the team for our roles in Reddit. And so, he takes credit for the parts that he’s responsible for, and we take credit for the, me and the other developers, take credit for the part that we’re responsible for. And so, I think everything’s been fair in that regard.

And also, you say you and your brother didn’t have that issue. Alexis and I have been friends, like we lived together for eight years through Reddit. So, we were pretty close to being brothers in the sense that we had the same relationship that I have with my sister, which is we can get mad at each other without having to apologize later. People with siblings understand that dynamic. You can be honest with each other and not take it personally.

Andrew: When Alexis was on here, I asked him why you guys sold the company, and he said it was for personal reasons. But at the time he wasn’t comfortable explaining what the personal reasons were. He’s since talked about what was going on with his family, and he’s since opened up about it. Here, you are. You didn’t have that issue with your family. Why did you agree to sell the company?

Steve: It was a little bit of an awkward time for everybody. Yeah, I don’t like to get too deep into it. Alexis had his reasons. We had another employee who wasn’t working out particularly well. We weren’t really sure about what the direction of Reddit was going to do or whether we were going to keep growing.

We have the benefit of hindsight now, and we can see, if we had known that Reddit was going to grow 20 times since we got bought, maybe we would have played our cards a little differently. Also, we were operating under this mentality of when the money’s on the table, take it. We were just poor college kids, and we had this opportunity to do pretty well for ourselves. So, we jumped at the opportunity, and most people aren’t that fortunate. Most startups fail. So, we’re like, we have a chance to be a successful startup. So, let’s do it. While I think we could have held on longer and probably made more money, we also did pretty well. So, it’s hard to complain or try to rewrite history too much.

Andrew: Have you ever regretted selling when you did instead of holding on for a little bit longer?

Steve: A little bit longer, no. Also, when we sold it was the fall of 2006, right before the economy totally tanked. And so, if we had held on a little longer, I think we would have had dark days ahead. If we could have seen the whole future that in four years things would recover and Reddit would be huge and traffic would be great, yeah, I wish I still owned Reddit now and owned it for the last four or five years.

For everything to have gone right for us, to have the stomach to survive that economy, I mean, who knows, like Conde Nast’s umbrella helped us during that economy. We could still hire and pay market salaries when a lot of people couldn’t. So, maybe we wouldn’t have even survived. It’s hard to say.

Andrew: How did life change after the sale?

Steve: Not drastically, not by a drastic amount. We moved to San Francisco. That was a pretty big change, but our best friends at the time also moved to San Francisco. So, it was mostly the same story in a new city.

Andrew: I mean, personally. I think on Calacanis’ show you said that you became a millionaire afterwards. Here, you’re telling me that you were a poor college kid when you started out. So, personally, away from work, how did life change?

Steve: Having money takes a lot of stress out of life. It’s funny I’m in this weird position now where I don’t remember quite how my thinking about money has changed. I know it obviously has because I don’t really think about money a whole lot these days, but I also don’t live a demonstrably different life. I still hang out with the same friends. My favorite memories are basically the same things that I used to do in college or that summer with Reddit before we sold, which is hanging out with my friends, playing video games or playing cards or whatever we do together. So, day-to-day life hasn’t changed a whole lot. I feel like I’m a little less stressed out. I don’t think so much about what I’m going to spend money on, but I also don’t spend a whole lot of money. It’s hard to say, to be honest.

Andrew: Do you remember the day when you signed the paperwork, when it was done? What was that like?

Steve: Yes. I remember actually the day before much better. The day before was when all the lawyers had agreed, and we basically said, “Tomorrow we’re going to sign the papers.” I remember I got really emotional that day. I was sitting there at my desk in Boston, and I just cried. I don’t know if I was excited or relieved. It was a stressful time trying to sell Reddit. There were lots of times when we thought, oh, it’s not going to work out. We just wasted the last month negotiating with these guys. That was a pretty emotional time. And then, when we actually signed Reddit or when we signed the papers, it was almost just like any other day. I felt like I had already gone through the big breakthrough the day prior.

Andrew: I get that. All right. So, now you did it. You stuck around YCombinator. You’ve talked to new startups. You’ve given them advice. You’ve also seen some succeed and some fail. The ones who don’t make it, we don’t really get to hear much about them.

I’d love to interview any YCombinator company that didn’t make it to find out what happened. Short of that, since you’re here and you’ve seen them, what do you think happened?

Steve: I think a lot of them have a common story in that they weren’t building something inherently useful. And they didn’t recognize that soon enough, or they didn’t have the stamina to change ideas. And so, when they weren’t getting traction with their idea, they were going to have to either do something radical to convince people that what they were doing was useful or do something radical or even more radical and build something completely new.

A lot of people just don’t have the stamina to do so. Other things are calling them, job with stable salaries or going back to school. I think it’s easy to make an excuse to go do something else, and I think that’s a common story. There’s a lot of cases where founders just didn’t gel. They didn’t know each other well enough beforehand, or they weren’t the right mix, or they weren’t the right type of people.

But I think the fundamental issue is not building something useful and not really committing for the long haul. Just quitting too soon is a common issue.

Andrew: Quitting, just saying that’s it. We’re going to close up the company. We’ll move on, and we’ll get another job. That’s what they say?

Steve: It’s rarely that defined. You can see it. You can see it a month or two into YCombinator, like you guys probably aren’t going to make it. But they’ll drag it out for nine months, kind of working, kind of doing things, saying things like, “Oh, we’re not developing our product right now because we’re waiting for this deal.”

Can you hear me?

Andrew: Yeah, I can.

Steve: My screen saver just turned on, and the password window popped up.

Andrew: Enter the password. I’m taking notes on what you said so I can ask some follow-up questions.

Steve: I think we’re all square.

Andrew: Okay.

Steve: So, yeah, because you meet people and you say, “Hey, you’re startup is dead.” You may not realized it yet, but it’s dead.

Andrew: But they’ve quit on it without officially saying they’ve quit.

Steve: Yeah. Some officially say they quit, and that saves a lot of people a lot of effort. Maybe they pay back their investors and move along. Others seem to give up on their idea without having a new one, or just kind of, the writing’s on the wall for quite a long time.

Andrew: There’s a big belief in YCombinator that you need to build something useful, without as much emphasis on marketing that useful thing. If you build it and it’s useful, then people are going to find you, and they’ll give you feedback. And if you listen to their feedback, you’ll be able to improve it, and you just keep doing that over and over again. That seems to be the philosophy. But have you ever seen companies that did build something that was useful but just weren’t able to get anyone to know about them or spread the word about them?

Steve: I can tell you a story of somebody. I don’t know how familiar you are with the AirBnB guys or their story.

Andrew: They came on here. I love those guys, yeah.

Steve: I think they had a similar story where they had that company like nine months or a year before coming to YCombinator, and they were having that problem. They were directionless, and they weren’t growing the way they expected to. I think if they hadn’t done YCombinator, they probably would have considered making some drastic changes. And then, they basically came into YCombinator and had this instant like shot of motivation and some new insights into their business and managed to totally change the company. Their traffic pre-YCombinator and post-YCombinator, or that graph, is pretty startling.

And so, there’s a lot to be said for just doing the right things at the right time, or when they took control of their business and started meeting their customers, they were able to make quite a drastic change in the company that had been around for quite a while.

One of the things YCombinator does well is there’s a lot of inherent motivation in YCombinator. You don’t want to let down Paul or you don’t want to let down all these investors you’re going to be presenting in front of. You don’t want to look foolish in the press, because whether or not you build a good product, you’re going to get a ton of press just being a part of YCombinator.

And so, most people have a desire to not look like fools. And so, they work really hard to, at least, feign usefulness whether or not they actually have it. And most of them in the process of feigning build something useful.

Andrew: All right. Do you have an example of a company that didn’t build something useful and just got tired before they could iterate their way toward usefulness?

Steve: In our first batch of YCombinator, there was a company called . . . they went through a couple of names. They started off as a dating site. The site that I think went public was called BrainGuppy [sounds like], and the idea was that it was this kind of question and answer site for building up kind of unique profiles, almost like a really trimmed down OkCupid.

They went through a couple of iterations of the site. The guys were really clever and smart. The site was kind of fun, but they weren’t really getting a whole lot of traction. And then, at the end of the summer, they all went back to school. And so, they were faced with this decision. Do we continue pushing the site that isn’t getting a lot of traction, or do we just go back to school? And so, they ended up going back to school. The site floundered, and the rest is history.

Now, for that reason, YCombinator has a rule where they don’t generally bring in students who can go back to school. You have to either drop out or graduate before doing YCombinator.

Andrew: Okay. And I could see also that the other reason for failure which is that the founders don’t know each other. I know now that YCombinator screens heavily for that. They want to make sure that there’s a relationship there. How do they help you make a product more useful?

Steve: So, right away we had Paul in our ear constantly. He was sending email all day, like, “This sucks. This is not what you should be doing.” Some of it was good advice. Some of it was bad advice. We had this one user and Paul. It didn’t matter if we were bad or not. He was going to continue using us until we were good. And that was helpful.

I don’t know if it happens quite as much in YCombinator because it’s bigger, but that was really valuable. And we also had Paul promoting us in his essays. So, we got these users who would give us the benefit of the doubt. If Paul Graham is promoting us, there must be something there. So, we’ll hang around until something is because our first version of Reddit was pretty lousy. It was slow. It was particularly ugly. It didn’t work right. It was always down. There were lots of issues. We were fortunate in that we had YCombinator and Paul shepherding us through that learning time for us.

Andrew: Just as Alexis was overly modest about his role, I feel that when I asked Paul Graham about his role in Reddit, how he helps create a better product, a more useful product, he said he just doesn’t know. I don’t know if he was overly modest or what, but I’d love to understand what he contributes, or I’m sorry, how he does it.

I’d feel so much better if there was a system out there that anyone can go and use than to say there’s one person who’s Paul Graham. And if you can get his ear and you can get his time, then your site will be user friendly. And if you can’t, then there’s no answer here. I want to understand why he does it or how he does it, sorry. What do you think?

Steve: I think Paul is a good product guy. There are lots of good product people out there. They’re not always working on the right things, but Paul is, I think, an exceptionally good product guy. He has a really good eye for what’s useful and what isn’t. And he’s also completely stateless and has no social filter.

It helps that you can go to this guy who will just be like, “This is stupid.” And it doesn’t matter whether you’ve been friends with him for five years, or you just met him or what. He’ll say that to anybody. Like if Larry and Sergei showed him a new version of some Google product, Paul would have no problem being like, “This is stupid. Nobody will use this.” And he might be right. That’s the thing.

And so, Paul, I think, the combination of his being good at products, being completely honest and having no social expectations makes him a very useful source of feedback.

Andrew: Do you remember one thing that he helped make or one way that he helped make Reddit better? I’d like to see his ideas in action.

Steve: So, one of the things he told us very early on. I don’t even think we had even launched anything. Maybe we had shown him some screen shots. He insisted that we put as much content in the upper left of the page as possible, and I think that was the first time I had heard that idea. And that’s what we did.

We’ve done that for all of Reddit, and I do that now in other products like HipMunk that I’m working on. We try to make sure, not necessarily upper left, but as much content, as much useful information on the page as possible. That’s just a piece of web product advice from Paul that I’ve carried with me for the last five years or so with good results.

Andrew: Okay. Did you ever disagree with him?

Steve: Of course.

Andrew: Did you ever say, no, you’re wrong? And how did that go? What did you disagree with him about?

Steve: Oh, our name, the logo. He hated the logo. He thought we should put the logo down in the lower right side [inaudible 36:52]. There’s a lot of branding things that he cared about. [inaudible 37:00] He wanted his own Reddit so that he could have that community.

We disagreed quite vehemently there to the extent that he built his own version of Reddit. But once we knew we were onto something or once we had the philosophy behind something that was working, we would generally stick with [inaudible 37:32]. Paul doesn’t take things personally when you disagree with him, which is also [inaudible 37:40].

