Posted on Thursday, Dec 7th 2017

According to a survey conducted by the Reuters Institute Digital News, 13% of North American users surveyed used Google News as their weekly news aggregator. Reddit came a distant second at 7%, followed by Flipboard with a 5% usage in the region. After years of controversy, Billion Dollar Unicorn club member Reddit is now more confident of its future as it eyes an IPO before the end of the decade.

Reddit’s Offerings

San Francisco-based Reddit calls itself the “front page of the Internet”. It was founded in 2005 by Alexis Ohanian and Steve Huffman as a platform for online communities. It hosts user-generated content and has built a following of over 234 million users. It allows users to submit links, create content, comment and vote on user-generated content, and host discussions on topics that interest them. Posts are classified under various Subredits or topics and can range from sports to gaming, pics, videos, and many more. Today, Reddit is the fourth most visited site in the US and the eighth most visited site in the world.

Within a year of being founded, Reddit was sold to Condé Nast for an undisclosed sum. At the time of the sale, analysts pegged its valuation in the range of $10-$20 million. By 2012, Advance Publications, the parent company for Condé Nast, spun off Reddit as an independent company while still retaining a majority stake.

Since inception, Reddit has been embroiled in controversy over its content. Till a few years ago, Reddit had maintained a free speech attitude toward its content. It allowed users to post whatever they wanted and relied on the readers’ ability to determine the veracity of the posts. The attitude was not well liked as Reddit soon got complaints of publishing hacked celebrity photographs and child pornography. Over the past few years, Reddit has changed its attitude towards its content. It now has a clearer policy on what can be published on the site. While it continues to host content on various topics, it has begun moderating user content. In 2015, it began by banning communities such as r/FatPeopleHate. Today, the ban extends to other content that promotes hate, violence, and animal abuse.

Reddit’s Financials

Reddit began generating revenues in 2009 when it launched its self-service advertising platform. For as little as $20 a day, it allowed businesses to advertise its products or services on Reddit’s bid-based pricing model and reach the audience with interests specific to the business need. It has also launched additional services such as Reddit Gold, a paid membership program for users that offers features such as the ability to turn-off ads, comment highlighting, a gold trophy for display on the homepage, to name a few. Membership fee costs $3.99 a month or $29.99 a year. While Reddit does not disclose financials, it recently commented on how its advertising revenues had grown five times over the past few years.

Reddit has raised $250.1 million in funding so far from investors including SV Angel, Bracket VC, Andreessen Horowitz, Edward Lando, Fidelity Investments, Coatue Management, Alrai Capital, Sequoia Capital, VentureSouq, Vy Capital, Y Combinator, Jared Leto, Snoop Dogg, Rick Marini, Paul Buchheit, Jessica Livingston, 500 Startups, Mariam Naficy, A. Capital Ventures, Kevin Hartz, Thrive Capital, and Philip Kaplan. Its last round of funding was held in May this year when it raised $200 million at a valuation of $1.8 billion. Reddit plans to use the latest funding to expedite internal product and business efforts, including a redesign of its homepage and venture into user-uploaded video.

Reddit has plans of listing, though not soon enough. It is eyeing an IPO in 2020. The management admits that the “time frame is pretty far out,” but believes that it is “the only responsible choice” to allow employees and investors the opportunity to exit.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns

