Author - Product Stories. Building Memer. Making world a better place, one meme at a time.
Welcome to the first edition of Product Stories. The first product that I have chosen is Reddit — a company that thousands of startups have tried to emulate but always failed to do so. Let’s look at why that is and what’s so special about Reddit.
Well, I didn’t. And here is my attempt at retelling Reddit’s early history in as brief as I can.
“Best product people are historians of their industry” — Jeff Morris Jr
“Product Stories” is my attempt to write about origin stories of some popular products and cover some of the less covered aspects of startup products like their metrics when they had just started, how long did it take to finally take off, how fast or slow were they in launching v1 of their product, initial target market and how they stumbled upon it, their failed experiments, etc.
This product story starts with a “rejection”. Reddit was officially started when Paul Graham (co-founder of Y Combinator) rejected Alexis and Steve’s idea for investment as part of Y Combinator’s first batch. Instead, he showed them Slashdot (a social news website then) and asked them to build something similar and he would give them $10k for the summer to work on it.
This part of Reddit’s journey is interesting because this is one dilemma that a lot of founders face — go with their own conviction/idea or change direction and choose an idea someone else suggested. Even more interesting is that Steve and Alexis had not even started work on their “food ordering app” idea. Without even trying their own idea, they chose the idea Paul gave them. This probably made the choice easier as unless you start working on an idea, you never really get the conviction.
I wonder what would have happened if Alexis and Steve had applied after 1 or 2 months of working on their original idea (and seeing some initial user validation).
A lot of people generally advise founders to follow their own convictions and not listen to VCs who give certain “trending” ideas. Well, here is one example of where the opposite happened and worked out well.
Another point of wondering is, what would have happened if Alexis and Steve would have stuck to their original idea of “food ordering app” and worked on it a couple of years only to realize it was early. Probably they would have been too burnt to start another company then. Lots of startup journeys end up this way because of the founder’s chose the wrong market for them. Luckily for both of them, they had Paul Graham guide them to the right market/idea.
Even though the idea was a copy of an existing product, they did not blindly copy it. They took the idea from Slashdot/Delicious but realized early on that it would be the recommendation system (the upvote/downvote mechanism in their case) that would be key. The lesson here, it’s okay to copy as long as it’s mindfully done. Especially since building a consumer tech company is catching lightning in a bottle and if you try to be original all the time in all your features, you might be in for a tough ride. It’s easier to copy things that work and try to deliver the most value to your user with your use case. Another case in point, Instagram taking “Stories” feature from Snapchat, and then using to enable the next wave of content creation on Instagram.
Steve and Alexis built the prototype and launched it within 20 days. 20 days is really fast even by today’s standards (when a lot of standard libraries exist and development time has drastically reduced).
To do it back in 2005, is really a splendid task. One really needs to internalise the “Launch fast and iterate” philosophy of building products in order to do that. Apparently, Paul Graham used to mail them twice a day “checking in” for progress, which made them push harder to launch (a fine line to walk for an investor, but alright!). Reddit would be a classic example of “launch fast and iterate” model of building products.
This is what it looked like after the first 5 minutes of launch:
Notice that there were no subreddits and no commenting. But they did have Karma points (Reddit’s gamification mechanism where users get points for submitting content to the site) from the very beginning. Often products launch gamification as an afterthought to increase their retention/engagement, but here is an example of a successful company that did it from the start. I am sure it helped in building “the community” that eventually became their differentiator.
This is how Reddit looks now:
Reddit now has subreddits as a way to group content/people, threads, upvoting/downvoting on comments, moderator control features, karma points, Reddit Gold and so many more features. But they started it all with just a mechanism to submit links and earn Karma points.
Another point to note is that they did not have any major traffic for a month after launch (crazy by today’s standards but it was 2005. Simpler times!).
Reddit got their first couple of hundred users after a month of releasing it when Paul Graham posted Reddit’s link on his blog. But the first couple of hundred users that Reddit got, were not just any users. They were all the internet’s power users (because that was the audience of Paul’s essays).
Reddit reached 1mn monthly readers (MAU) and 70,000 daily readers(DAU) 16 months after it was launched (7% DAU/MAU; which is terrible considering today’s standards for a consumer startup but thankfully Reddit persevered).
This is interesting as when Reddit was started, metrics such as DAU/MAU were not very popular. Retention was not the most important thing every consumer founder looked at. Analytics tools for measuring these metrics also did not exist. This ignorance I think turned out to be bliss for Reddit as well some of the other less instantly viral products of the time.
Too much focus on metrics in the early days of a startup leads to a lot of self-doubt in founders. Partly because founders compare their crappy metrics (which are always crappy as it is early days of their product) with metrics of successful products. It might more productive to look at subjective user feedback instead of chasing metrics during the early days. There is still merit in looking at metrics and being aware of it, but optimizing too much of them early on might not be the best strategy for all.
For a whole month after launch, Reddit had no traffic. Every day Alexis and Steve would wake up, manually submit links themselves on the site and read that news themselves only. In order to fool the users (the total count of which was 2 back then, Alexis and Steve), they would use different fake usernames to post links (in order to create an illusion that there were already a lot of users already on the site).
They reached a respectable size only 16 months later when they reached 1mn MAU (Monthly Active Users), that too at 7% DAU/MAU (a metric popularised by Facebook in its early days to measure user engagement). To give you an idea, in current times a DAU/MAU of 50% means that it is a daily habit, and a DAU/MAU of 20% is considered a decent metric.
