This Week in Startups - Reddit CEO Steve Huffman on mod revolt, building a legendary community & more | E1763

Episode Date: June 17, 2023

This Week in Startups is presented by: Trovata. Starting up is hard. Trovata makes managing cash easy. Start automating your cash management at Trovata.io/TWIST. Use Code TWIST for 30% off one full year of premium features like AI forecasting. Embroker. The Embroker Startup Insurance Program helps startups secure the most important types of insurance at a lower cost and with less hassle. Save up to 20% off of traditional insurance today at Embroker.com/twist. While you’re there, get an extra 10% off using offer code TWIST. Eight Sleep. Good sleep is the ultimate game changer. Now you can add the Pod Pro Cover to any mattress! Go to eightsleep.com/twist to check out the Pod Pro Cover and get $150 off at checkout! * Today’s show: Reddit CEO and Co-Founder Steve Huffman joins Jason to discuss building a platform that serves Reddit's community (13:33), addresses the situation with third-party apps and moderators (35:00), and much more! * Time stamps: (00:00) Reddit CEO Steve Huffman joins Jason (2:40) The evolution of Reddit and its community (4:10) The tailwinds powering Reddit and Steve's thoughts on speech mitigation (12:00) Trovata - Use code TWIST at https://trovata.io/twist for 30% off one year of premium features, like AI forecasting (13:33) The Reddit "Keep it real" ethos and the importance of allowing open debate (17:47) Authoritarianism and challenging orthodoxies (24:29) Embroker - Use code TWIST to get an extra 10% off insurance at ⁠https://Embroker.com/twist (25:44) Steve's optimism for AI and why this is only the beginning (35:00) The response to Reddit's API use in various LLMs (37:57) Eight Sleep - Go to https://eightsleep.com/twist to check out the Pod Pro Cover and get $150 off at checkout! (39:29) Going in-depth on Reddit's situation and API history (48:03) What it comes down to for third-party apps (56:20) What changed Steve's opinion on advertising * Read LAUNCH Fund 4 Deal Memo: https://www.launch.co/four Apply for Funding: https://www.launch.co/apply Buy ANGEL: https://www.angelthebook.com Great recent interviews: Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland, PrayingForExits, Jenny Lefcourt Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow Jason: Twitter: https://twitter.com/jason Instagram: https://www.instagram.com/jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

With the crypto stuff. I was going to say the exact same thing. It's so much better than the crypto conversations. I mean, everything in crypto was like, here's what we're going to do. We're raising $100 million. I'm like, okay, who's the customer? And I'm like, no, no, no, I'm an investor. I'm not a customer.

Like, you're the investors. So you buy the tokens and that's the business. I'm like, the business is the cap table? They're like sort of. Yeah. Yeah. It's like digital multi-level marketing. What don't you understand about it?

This week in startups is brought to you. by Trovada. Starting up is hard. Travada makes managing cash easy. Start by automating your cash management at trovada.io slash twist. Use code Twist for 30% off one full year of premium features like AI forecasting. Embroker's startup insurance program helps startup secure the most important types of insurance at a lower cost and with less hassle. Save up to 20% off of traditional insurance today at imbroker.com slash twist. While you're there, get an extra 10% off using offer code twist and eight sleep good sleep is the ultimate game changer now you can add the pod pro cover to any mattress go to eight sleep dot com slash twist to check out the pod

pro cover and get $150 off at checkout all right everybody welcome back to this week and start up red it is by far the most successful community ever built not just on the internet but i think it's the most successful community at scale in the history of humanity. Co-founder of that website is Steve Huckman. He also is the CEO. And if you're living under a rock, it's been a little bit of a kerfuffle lately. And Reddit finds itself, once again, super relevant, not just because of this incredible community, not just because there's a potential IPO that's going to happen, but because

generative AI is using the largest data. datasets in the world, which include Reddit to train their models. Welcome back to the program. Steve, it's been a minute. It's been a minute, but I'm glad to be back. Jason, great to see you. Thanks. Looking forward to talking to all those people who have been under a rock. Yeah. So listen, just a level set here. You heard my sort of framing of what Reddit is. It is extraordinary, the staying power of Reddit. And how how large it's gotten. Give us just broad strokes how long this community has been going and how big it is now, because I don't think people appreciate how large and impactful Reddit is. Sure. So Reddit, we are celebrating our 18th birthday like right now. Wild.

Started in 2005. It is wild. The question I get asked a lot is, did you ever think Redo was going to get to this position? And my answer is Reddit is bigger than I ever thought it would possibly be. And I've been saying that since August 2005. So it's been an incredible journey and roller coaster and adventure and all these things. But to answer your question, we're about 100,000 communities that cover pretty much any interest topic, whatever reason people would have. for being together imaginable. But the analogy I love using for Reddit the most is Reddit as a city.

In the same way that cities are both physically built by people out of cement and concrete, they're also living organisms. And Reddit, I think, very much has those qualities, right? It's a platform that we at Reddit have built. it's a bunch of communities that our users have built but it's got a lot of organic qualities like a it's like a living evolving thing and so I think part of the fun of working at

and on Reddit is kind of watching this thing evolve Yeah one of the things that you tell me if I'm right here having watched it from the start and knowing you guys from the start is your trust in the community. And the sort of staying power of this is you never gave up. You gave so much control to the community. And it hasn't changed all that much. And there's something about being true to trusting the community and not making radical changes that keeps a brand like Reddit.

Or maybe we could look at Craigslist another at scale community that stuck around, eBay, another at-scale community that stuck around. And maybe I guess you could say the Amazon third-party sellers, if you can share that community, but man, it's one hand you could count the communities that have kept it together. So what is the staying power here in your mind? I think Reddit, one of the tailwinds powering Reddit is that human beings naturally create community. like if you have people in proximity to each other, that's one of the byproducts is community.

And so they create these spaces. There's lots of, I can talk all day about what communities are. But this kind of collection of people with like common interests and affection for one another and this kind of sense of belonging. And if you're not in the community, a longing for that sense of belonging, I think that's a very kind of built-in aspect of humanity. And so you see it offline, right, in cities and communities at work and everything big and small. And Reddit is the online version of that.

So I think the, like a lot about Reddit has changed, but that core idea of people being together hasn't. And our belief that people want to be together, good things will happen when they're together in that we try not to have too many other opinions on how and around what subjects or topics or whatever they do that around, I think has served us well or served the community well. A light hand, I guess, would be the way to say it. And I mean, the only time you've ever shut down communities or told people, hey, this is too far is when people go pretty far over the line. And you're generally pretty permissive, as long as people aren't breaking the law.

Freedom of speech is kind of built into Reddit, yeah? That's right. That's right. We believe in openness. We believe in speech. We believe in free markets. But we're also a platform that we want people to enjoy and feel welcome on. And so when we do ban a community, which we do, for various reasons from time to time,

it's because they were either breaking our explicit rules and really working against our mission, right, which is to bring community and belonging to everyone in the world. If they're working against that in some way, right, preventing people from enjoying Reddit, from coming to Reddit, feeling safe on Reddit, you know, that's where we may say, you know, hey, this community, this subreddit is not appropriate for our platform. Yeah. And there's a thing all the time, but yeah. There's a release valve for it. People have made Reddit open source software. It's not the hardest thing in the world in 2023 with AI, especially in co-pilots, to write a Reddit competitor.

And people do that if they want to do things that are, you know, just way out there. And they have. And so there's a release valve. You're not the only source of community on the internet. People can go do that crazy stuff somewhere else. you have to have like some basic, I guess, decorum, etc., to hit that mission. People can't be cruel to each other, et cetera. But I'm curious, big picture.

We're going to get into the specifics, folks. Don't worry about it. But I just don't get Steve here, but every five or six years. So I just like to think big picture because, God, there's so few startups that last the test of time with the original founder. I'm curious as a Gen Xer who grew up on, hey, freedom of speech is a very important tenant for us. you know, here in America and in the West writ large, this kind of silencing, censoring, you know, words can hurt people, microaggressions. I'm curious how you look at that being of our generation versus maybe some folks who

feel like, oh my God, these words are hurting me. And can you please stop making people hurt my feelings? God, if I go into the all-in subreddit right now, they can be. be brutal to me. And you know what? So be it. I'm, I'm, I believe in free speech, too. If you want to have that, have that it. And, you know, it doesn't mean I have to participate in it or like it, but I guess I have to deal with it if I'm going to put content out in the world. But how do you look at this generational shift that's occurred where people really want to have the platforms? We saw it with Twitter pretty acutely over the last couple of years. People want the platforms to mitigate speech.

What are your thoughts of that just broadly? It's a complex issue. Well, it's complex in how we respond to it. But I think there's some maybe aspects of my answer that are, I was going to say, simple, but maybe easier said than done. So, right, as you observe, right, the law of the land is free speech. Literally, the first law of this land is freedom of speech. Yeah. And I think it's really important for our country, for democracies in general, for living in a modern healthy society. And I think it's a requirement, right, at a government level. Now, Reddit is not a government, right?

We're not a country, but we're still pretty big. And so that's the principle that we start with. But just like in our country, there are constraints on that. They're enumerated as clearly as we can in our content policy. No hate, harassment, bullying, spam. involuntary sexualization, inciting, glorifying of violence, nothing involving kids. I think straightforward stuff and I think by and large pretty unarguable stuff, especially for a platform like ours.

Like as I said, we wanted to be a welcoming platform that people enjoy. I think it's a common topic of conversation these days that we need to limit speech for safety. and I think it's a false trade-off on and off of Reddit. It's an easy trade-off to observe at first, right? Because we used to go through this at Reddit. We were like, well, we believe in speech, but then we've got this type of speech that makes people feel unsafe or actually unsafe. And so it always felt like we were trading speech and safety on.

and off against each other. And that was tough because those are two things we care about, right? We had our own values. We're in conflict. And the way we resolve it at Reddit, when we get in those challenging conversations in the gray area, by the way, that's the only thing we ever talk about is the gray area because the good stuff is fine and the bad stuff is not fine. And so we spent all our time in the middle. Trovata is a cash management platform. That's going to help you and your startup keep tabs on your runway. This is a is super important, right? And it's going to help you easily answer questions that your investors have about how you're doing. It's basically going to help you gain control over all your financial

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But all edge cases, and over time they get harder and harder, but I often use our mission to resolve those conflicts for us. Does this subreddit behavior, you know, whatever it is we're considering, is it help our mission to bring community and belonging to everybody in the world or is it working against it? And that almost turns it into like a business decision, a much more defendable decision rather than what I think is really, problematic is, well, this idea is bad.

Because, look, there are many ideas, while there are many ideas that are, I think, in our society, objectively bad. Let's say, like racism, for example, and hate in the many ways it shows up. A lot of bad ideas are not necessarily bad ideas. or there might be just undecided ideas or arguments our society is currently having. And without the ability to argue and have differences of opinion and debates, even if it's not perfectly friendly and professional at all times, is really important.

It's the foundation of the society we live in. So at Reddit, we're default accepting of ideas of content. And we look, does it violate our content policy? Does it work against our mission? That's basically our thought process. But if it's not in violation, we are default accepting. We have a value on this principle on this called keep Reddit real. Keep it real.