Andrew: One more thing about startups, entrepreneurs who quit too soon. Why do you think you stick it out? What’s your motivation or what was your motivation for sticking it out through the hard times? What is it that you have that others who quit too soon don’t have?

Steve: Well, there’s a lot of things. One was I didn’t have the lure of going back to school, and I didn’t want to work for somebody else. Even just after that first summer of doing Reddit, before it wasn’t really taking off but it had a few users, that was enough of a good experience for me to know that I don’t want to work for anybody else. I want to work for myself.

So, I felt like we didn’t have a choice. If Reddit wasn’t growing, maybe we would have walked away at some point. But Reddit was always growing. Or if it had a stagnant month, there were still people there using it. And so, our feeling was if somebody finds this useful, somebody else who hasn’t seen it yet will also find it useful.

And so, not letting those people down was a big motivating factor. And then, a much sillier motivating factor but still important was I didn’t want to look silly in front of my parents. So, I didn’t want to look silly in front of my peers. I wanted to have a successful thing, just for my own personal, I guess, satisfaction.

Andrew: Were your parents the kind of people . . . how would your parents have reacted if it failed and you looked silly in front of them?

Steve: You know, they would have been supportive. They would never, like, tease me or anything. But my mom was kind of, especially in the early days, always calling me and being like, “Hey, when are you going to get a real job?” And I was like, “Never.” I really wanted to demonstrate to them that this was a real job and we’re building a real thing. And while they can’t relate to the content on Reddit or any of the things that, I shouldn’t say any, but many of the things that make Reddit magical might not appealed to them, that we were actually doing something real and making an impact.

Andrew: Did you come from a family of entrepreneurs? How was entrepreneurship looked at when you were growing up?

Steve: So, my parents divorced when I was young. So, I had the advantage of having kind of two sets of parents and lots of perspectives. So, I had my father who was always talking about some idea he had. Now, I want to open a restaurant, or I want to open this go-kart rink, or I want to do this and do that. And so, he was just always talking about starting companies. He actually idolized his father-in-law who owned a bakery. He just thought that was the coolest thing ever, and his parents owned a furniture store. So, there’s some amount of entrepreneurship around, not tacky or anything like that, but enough around that it always seemed like a possibility.

And then, I had my mother and step-dad who had a very different perspective. My step-dad was a successful business guy, always talking about business things and really good at economics. And he was also a military guy and kind of gave me a totally different perspective on how to approach problems and how to work with people.

And I think that was all really valuable growing up. I didn’t know it at the time. But looking back on it, I feel like I had a distinct advantage of having so many influencers and different perspectives.

Andrew: Did you start any other businesses before Reddit, maybe something smaller?

Steve: I tried a couple of times. I repaired computers in high school part-time. I tried to build this computer manufacturing company where I build and sell PCs. That didn’t go so well. I spent most of my time as a kid just learning how to program for no other purpose than learning how to program. I’m glad that I did. I didn’t know at the time that it was going to be valuable, but it’s paid off in spades now.

Andrew: What was it about programming that kept you going?

Steve: It was like Legos, but you didn’t have to buy more Legos. Programming is cool in that you can build things, but the raw materials are free or close to free. If you have a PC, even a really old one . . . in fact, really old ones came with a lot more tools than they do now for learning how to program. You can build things. You can construct castles in the air.

Andrew: Do you remember one of the castles you made early on?

Steve: I used to write a lot of games, a lot of stupid games. I remember working really hard on my wireless network inside our house before wireless networks were cool. That was a project of mine that consumed me for quite a while. I always had the satisfaction of building things that worked, even though they didn’t do anything particularly useful.

Andrew: What was one of the games?

Steve: Oh, I had this combination of . . . it was like two player Asteroids. I guess, Asteroids does have a two player version at the time, but it just had a couple of ships flying around shooting each other.

Andrew: All right. Let’s talk about HipMunk. What’s the idea behind your new site, HipMunk?

