peaks than ever before. The duo managed to make Reddit the go-to platform for users who wanted to be part of a community.
Reddit, which is a social news platform, gained popularity pretty late, with its user base increasing considerably in the last 7 years. Due to its user-driven content and open platform people gather on Reddit for its endless topics of discussion, free speech and content, and anonymity. Not to mention that some subreddits are so influential that one of them even created the GameStop Short Squeeze.
With its active user base and revenues from advertising increasing considerably year on year, there’s no wonder it attracted considerable investments from venture capital firms. In fact, the company went through multiple funding rounds over the years, ending up with a $10 billion valuation at the end of 2021. Even more so, the end of 2021 caught Reddit filing for an IPO, at an expected valuation of $15 billion by the time they go public. And later this year the company is finally expected to go public, but it’s hard to believe they’ll reach that initial valuation mark.
Still, with a lot of money under its belt, Reddit managed to expand its operations and increase its user base considerably. Right now, Reddit is one of the most popular platforms on the World Wide Web, with more than 1 billion monthly active users. Additionally, it is considered a unicorn startup - a term used to describe privately held start-up companies that are valued at over 1 billion dollars.
However there were many challenges to overcome in the early days of Reddit's start-up phase.
Reddit had a tough battle ahead of it because competitors like Digg and Newsvine were killing it online. What could Reddit do to shift the attention of the users to its platform?
First, Reddit focused on creating online communities for people to enjoy. As the internet continued growing, users became accustomed to the benefits of online forums. Second, Reddit's features, such as the voting system and the user-generated content, gave people the autonomy to do everything they wanted. They only needed to respect the rules!
But surprisingly one of the main subreddits that held the company back through the harder times was the NSFW one. And guess what - it was a topic started by the founders, back when they realized that any user is a good use when you lack numbers. To this day more than 10% of the traffic on the platform is porn-focused. So we can see that was an unethical yet smart decision for the future success of Reddit.
But what were the factors that contributed to the growth of the company?
Reddit knew how to infuse the feeling of community with its users. You could have felt that you belonged. This strategy helped build an impressive user base that drove massive traffic to the website. Another factor that launched Reddit to Unicorn status was its transparent platform. Topics of any kind were discussed on the site. This diversity brought different typologies of users to Reddit, from casual internet users to communities of enthusiasts.
But, as we all are aware, you can't build something astounding without significant funding. Luckily for Reddit, they have attracted the attention of venture capital firms, the company itself starting as one of the first companies financed by Y Combinator in the summer of 2005. Back then the company managed to raise only $100.000 but it looks like it was enough for them to move forward. Their last funding round was the Series F back in August 2021 when they managed to secure more than $410 million.
The future of Reddit looks promising as the platform continues to see steady growth in its user base and engagement.
A lot of start-ups start with the potential of becoming Unicorns but succumb to their hardships - look at Airlift. Reddit, on the other hand, knew how to benefit from its challenges and took online communication to the next level. They can also explore new frontiers in the realms of artificial intelligence and machine learning. This can help them to understand better the user's behaviors and needs.
All in all, Reddit is a successful Unicorn story. And we are nothing but proud of being Reddit users since its early days. Innovation in any shape or form should be celebrated, and Reddit did such a good job with the resources it had. We are excited to see where the platform could go in the future.
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