And that's a sense. I mean, COVID comes to mind. We needed to debate that issue. And we had a lot of folks saying, you cannot. talk about Ivermectin. Joe Rogan can't have a conversation on his podcast. Twitter, you have to ban some Stanford professor who's got a dissenting opinion. And it's, I think now that's going to become one of the seminal ones in our life where we'll look at it and say, what are we getting good information? Should we have debated it more? Should kids have stayed in

school? You should, you know, wear these masks, a farce, you know, which types of masks actually work and how do you wear them versus like people can wear a bandana and that's actually suffices for a mask to protect against the virus these were like very nuanced important real-time discussions how do you look back on the whole COVID musha ghana and craziness and how does it inform you going forward that was a tough time yeah it was a tough time right for anybody living in that era um and it was a tough time for us as a platform because we had to develop some of the opinions that i'm sharing with you today, we developed during that time debating these issues. And, you know, it was very frustrating because it felt like from my point of view, people really struggled

holding two ideas in their head at once, which is COVID is dangerous. And we need to have constraints on the things we do and the way we live to get through this together. And And the advice that we're getting might not be correct. And then there was another dimension to that, which is, and we're not allowed to debate it. Yeah. And we're not like, and if you, and then if you do debate it or push back or just ask questions, it was very easily, easy to get written off as a, as a crazy person. Yeah.

Get silenced. Yeah. Character assassination, all that. It was really bad, really bad for a lot of folks. you know, we, and we got tied up in it for sure on the Ivermectin stuff. Yeah. And that was frustrating. So we did our best to navigate it.

I think we've learned a few lessons there for sure. What's the big takeaway? Yeah. Because that's, I mean, in our lifetime, have we ever felt authoritarianism kind of come in and say, hey, you can't think this, you can't say this? I don't have another moment in time. where the government or organization started to say that to us as Americans, hey, this conversation's, you're not having it.

It's not allowed to be talked about. And so it has changed my thinking on things because I'm like, wait a second, you can't even have the conversation about vaccines, are they safe or not, and MRNAs and new technology. This seems like a really good conversation for us to have. And all the all-in podcasts where we debated it, they flagged him. And all of a sudden the traffic went way down. I'm like, why are we flagging this conversation?

We're four reasonable adults. We can't talk about MRNA? Like, and we have Friedberg, who's like a science guy. Like, we should be able to talk about this. Very weird. What's the takeaway? I mean, look, so I do want to disagree with one thing, which is like we have been in moments like that before and are currently in them now. Oh, really?

What, there are so many topics where it's risky to challenge the orthodox, the orthodoxy. And part of the spirit of red. like the founding spirit of Reddit is that mainstream media is not the best source of information. In fact, like the established media that we grew up with and still exists is biased or corrupt or, you know, has an agenda. And so that was literally the founding spirit of Reddit. My co-founder used to like the joke, freedom from, the press. And that in that spirit, I think, is still alive and well on Reddit and in our society. And really, I think that the internet has one of the powerful things, it's unlocked a lot of voices that were

previously unheard. And I think that's overall a good thing. Obviously, it can have a lot of drama, too. But I mean, I can give you a simple example. Like anything involving climate. And there's some really damaging ones, the fight against nuclear power. Crazy. Right? From environmentalists, it's like that's the only technology known to man that can save us right now. Yeah. And for years and years and years and years, the most vocal people in the climate community

argued against it and shut it down. Yep. And of course, and I can probably do this for every example, please don't make me because I'll sound like a crazy person for an hour. But those anti-nuclear policies backfired, right? They turned into burning more coal and more wood and tearing down forests, right? Which is what Europe had to do last summer or last winter. And so you can pick any of these examples.

And not only was their important debate that was silenced, but the policies were also counterproductive to what the silencers actually. wants. And that is a, I think, inexcusable problem. It's a great paradox, what you're pointing out. The the green people got it wrong. They hammered it. They did the no-nukes conference. They got tons of celebrities to kind of back this movement. And then we have geopolitical issues and, you know, Germany shutting off nuclear reactors and becomes dependent on an authoritarian country run by dictator. And it puts us on the brink of this, you know, how can Germany make an intelligent decision about energy now if they're dependent on Russia for keeping their houses warm? It's just such a great example. And I think the media example is also good. You know, you look at, you know,

what's happened in media. They've all picked a sign, you know, and that puts us as citizens of this country going, okay, Fox has a side, MSNBC clearly has a side, CNN has a side, everybody's got a side. How do I actually discover the truth? Part of discovering the truth is debating it. Where are you going to debate it? You're going to debate it online. And so you can't stop the folks who are trying to host these debates. That's the thing that I find so pernicious about this safety and, oh my God, you're giving bad information. We don't need to treat the populace like their children. If you do, they're going to not be informed. You want people questioning everything.

You want people having vibrant debate, but of course you could have conspiracy theories comes up, come up. So how do you think about the line between dissent and trying to figure out, hey, what's the best policy and just straight up conspiracy theories? I think what speech and debate give us

is the output of that is, is more credible ideas and guidance. As a society, I think we are capable of working through these issues. I don't think everything has to stay in debate forever. It's just when there is no conversation, then, you know, you're never sure that you're making the right decision. And I guess when I say that, I was thinking of big decisions, but this comes up at work all the time in small decisions, right? If everybody's nodding their head around the room when I'm saying something, I'm like, oh, man, I'm in trouble.

And I can't distinguish between everybody agreeing with me because they don't want to get in a debate or, you know, I'm right. And the only way... CEO's lock comes with a power dynamic, yeah. And so the only way to be confident in our decisions is to like have turned over as many rocks as possible, the bait of these things argued about them, thought them through. And of course, right, not everything is going to be right or makes sense. But I think it's really important that people have the space to kind of work through these, work through these ideas.