Steve: So, HipMunk, the idea behind it is really simple — that buying plane tickets or planning traveling is a very painful experience, and we can do it better. And so, that’s the simple motivating factor behind HipMunk. When my co-founder, Adam, called me this past spring and said, “Hey, I want to do this travel thing,” my only objection was, are you sure we want to be in the States?

It’s an easy sell that yes, there should be a better travel thing. You should be able to buy tickets easier, get plane tickets easier, hotels easier. That was not the thing we talked about. That was obvious, buying plane and hotels sucks.

Andrew: What sucks about it? Before we get into what’s obvious, what sucks about it? I thought I just go into one of the search engines, like Expedia. I say what day I want to take off, morning or evening. I see a list of flights. I sort them by price. I pay for the cheapest one and I’m off.

Steve: Yeah, you pick for the cheapest one, but you know in the back of your mind, well, this one is cheap. It’s cheap because it has two layovers. Maybe there’s a non-stop that’s slightly more expensive but a lot better.

Andrew: But you can still say, no layovers, or I’m willing to put up with one layover.

Steve: Yeah, but then, what if there’s a layover but it’s $100 more expensive? You basically get overwhelmed by data. All the travel sites have access to all the same data effectively, including us. So, it’s hard to win on price, but I knew the experience was bad. And I felt that it shouldn’t be bad because I would be buying something from a fixed list of a few hundred things. Finding the best one shouldn’t take an hour, and I shouldn’t be mad. Sometimes, I’d be like, I would have to take a walk after buying a plane ticket because I just felt like, man, this totally derailed me. I can’t work for a little while because I’m frustrated with the experience I just had.

And to top that off, the websites often had this tone of almost like I don’t want you on my website. I’m just a means to an end for them. They can serve me apps, but they only serve me useful content in this one by one square in the center of the page. It’s just like, what the hell? I’m making you money. Throw me a bone.

Andrew: Okay. And so, how are you solving that problem? And I’ll tell you in a minute. It sounds like I don’t like HipMunk. I want to tell you in a minute what I like about it, but I’m curious about how you guys are planning to solve that frustration.

Steve: Sure. So, we do a couple of things. So, our overall goal is to make the experience better. So, the way we do that is, first of all, we don’t show you 35 pages of results. We cram all of our results on one page. One of the ways we can do that is we remove about 70 percent of listings right off the bat. If you tell us a little more about what you want to do, we can remove like 90 percent of those things, and that makes it really easy to see what the options are.

If you’re flying across the country, there’s really only about five or six different options to choose from. And so, we will go down from a few hundred to five or six. That makes the decision a lot easier. We present the results in an easily adjustable format where you can see the length of the flights, and you can see the connections. You don’t have to read a lot of text and your brain has to do all this parsing and remember all these flights that you’ve previously seen and that sort of thing. You can just see it all at once. That makes the experience go a lot faster.

Andrew: That’s one of the things that I like. There are two things that I love about this site. The first is that, as you said, you’re displaying in a visual way when a flight takes off and lands. Next, the price. That’s the most important thing for me. And what I usually will do on a site like Expedia or Travelocity or any of the others is I’ll start to scan down, and I’ll start to see what time are they leaving, when is that one landing. And then, it’s not organized based on time, based on when they take off and arrive. It’s organized by price. So, I have to really do a lot of work to figure that out, and that’s a frustration for me.

The other frustration you guys are solving is sometimes a flight isn’t the best way to get from point A to point B. For example, if I’m in Washington, D. C. and I want to get to New York, in many cases Amtrak is better. And you guys list the Amtrak times and the Amtrak prices right there with the flights.

Steve: I’m really excited about Amtrak. We actually haven’t promoted that as much yet because we don’t have a relationship with Amtrak, but they’ve actually become more willing to talk. So, that’s going to improve in the future, because that’s like one of these things that not a lot of people know. But if you’re in the Northeast, Amtrak’s the way to go. It’s so much better than flying.

Andrew: I didn’t know that. It’s so much better because you don’t have to waste time at the airport. You know exactly when the train leaves. You don’t have to go through security. You don’t have to waste time waiting for it to leave or deal with delays. And then, once you’re in there, you plug right in. You have Wi-Fi. People can call your cell phone. It’s just a much more convenient way.

