Reddit stands as a social media titan, boasting more than 110 million daily active users and a market valuation approaching $40 billion.
TL;DR
- Reddit founders Alexis Ohanian and Steve Huffman sold their company for $10 million just months after launching it in 2005.
- Ohanian admitted naivete, citing personal tragedies and the appeal of immediate wealth as reasons for the early sale.
- Both founders later rejoined Reddit, with Huffman serving as CEO and Ohanian in leadership roles before leaving again.
- The article highlights the common entrepreneurial dilemma of selling early versus holding for potentially larger future gains.
Just months after University of Virginia roommates Alexis Ohanian and Steve Huffman launched the company in 2005, they sold it to Condé Nast for just $10 million.
Looking back on how successful the platform is now, it might seem astounding for them to have sold so prematurely —and Ohanian even admitted he was a bit naive. But the then-23-year-old’s life was nothing short of complicated. His dog died, and loved ones, including his mom, battled serious health problems.
“As a first-time CEO fresh outta college, you’re feeling invulnerable, feeling really good about building this business,” Ohanian recalled to Wired in August. “And then all of these things happen. And in particular, when my mom was diagnosed, it really framed mortality for me in a new way.”
At that moment, $10 million also seemed like a life-altering sum for the young adults. Ohanian had witnessed Zuckerberg reject Yahoo’s $1 billion offer for Facebook and believed it was “preposterous” to refuse such a substantial amount. For Ohanian, the prospect of generating millions in value within a brief timeframe was highly appealing.
“If anything, I was very naive,” Ohanian said. “You have to consider $10 million of value creation in 16 months. When we first got the offer, I’m thinking: It’s been not even a year. This is more money than my parents will earn their entire working lives.”
Ohanian and Huffman redefined the definition of success.
Reddit’s founders have found new pathways to success.
Huffman rejoined Reddit and has served as its CEO for the last ten years. Ohanian, on the other hand, rejoined Reddit as a full-time employee in November 2014, assuming a leadership position (executive chairman/executive director). Ohanian ultimately resigned from Reddit to protest its content moderation rules, demanding a Black board member be appointed in his stead. He subsequently established the venture firm Seven Six. Ohanian discussed the growing market of women’s sports at the Coins2Day Global Forum in Riyadh this week.
Beyond money and career milestones, Ohanian has discussed a new wave of CEOs who don't lament missed business chances as much as they do time away from their families. “I wish I’d spent more time with my kids,” he recalled them stating.
“CEOs around me are starting to understand this and want to be amazing leaders, partners, and dads,” he added.
Even Sam Altman, CEO of OpenAI—the world’s most valuable private company—recently echoed that sentiment after becoming a father. “It is the best, most amazing thing ever,” he told Bloomberg. “And it totally rewired all of my priorities.”
Startup quandary: liquidate assets or maintain ownership?
The choice made by Reddit's founders to sell their company early isn't an uncommon one; it represents a frequent dilemma faced by entrepreneurs in Silicon Valley, who must weigh the certainty of an immediate financial gain against the possibility of pursuing much larger future returns.
YouTube is another example. Just over a year after its creation, cofounders Chad Hurley, Steven Chen, and Jawed Karim took an offer from Google to buy out the video sharing platform for $1.65 billion. However, with its valuation today being closer to $550 billion, YouTube has grown some 333x (unadjusted for inflation).
Instagram, too, sold less than two years after its founding. Facebook offered some $114 billion for the photo-sharing app, divided between its two co-founders, Kevin Systrom and Mike Krieger, as well as investors and less than a dozen employees.
Although the financial gain was considerable, it didn't bring the cofounders as much satisfaction as they had expected.
“I think the biggest lesson… coming into a fair amount of money pretty quickly, was that money itself is no end,” Systrom said at SXSW in 2019. “It doesn’t make you happy. It doesn’t solve health problems. It can help in those things.”