And so online, this takes the shape of people like saying ideas that they may not even believe yet. You know, I know I personally do this, right? I think while I talk. Right. I can't think without talking. And so I have to say a lot of bad ideas to like find the good one that actually believe in. And I think that's natural. We can't.

And so restricting speech is like, it's like restricting thinking. And I think that's real. That's, obviously that's a bad thing. Listen, I work with super early stage companies at launch, like literally year zero. They haven't even incorporated yet. And then we hit the series A. People have thousands of dollars in MRR. And they, maybe they've only raised a couple of.

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Okay. Let's get back to this amazing episode. So this is a perfect pivot point. You see Jenner of AI. We've obviously been following this for years. And it was unimpressive or modestly impressive. You know, a couple of years ago. You see Gmail, you know, predicting like, would you like to have dinner?

Would you like to? Whatever. You know, you're like, oh, wow, you can guess the next word. Congratulations. Good for you. Or, you know, your Reddit for you page, you know, guesses I like the Nix and Mark Knopfle gives me a little bit more. Okay, yeah, this is great stuff. But, man, the jump it made is pretty miraculous. So I guess step one, what are your thoughts, generally speaking, on what we've

seen in the past year in terms of the advances, which seemed to be coming, you know, out of a credible pace. It's super inspiring. So I'm curious how you think about that as a technologist and a founder. But then part two, when did you realize everybody was using your data to build these models. And how did you come to the conclusion? You know what? This is, this data has value, people should pay for it. And take it in either or you want. Sure. So look, I think as a, as a technologist, as a human being, this is some of the most exciting technology we've seen since the internet. And it's just going to transform society, I think, in so many powerful ways. I'm firmly on the side of this is great.

This is great. Why? Why do you think it's going to be great? What do you think of the big wins that are going to happen? Well, we've seen this cycle. This is kind of like the cycle of technology in advance in humanity. There's a new technology. And the arguments against it will be, well, it's dangerous.

It needs to be controlled. It's going to eliminate lots of jobs. and there might be some danger that needs to be constrained and considered, for sure. But almost always what happens is we eliminate some sort of rote work that humans were doing, automate it, and then we allow humans to do new things. And so, like, I think when folks are kind of anti-technology, it always makes me wonder. it's like, well, I just think as human beings, we aspire to be more than farmers. Yeah, haven't we seen this movie five times?

We've seen this movie like 5,000 times. Yeah. And so this technology is so impressive, right? Because effectively it can do text tasks, reading and writing, and some considering better than like 95% of humans. Incredible, yeah. And that's incredible. And I think that thing that makes me really, really excited is that there's a new UI for computers.

And it's English. And the most powerful programming language is now English. Incredible. Literally describe to these things what you want to build and it will build it or it will do it. As a coder, it's just like your mind is blown that all of a sudden everybody can become a 10x coder. And then what a 10x coders become? Like, it's like to watch. So I thought though, you know, I thought smugly when we're seeing this AI wave coming,

I was like, well, as a software engineer, at least my job is safe. I didn't think I was going to be the first to go. First to go, right? You're the crosshairs. But it's so incredible. And the thing is we haven't even seen the products built on it yet. We've seen some tech demos. Yeah.

Right. ChatGPT was really a tech demo that got way out of hand. And you've got some, you know, whatever, BARD and Bing, whatever. You know, Barr, yeah, I mean, BART is, I've been using it. I do every search, instead of using a search engine now, I basically open up BART, I open up chat TV, two of my default browser windows when I open my browser, and I just put it into both. And I asked follow questions, holy cow, Bard's moving quickly too.

And I, but I would say it's like, it's neat. Yeah. But we haven't even seen, like they're not even products yet. No. They're like, command line. Yeah. Yeah.

And so the idea that you can speak and then this, this, this agent can turn it into really, really complex commands that control our software. Right, right. We've been, the way we use computers right now is mouse, keyboard programming language. Yeah. And all of a sudden it just got a thousand X more powerful because anybody can now control computers in this new way. I think the next year or two or five is just going to be wild.

It's going to be wild, too. You just think about what the internet did for people's access to information, and then you take Starlink and you put it with AI, and you think, okay, there's a couple billion people who don't have access to the internet right now, and then they're going to grow up, just like some people, you know, grew up on mobile phones instead of desktop computers like we did. They're going to grow up with this interface where they just ask it a question that does stuff. Like the jump for somebody who is in a frontier market, we used to be called the third world,

but a frontier market where they have no technology and no access to broadband and the internet. And then boom, all of a sudden they have access to chat cheap T as an interface. Like it's going to lift a couple of billion people into knowledge workers. Boom, in a year or two. It's going to be wild. Well, imagine, yeah, every human to take that, make that idea one notch more specific, every human on the planet has access to a world-class tutor. Wild.

always patience and knowledgeable. And every human on the planet has access to an army of assistance that can just, like, do all this stuff. Like, there's just so much stuff that we do that doesn't really create value. It's just, like, kind of moving bits around. Yeah. Chores. You do have to do your chores. Yeah.

Yeah. All these kind of, like, digital day-to-day chores that now we can just, you know, Siri will do it. Isn't that the funny thing too? When you think about it as a technologist, we saw Syria and Alexa. You see like Steve Jobs and, you know, Bill, Jeff Bezos, like saying like, hey, this is the real deal. And you're like, I can maybe change a song or it'll send a text message. Maybe that's got two typos. And it just never clicked.