Steve: It’s like flying first class.

Andrew: Yes.

Steve: For a tenth of the price, sometimes.

Andrew: Right. Right.

Steve: Plus you get dropped off in the center of the cities.

Andrew: That’s true. You get dropped off in Manhattan instead of having to go from Queens to Manhattan and figuring out a way to get there. Either you wait in line for a taxi, or you have a . . .

Steve: It’s Union State or Penn Station.

Andrew: Right.

Steve: It’s that simple.

Andrew: I would suggest one more addition. Can you guys add buses in the Northeast? It’s very often easier and faster to take a Chinatown bus than a flight or a train, even last minute.

Steve: Short answer is absolutely. That was actually the original idea of the site. It was multi-modal transportation because it’s not always obvious. Planes aren’t always the best option, and the other options aren’t always obvious.

We did planes first because that’s where the most pain is, and it’s the most established way to grow. But we will definitely be circling back to add. Like I said, that was the original idea, and we’ll be getting there soon enough.

Andrew: Who knew I used to laugh at the idea of a bus from Chinatown? I thought it would just be some crappy old bus. Those buses are terrific. You can plug right in, also. You have Wi-Fi, but really you’re going to end up with 3G on your mobile. It’s terrific.

Steve: Fifteen bucks, can’t beat that.

Andrew: Fifteen bucks, can’t beat that. Do it last minute. Perfect.

Steve: Yeah.

Andrew: I missed the bus. I had to go from New York to D. C., I guess it was earlier last week. I missed the bus, and there was another one right there, an hour later. Perfect. If I miss a flight, I don’t know what I have to do.

Steve: Yeah. If you miss a flight, you have to bribe somebody and you’re going to have a bad day.

Andrew: It was, like you said, in the heart of the city. So, I could just jump on the bus. Why take funding for this business at all? You did okay with the first company, with Reddit. Why not just fund it yourself and grow small and do it the 37Signals way?

Steve: Yeah, we could have done that. There’s a couple reasons. Well, one, we did YCombinator largely on a twist of fate. When Adam called me, he was in Boston finishing his undergraduate at MIT, and I was in Virginia hanging out with my wife who was finishing her med school degree in Virginia. So, the fact that we ended up on the Bay Area was largely a function of the fact that my wife started her residency at Oakland Children’s. If that hadn’t happened, we could have ended up in . . .I don’t know how familiar you are with how medical residencies work, but it’s madness. You basically make this list of cities, and then every med student in the country finds out on one day where they’re going. And I was going where my wife was going. Fortunately, that was the Bay Area. So, that was kind of the first decision.

And so, being in the area made it really easy for us to consider doing YCombinator. We could have funded it ourselves, but if we can’t convince anybody else to fund us, maybe we have an issue. And taking money from other people is a great motivator, especially for me. It would have been tough, or I should say, it would have been easy for me to walk away from HipMunk at any point. I’d be like, I don’t know. Hey, this isn’t working out. Let’s take our money back and go do something else. As soon as you take money from somebody else, you’re on the hook, kind of mentally and legally to do your job the best that you can. And that’s good.

And then, there also was the mentality of if it’s not broke, don’t fix it. You know, it worked with Reddit. We had a pretty good experience. Why not do it again?

Andrew: I see. Now you’re in a situation where you don’t need it so much. You’re not a poor college student. You’re now in a situation where you’ve got a wife and you need to spend time with her. How’s this different?

Steve: It’s different in a lot of ways. Our hours are different. I work more reasonable hours now, but I also know a lot more now than I did five years ago. So, I don’t have to learn how to build web apps again. I know a lot more this time. So, in that regard, I get a decent amount of work done. And Adam is also a technical founder, so we had two programmers when we started this summer, which made building that first product go a lot quicker.