Reddit fared much poorer than the current industry benchmark. It took a lot of time for them to reach a state when they became a daily habit. And let’s look at when that exactly happened.
The most interesting thing about Reddit’s journey is that — at no sharp point can you say that they hit a Product Market Fit (a term coined by one of the VCs while analyzing another VC’s investing style 🤷) and everything changed post that. It has always been a relatively slow and steady growth for them. Reddit had only a couple of hundred users within the first 2 months.
Maybe they had the so-called PMF from Day 1 or they never really cared for PMF. They believed their product was what users wanted and kept on building for them not caring much for whether they are pre-PMF or post-PMF.
I believe a lot of startups go through unnecessary self-doubt (and thereafter distracting experiments; often killing startups) thinking that they have not reached PMF while all they needed to do was keep on working for their users.
That being said, Instagram on the other hand got 1 million users within first 2 months of launch.
Snapchat had 127 users after 6 months of founders working on it, but in Dec 2011 when they find their right audience (i.e. high schools in North Carolina and Silicon Valley) they went from 2000 users to 20,000 users in a month. 100k a couple of months later.
Reddit was neither an instant hit or found a sharp turning point in its journey. It has always been steady.
This stark contrast between the three social apps is one of the main reasons why I wanted to start this newsletter. Often times, we get bogged down thinking there is only one path or one trait all successful companies have. As I have tried to study the histories of a bunch of them, it turns out there is none. There is no way we can determine a success formula looking at PMF path of these three companies. The only thing common is that all of their paths were different.
Another important aspect of Reddit’s early history is the growth of different genres inside it.
While it was initially built around solving for the founder’s problem of going through various news websites to find popular trending news, it quickly expanded to other forms of content discovery.
Even though Reddit founders took an already existing idea, they still looked out to solve a unique problem. Since it was the early days of the internet, they could take up vague problem statements like content discovery. This is a luxury Reddit had. Newer startups I believe don’t have this luxury. They need to pick up much narrower problem statements now. I will talk about this aspect in a few of the later editions of this newsletter as well.
The prevalent system of enabling content discovery at that time was “tags”. Some of Reddit’s competitors like Delicious were already using tags. If Reddit had been too fixated on beating competition, they would have introduced the same feature. They thought of their features from first principles and came up with a new content discovery mechanism of “groups”. Instead of categorizing content, they ended up categorizing people. Their rationale was “What might be considered “politics” by one person might be tagged as “left-wing liberal bullshit” by another.” That’s when they came up with “subreddit” as a way of categorizing.
This automatically created all the difference between Reddit and its competitors. While all the other companies remained content discovery platforms and died, Reddit survived because it focused on building communities. It also ended up establishing network effects for them. Now any new company that wants to replicate Reddit, will have to replicate every one of their million subreddits.
NSFW was one of the major early subreddits that was started. It still contributes around 10% of Reddit but back then it may have been the reason for Reddit’s continuous growth. Another example of “Do things that don’t scale”? (or probably “solve for your needs first and then find users similar to you”)
“NSFW subreddit” is interesting as it was not a subreddit that users themselves started. It was a deliberate action taken by the founders. They realized that while it might not be something Reddit stands for (at that time which was social news), they still chose to go ahead with it. This may have been because those were very early days of Reddit and they would have been happy with whatever users came as long as it was growing. Which I believe is fine. Sometimes founders become too idealistic in their vision that they don’t try out anything which deviates even slightly from their vision (thanks for all the gyaan of “focus on the vision”). Sometimes at the early stage, you got to whatever it takes to get users and figure out the rest later. Its a fine line and everyone would have different definitions of where they draw the line but can sometimes do wonders. Even if it does not lead to anything meaningful for the product, it might just give enough confidence to the founder to persevere longer.
You can see the chart of various subreddit’s submissions over the years:
Reddit was not the first social news company that was started. Yes, back then Reddit was called a social news site. It is now called a community / social network.
While the inspiration of Reddit came from the utility of Slashdot (news for nerds community) and Delicious, it grew continuously while others failed.
Every one of them had different reasons for their failure (which can be all individual subsequent posts).
In the case of Delicious, one of the major reasons turned out to be that Delicious was being used more as a utility for bookmarking webpages, which meant its content was generally longer reads which people saved for later (as opposed to current and trending topics on Reddit).
Digg died because of different reasons but one of the major ones being self-promotion on Digg. On Reddit, self-promotion — say, posting your own personal blog and voting it up from multiple user accounts you’d created — was considered spamming. On Digg, however, there were loopholes often gamed by users, networks of friends, and newsrooms. Interesting point to note here is that, Digg was more heavily funded than Reddit at that time.
4chan still exists but it has evolved into more for toxic communities which somehow Reddit has been able to handle in spite of so many unfortunate instances.
Reddit was also self-policing with users themselves downvoting as they considered themselves a part of the community (exact percentage of downvoters however would be an interesting metric which I couldn’t find).
This concludes my attempt at writing about the early history of Reddit. There are a lot of other anecdotes about its early history that are worth mentioning. One of them was Reddit’s failed attempt at building Reddit TV — a video Q&A platform (a classic case of founder misalignment). I will probably talk about that later.
That’s it from my end. If you found this helpful, do share this with some of your friends in product-based roles.