And then all of a sudden you see this technology. Like, oh, it's going to be good. It's about, it's going to be really interesting. I just can't wait. I just like, it's like this like, I feel like I'm the. kid on Christmas morning or this kid like December 20th and it's like Christmas is coming every time I try to add a reminder into my phone and series like you know calling mom and I'm like no no no don't call mom I just wanted a reminder to buy tickets so like it's coming it's coming hopefully

in the next year so close it'll be great for everybody it's going to be amazing I you know I'm with you we we didn't have the job of podcaster we didn't have the job of of influencer. We didn't have the job of community manager. And 98% of people were working on farms. Like, humans find something to do and we'll be fine. And sure, some people will be displaced. But if they have the world's greatest tutor, like you're saying, great description of it, the most patient tutor, if you're somebody who gets displaced because you're the bottom third of accountants, like, you're going to be able to talk to that tutor and become the top third of accountants or financial planners or some other job. I mean, how quickly can you figure out

another job with this technology? Well, I mean, try to, you know, go back a thousand years or 2000 years and try to explain the job of an accountant. Yeah. And people are like, well, you have so much surplus stuff. You have to count it. Yes. I guess you could explain it then. But like there's just so many, my point is there's so many jobs that exist today.

Yeah. That did not exist. Even 20 years ago, you just named a couple, right? Podcast or influencer or whatever. There are going to be so many more new jobs. new things we can do. Yeah. There's just,

and it's, I think it's hard to envision them from where we sit today. But I think just looking at the way history has gone in the past, it's coming. It's just going to be new, new things for people to do, new things for people to create. You know, just ripping on what you're saying. You know,

I don't know if you've ever had this thought. Like maybe I, you know, wouldn't it be great if I had taken another career path and I had been a rock star or I had been, in wrote screenplays or as an actor or I did some other thing. I was a professional athlete. With this technology, you might get a chance to have like two or three careers. You might get a chance to just be a virtuoso in more than one thing in a lifetime, which very few people have the opportunity to do. And it just could be so magical. So you and I both know Sam Holmonds for a

long time. He helped you raise money for Reddit at one point. I think when you did the buyout. Is that right? If I remember correctly? He led Reddit series B back in 2014, which was just before I came back. He was on our board, and he was instrumental in me returning to Reddit. Right. So this is like a super advocate of yours and supporter. So at some point, open AI ingest Reddit, and then at some point you say to him, hey, can we get paid for that?

How is this all shaken down in terms of your position on we deserve to be compensated for Reddit's data set? And then your friendship with him and other folks who, are indexing it. We do deserve to be compensated, I think, for the role Reddit played in creating these models, which was significant. You used to be able to just ask the models what percent came from Reddit, and they would happily say, oh, 22%, 30-something percent.

Wow! Big numbers. So we're working through it with them. You know, that's about all I think I can say there right now, but look. Okay, fair enough. We believe we should be compensated for the use of that data. And I think it's an open dialogue and you have multiple players. So do you see a world in which one player could and just putting open AI in your friendship with Sam, you know, on the side?

Let's assume there's 10 players here. If a player said to you, we want to, you know, use our model to have exclusive access to this, is that something you would consider if it was, you know, if it was in the best interest of shareholders in the company? or do you think, you know, you want to license it to 10 people and just give everybody access to it if they pay a fair price? I think we need to just kind of work our way through it. Right. There's the kind of big companies that you've mentioned that have used our data already. But I think there's a lot of folks who would be interested in it for different reasons.

You know, at Reddit, we've long talked about a data business. It's just not something we've actively pursued until now. But so there's the LLM stuff. But then look, there's aspects of Reddit where it's like, look, we have this massive corpus that gets updated every day of people's opinions about pretty much everything. And I think there's a lot of value in that. And so if Reddit, I think, is sneakily one of the best, for example, product review sites on the Internet. I mean, how many times do you type in best toaster and then the word Reddit is appended automatically by Google? You know, it's like, you can go to the wire cutter or you can go to Reddit and you know what?

I do the, that's literally when I'm making an appliance decision. I type in appliance name, Reddit appliance name wirecutter. And then I'm done. By the way, Google autocomplete has been sentient for 10 years. That is the best AI text box on the internet. It knows what you're thinking. Yeah, like, I don't think we give them enough credit. Like, that text box is amazing.

And yes, we do appreciate it. Yeah. Saving everybody a click and just adding Reddit. If you want to get ahead in your career, you need to sleep well. And if you want to be a stallion, if you want to be a workhorse, you need to get a great night's sleep. It's that easy. So do what I do. And that's getting an eight sleep, right?

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And they're now shipping, not only in the U.S., but Canada and the UK, and some other countries in the EU and Australia. So, Aatsleep.com slash twist for $150 off the pod cover. Can't go wrong. All right. So suffice to say, this data business is going to be amazing. I think it really is going to be awesome for y'all. Now, people who contribute to Reddit, they understand.

You get a license forever to their content, just like any other service. I think that's a pretty generic standard on the internet. You get to license it. But people own it. They get to take it out. If they don't like using it, you decide you're going to do this API. When you have an API, you had a lot of people build apps. And that's, I guess, at the center of the current controversy.

So maybe for background for people to level set. My understanding is, and I remember this for Twitter, but I don't know specifically for, you know, in talking to Ev Williams back in the day. In that web 2.0 period, startups were resource-contrained. They didn't have enough developers, didn't have enough cash. So you put out APIs, people build products to extend the service, and then Twitter went around and sort of bought some of the best of that, tweet, decks, some eyes. I remember a bunch of startups got bought and then incorporated into the mothership.

Reddit had a similar trajectory in terms of letting people build on the API, but at some point you need to get paid, so you decided to put some numbers to that. So maybe you could explain the history of why Reddit and that people build off the API and then why now you want to get paid for the API. Sure. So, yeah, so this is kind of distinct from the other conversation about data. We've had this API, the one that people use for as long as I can remember on Reddit. And a reason for having it was really, look, we believe in the open Internet, right? And we thought giving access to Reddit in ways and the ability to extend Reddit can't hurt.