But one of the things I learned on Reddit was how to not burn out, or I should say, on Reddit I burned out a couple times. I just wouldn’t get any work done for a while because I just didn’t feel like working on the same thing. And, you know, one of the lessons is have a life. So, I’m much more cognizant of having hobbies and spending time with my wife and spending time with my friends, because those are the things that keep you happy and make life worth living.

Andrew: How did you burn out? Do you remember a time when you burned out? What was that like?

Steve: Yeah. There was a time in Boston, before we had sold where, fortunately, we were dealing with the acquisition at the time. So, we had that to keep us busy and used that as an excuse for not getting anything done. But it was just hard to get work done. It was always the same issues, like fighting spam. Users were complaining about something. It just kind of takes its toll. That’s come and gone over the years. I don’t know if there’s a way to get past it other than just stepping aside, taking a vacation, or just working on something else for a while.

Andrew: What kind of things do you do now to separate yourself and get some distance?

Steve: Well, me and a buddy started racing motorcycles about a year ago. So, we can do that. I spend actually far more time maintaining my motorcycle than I do riding it, but it’s always fun. HipMunk is still in the position where there’s a lot of interesting problems to solve, also.

Andrew: Like what?

Steve: And I have my wife. When she gets home, I stop working. And the HipMunk problems? Well, we’re starting from scratch. We don’t have to deal with spam and an angry community. We have to deal with airlines and where we’re going to get the data. What’s this deal going to look like? What feature are we building? There’s so many more features to build.

On Reddit, we basically had two features and just iterated them over and over. User submit stories, users submit content or comments. On flights, we want to do flights. We want to do hotels, buses, trains. How do we want to sort them? How do we want to display them? There’s just so many more things to do.

Andrew: All right. Finally, what kind of headline do I need to put on this thing to get a ton of traffic from Reddit? How do I game Reddit to get a lot of traffic for this interview?

Steve: If you want to game Reddit, the headline should be like “Reddit founder bad mouths Reddit.”

Andrew: Yes, in his underwear with a hot chick or something.

Steve: Reddit founder decries left wing content on Reddit.

Andrew: Would you please decry left wing content, please, and maybe right wing, also? I’d like to get both sides.

Steve: I can decry left wing content which is . . . we have enough left wing content, but it’s hard. Reddit users . . .

Andrew: What is it about left wing content that you don’t like?

Steve: It’s not the content that I don’t like. I guess it’s the amount or the lack of different opinions on some parts of Reddit. It’s funny because, on Reddit, the Reddit users don’t really know my personal opinions on anything. And so, we had this whole controversy with the atheists on Reddit.

It’s funny, because while I agree wholeheartedly with their message, I felt like I was kind of a standard bearer for making Reddit seem welcoming for new users. And so, people were like, oh, I guess he’s just some sort of devout Christian. He just wants to squash our message. And I always take the opinion that my views have nothing to do with this. I’m just trying to maintain Reddit, and it’s been kind of this running joke.

Reddit has the content that I love. That’s the whole point of Reddit. That’s what we were building. But I often get ripped by the user base for censorship or something like that.

Andrew: Are atheists becoming a little too militant, a little too fanatic?

Steve: I think it can get dangerous. The community has been good about policing itself. There was a phase there where if somebody screwed up in real life, but Reddit felt this sense of needing to dispense justice by calling this person and harassing them, which is a major issue. And I took no part in squashing this. They did it themselves.

A couple of more reasonable people were like, “Hey, quit it. This is not healthy. This reflects poorly on us. This ruins people’s lives. This is not how justice is supposed to work.” And so, I feel like Reddit gets a little too ahead of itself sometimes but also manages to rein itself it occasionally. They’re very self-aware. And that’s one of the things that I think is pretty cool about it.

Andrew: All right. The new website is HipMunk, H-I-P-M-U-N-K. He finally ditched Alexis. He gets to get all the attention for being the founder of a company and no more left wing articles on Reddit. It doesn’t work really, guys.

Check out HipMunk.com. I’m telling you I like this site a lot, and I think you guys will, too. Thanks for doing the interview.

Steve: Hey, thanks. That was a good interview. I really appreciated it.

Andrew: Thanks. Thanks you all for watching. Cool.

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