And so the vast majority of users of our API and then and now are to create bots. Basically, kind of friendly bots, either that help moderates moderate, help communities, you know, do various functions, be unique. One of the most popular bots is called Remind Me. Yeah. So somebody says, hey, blah, blah, blah, two weeks, I'm going to do this. You know, if GameStop doesn't hit 100, I'm going to eat my shoe. And then very next reply will be... Everybody, remind me two weeks.

And so there's a lot of those use cases. Now, we also had a handful of folks create basically Reddit apps. So apps that look just like our app. Now, in our app, we released in 20,000. 17. So some of these apps came out before our app. And so in those days, it's really filling, those apps are filling a kind of hole in the market. And what's happened, though, over the last five, ten years is these kind of small users of our API have themselves turned into massive users and are making.

And at our expense, making millions of dollars. This is a key point here, yeah. Because you're paying for all those API calls. You're paying for all those data. And then they're charging subscription fees. And I remember talking to the new proprietor of Twitter about this. You know, some of the Twitter apps were taking out ads. And if you were to look, they're like, pay 20 bucks in order to take out ads.

So not only, you know, were some of these apps. costing money to Twitter and other services that allowed this, they were then removing the ability for the service to make money. So it was like doubly harmful. Exactly that for us. And a couple of them adding in their own ads. One of them, Bacon Reader, is owned by an ad network. That's hilarious.

Yeah. And it's a real, I mean, both it's a problem for our business, but it's also a problem for our users because, look, I know how much work it is to have an ads platform that isn't predicated on harvesting and reselling personal information.

And the third-party apps, like they have all the grossest SDKs, like the ads SDKs, the ones that like sniff on every sensor of your phone, like just the worst stuff. And they have no problem selling your data, whether it's healthcare. You know,

you go, to depression, whatever the subreddit is for depression or some mental mental illness, these folks would have no problem selling your IP, your address, whatever they can get, and they would triangulate it with other services. It's pretty gnarly in the, and I know like our government's looking into some of those, you know, dark actors. It's not good. Others are just selling subscription with no ads, right? So no Reddit ads, selling just money on top of it. So look, some of those apps did and have and still do provide a valuable service to Reddit. So in particular,

we've got a number of apps that are built with accessibility in mind. Oh, fantastic. So create a much better experience for blind people to consume Reddit content, better than our own app does. So, you know, those ones, I'm very happy they exist. I think it doesn't let us off the hook of making our own app more accessible. But those apps are exempt from any of our changes here. all of the mod tools and bots, the vast majority of which are below are within our free tier anyway,

but even the ones that are over it, they are exempt from this. But the apps that are very heavy consumers that are themselves companies that are, I think, exploiting our data for their own financial gain. That's where we drew the line. It seems completely reasonable. If you were to take the New York Times through their API and I decided I'm going to make a New York Times app and republish it, where I did it with Disney Plus, it would be clear as day that if I took the ads out and inserted my own ads and then charged a subscription fee, this would be ridiculous. I think people may be stuck on

here because it's a community side or because these apps actually might have some good features you haven't gotten to yet, which is on you. And that means the Reddit app team's got to do a better job, whatever. It's a race to make great apps. It's not easy. But it's completely unfair. And I think you've explained it really well here on a practical basis. buying some of these apps or giving them a rev share. Did you think of some of those other options? I think people ran with the story that you were just shutting off API access completely. But the truth is, 99% of people using the API Plus are not impacted by this. It's only people who are using this to make money, right? Right. So the story has gotten pretty complicated.

look, I have some frustration of the folks who are mad about things that are not true, right, in terms of we're not blocking the moderator bots or the accessibility apps or those things. I totally get that people are mad because they're going to lose something that they like. They like those apps. They've been using them for a long time. They're simpler. They don't have ads. Some have some features they really like.

And so I get, I get that. And I also totally get that, you know, the average user doesn't give a about our business, nor do we expect them to. Right. But our business is our business and, right, Reddit is a business. And if we want to continue to exist, we do need to stand on our own two feet. Yeah. So look, I think our work's cut out for us.

Look, our app has changed a lot, I think, since a lot of these folks last tried it. And I think we've got some changes coming that I think just on the pure functionality gaps, the stuff they like, I think we can close that gap and give them better and better experiences. There's nothing that says you can't in your Reddit app have a $10 a year or whatever your monetization is for all these users over the year. You can just say, hey, listen, our average revenue per user in the United States is whatever it is, 50 bucks a year, I'm not sure where you're monetizing at. seems pretty reasonable the number of ads I see on Reddit. Hey, pay 30 bucks and turn off ads. You don't have that feature right now, right? We do have that feature.

Oh, you do? It's called Reddit Premium. Yeah, yeah. Oh, Reddit Premium turns off ads. I didn't know them. It's an option in there, yeah. Great. So look, with these third-party apps, our first ask is for them to cover their costs.

I think there are more complex things we could do. If, like, we're a bunch of the big ones just said, no, we don't want to, we're not going to bother. So they're just going to shut down. We're in talks with a couple others. And so we'll see where those, we'll see where those go. My preference is to not get too complicated. Our napkin math that we use is like, well, they can cover their costs for about a dollar per user per month, which we felt looks like totally reasonable. So I kind of want to just cross that bridge first. And then we'll we'll see where this goes. Because for a developer community, what we're really focused on is not,

we're talking about a legacy API. What we're really focused on is the new API, our developer platform, which will allow people to do, like, radically customize Reddit, do some stuff they've never been able to do on Reddit. What's an example of that? So, new post types, so dynamic posts. So a post that can update in real time, posts that are interactive. You can imagine, like a game and a post. There's all sorts of, I think, really fun stuff that users will invent. And then with that, I want to take that further into actually allowing them to have business models. So think of the App Store, right?

You can sell an app, you can subscribe to an app, you can have services. Because this is all part of like both we want to empower users and communities to extend and expand Reddit, but also we want users and communities. to be able to make money on Reddit, which is not something they can do today. This is interesting, because we had this debate years ago, and like the original debate was, hey, what drives, remember with Alexis, your co-founder,

he's like, hey, listen, what drives community? At its core is the affiliation, the recognition, the non-financial returns. But as we've seen, Reddit's gotten so big that people who are mods have a lot of power, and maybe they're on the sides being able to make money, covertly, you know, there could be nefarious ways or they could be monetizing it, just like people, shocker of all shockers.

There are Wikipedia editors who you can pay to edit Wikipedia pages because Wikipedia doesn't have a model for those great editors to get paid so they will sell their services to help massage pages on Wikipedia. Do you see a day where somebody who's a subreddit mod could make a living? And we were talking about new jobs in the world and there's a path to that? That's my dream. It is. That is my literal dream at Reddit right now. And so think of Reddit today. It's like the internet, but if every website was dot org.

And so we love the Reddit of today, right? It is powered by, if I were to put in a single word, altruism. People want to have fun, share a few laughs, help each other, be connected. That's not going anywhere. That's the vast majority of subredits we see today. But there are a handful of subredits that are literally trying to be business. There's a subreddit called Watch Exchange where people buy and sell expensive watches. It's like with no escrow, no safety, limited reputation.

They've done an amazing job considering they're on a conversation platform. But there's just like there's a lot of commercial intent on Reddit. And we're living in this gray area on the frontier of Reddit where Reddit is, we've historically said, no business, like no business activity. Mods can't make money. And what does that resulted in when you put that constraint? Well, it's mostly that way, but then there's like some corruption or a little bit of stuff on the side. A little gray market action?

Yeah. And we just want to bring that above board and let subredits who want to be businesses be businesses. Love it. So if I had one for my podcast and I do have them for the podcast, I could invest in it. And like, you know, maybe Etsy or Substack or Patreon, there would be a way for me to say, you know what, this is worth me putting my time into because I can get a cut of the subscriptions or maybe affiliate ads or something. I'm not sure what I'm thinking about.

Exactly. I think there's a variety of business models they could have. And so I don't think existing subredits will change, but I do think this whole new generation of subredits built around this concept will come to exist. Yeah. And so that's, and it'll just give people. a place to do that sort of activity above board. And I think

that would make the whole ecosystem healthier. Because I think there's like, we talked at the beginning of our conversation, I think there's this natural community creating instinct in people. There's also this kind of entrepreneurial, like business creating instinct in people as well.

And so Reddit's really good at unlocking the community creating instinct. But we're very bad. In fact, we kind of work against the business creating instinct. You're explicitly working against it. Yeah. You've literally said no bueno.

And so I just, and so actually I misspoke when I said our mission is to bring community belonging and community belonging to everybody in the world. We actually added a word last year. Community belonging and empowerment to everyone in the world. And like, and we've got this kind of like community empowerment right now. I mean, you see it on our platform, right? People have a voice. I've got to say during this whole conversation, a bunch of mods went on strike because they didn't agree with your decisions.

And we're still in the middle of that right now. So what's the update on that? We're on the back half of middle of that. A lot of people were pissed about the API changes. It's kind of evolved into being mad at me or how we're handling it or there's layers to this thing. And there always has been in the history. of Reddit, right? Like, they are the most anti-establishment group of people.

They kind of self-select for that. So they love, you know, if you make a mistake, they love telling you about it. It's funny. It's funny just because we created Reddit to be this anti-establishment place, and now I'm the establishment, and it's like...

Pretty funny. But you're also super accessible. Like, you get in there and you talk honestly with I'm like, here's my thinking. So I think to a certain extent, they should at least have that that this isn't like Zuckerberg, who's like, I'm not going to even talk to you about this. You use Instagram. You like it.

You don't. I don't care. I try to take my beating fairly. You know, just, it is what it is. It is what it is. Yeah. But anyway, I think there's, when we get back to business, there's some really, I think, fun stuff coming, kind of in the spirit of further empowering people.

I think it's such a great vision. And, you know, this is where. an 18-year phenomenon that nobody expected to last this long, you know, when something gets to 18 years, things change in the world. The thing that's changed in the world is, you know, Reddit has existed longer than YouTube and Twitter. Am I correct? I think right before. Other than Twitter, we're about six months younger than YouTube. Got it. So you look at how innovative and how long this thing's been around. What's changed? YouTubers like Mr. Beast are making, building multi-billion dollar businesses on a platform that, you know, shares their videos for free. You look at Twitter.

They now have subscribers. They're going to share revenue. Patreon, subsack. I mean, the list goes on and on of people who are now making a living, TikTokers too, from being content providers or moderators of community. And so the greatest community in the history of humanity ever made is, I mean, I think this is a 10x, maybe a 50x greater revenue stream, all. ultimately than the ad business. That's my belief. I think it'll be big. But, you know, if there's one other thing that's changed in the last 18 years,

it's my opinion on ads. Oh, yeah. Tell me. What do you think? Well, so I used to hate ads. I hate them. And, you know, because I felt they were parasitic and they just got on the way of content and all these things.

But look, I've grown out of that. They can be both of those things. Sure. Right. There are ugly ads. And we worked hard to get rid of all the programmatic ads on Reddit. We have those for a lot. Explain to people what those are?

So programmatic ads are ads that are sold like from an ad network. So you install some chunk of code that comes with all the grossest code on the internet with it. You don't know who your advertisers are. The advertisers don't know where they are. There's all the tracking. It's just, ugh. It's the worst. Yeah.

Automated ads. Automated ads. So we got rid of bottom of the barrel adverton. But, you know, the nice thing about ads is it scales. And look, most people, you can see this on every platform that has ads and subscriptions. Most people prefer ads. 90% plus. Right.

90% plus. And so it's the price you pay for free content. And I think free content is obviously great. Or it's a price you pay for open content or whatever. Sure. And so there's some, I think, there's some nice qualities there. I think there's some nice qualities there. I think there's also this other kind of light bulb moment for me that I went through just

kind of as a business guy, like five years ago, I was at CES and talking to customers, talking to potential advertisers. But at the time, I wasn't really selling ads. Yeah. And we were doing a turnaround at Reddit. And so I was just thinking about mission and values. And so I was just kind of asking all of these people that I'd never met. Like, why do you work at this company?

Why have you chosen this as your life's work? No, but seriously, unironically, that's what I was asking. And openly, I was just curious. Well, so I remember this moment. It was with Ally, Ally Bank. And I asked, it was their marketing team. I was like, why do you all work at Ally? And they're like, well, you know, banking is predatory.

and we provide banking services that aren't predatory. And we enjoy doing that. We get fulfillment out of that. And we think, like, you have to have a bank account to participate in our society. And we provide that for people in a fair way. And that's meaningful to us. Amazing. They have a mission.

And I was like, yeah. And more companies than not have missions and employ people who believe in those missions. and I find that very inspiring. And so it helped me see our advertising customers as not like a means to an end for like revenue and survival for us, but as actual people as well. And so I think like, I don't know,

it just changed my perspective on these things. I used to be much more close-minded about it. If you think about when you and I got into the internet, slightly older than you, I think, but not much, there was this concept and listen information wants to be free and you know you want people to have access to information

because it helps them in their lives and now because of what's happened in journalism journalism bifurcated where I came from originally as a journalist and a publisher of magazines and then blogs it bifurcated and you had one group that said listen we're going to produce

high quality stuff but only rich people who can afford you know 200, 300 a year can afford it 20 bucks a month and then, okay, we're going to be the schlocky website that is ad-based and has bad writers who are just rewriting this other stuff, and we're going to be free. And, you know, there's, it's kind of a shame that people can't read the Wall Street Journal, Washington Post, New York Times.

And then because they went subscription, you had this other weird downstream effect. They had to pick a side. And if you look at the subscriptions from the New York Times, it's kind of going like this. I'm just showing like a non-steep curve. Trump gets elected, they start anti-Trump ads. Like, hey, listen, join the resistance by subscribing to Washington Post. And here are times, boom, subscriptions take off. Trump goes out of office, subscriptions go back to the same crew.

Right, right. You have to pander to your audience. Yes, or I'll say unsubscribe. And ads, in many cases are kind of their mass market. Yep. And there's something to be said for that because it keeps you in the middle. Yep. And I think that's important.

and so now there's there's some there's some other constraints that come with that which is like the advertisers also have feelings and sensibilities and their own politics as well yeah um but by and large I think ads at scale keep you in the middle yep and I and now that we've seen what the extremes look like yeah not so bad the worst like

like you have to have a business model at some point and if you think of that one it does that have some great features to it. And we saw what happens when advertisers decide, you know what, we are, you know, alcohol brand, our beer or, you know, whatever, we should take a political stance on all these things. And customers are like, you know what? We prefer not to be lectured by our consumer package goods. Can you just tell me which one to buy and the, the, what's notable about your product. Which one tastes great and is less filling? Yeah, just keep it simple. Like, we don't need your beer to comment on everything. Could just be a crisp,

Clean beer. Listen, Steve, it's so great to catch up with you. Thanks for doing this. I know you don't have to do this, but you're an old friend of the show. Come back anytime. Congratulations on the great success. Super excited to see you. It's super inspiring for me, you know, just to have watch you guys from the beginning.

And it's such a great lesson for startups that if you just focus on one thing for an extended period of time, you can change the world. And Red's done that. So congratulations. Thanks, Jason. It's great to see you again. Great to be here with you. and good luck with podcasting and talking to founders. That's it.

I mean, the two things I do all day. Talk to founders, invest in startups. And I love it. I could literally talk to you for three hours, but I know you got a lot to do, continued success, and we'll see everybody next time on this week in startups. And to everybody who's on strike at Reddit,

I think you made your point. Steve's really cares. He's in it for the right reason. And, you know, let's get back to work, everyone. That's my message to people. who are on strike. Everybody, let's get back to work making great content. You can trust is a good actor. Redders want to Reddit. Redder's want to Reddit. Of course. Of course. It's what makes, I mean, I have gotten so demolished since Allent became so popular on Reddit. And I never

experienced the full force of that Dead Star being on one person. I have people who are so in love with me and who are so, the praise makes me feel like I'm 10 feet tall. And then other people are like, oh my God, Jake Howell's opinions are so stupid and based. And, uh, you know, I, I cannot stand this person with all my heart. He's the worst somewhere between like Hitler and whoever. And I'm like, not quite. It's, it's, like, I'm right there with you. I know the feeling. You know the feeling. And it's like, it's super honest in their replies. It's easy to be a critic. Yeah. And it's, it's hard to, it's hard to have your voice out there. So yeah, it is. But I love it. I still mix it up on Reddit.

All right, everybody. Continue success. Take care, Jason. We'll talk to later. Cheers. Thanks, bye. Bye.