Strong advertising performance has propelled Steve Huffman into the billionaire ranks. Now, the Reddit CEO is charting a new course, aiming to make the platform an indispensable partner for AI companies.
After nearly two decades of losses, Reddit has finally turned a corner—achieving its first profitable quarter a year ago and now delivering its strongest earnings report to date. On October 30, the company announced a net profit of $163 million, marking five consecutive quarters of profitability since its IPO a year and a half ago.
The market responded enthusiastically, with Reddit's stock closing at $208.95 on Friday, up 7.5% from the previous day and 75% year-over-year. This surge pushed the net worth of co-founder and CEO Steve Huffman to $1.2 billion.
"Our Q3 performance was strong," Huffman said during the earnings call, praising Reddit as a platform "created by humans, for humans" while subtly criticizing the flood of low-quality AI-generated content online. "Reddit’s uniqueness lies in not copying others but being the best version of itself—a place where users connect and find authentic, useful information."
In an era where bots and ads dominate, Reddit has emerged as a trusted source of information. Its popularity has soared in recent years, with daily active users nearly doubling since summer 2023. Google search results increasingly feature Reddit links, and organic search traffic to the platform has grown over 560% in two years, according to digital marketing firm Semrush.
While Facebook, Twitter (now X), and LinkedIn minted social media billionaires in the early 2000s, Huffman’s entry into the billionaire club comes later. Despite Reddit ranking as the world’s seventh-most-visited website in September—ahead of LinkedIn, TikTok, and Netflix—Huffman sold his founding stake in 2006 when the company was still a startup.
Founded in June 2005, Reddit was sold to Condé Nast a year later for $10 million by Huffman and co-founder Alexis Ohanian (now a venture capitalist married to tennis star Serena Williams). The duo admitted the sum was life-changing at the time, but the long-term cost was steep: by 2014, Reddit’s valuation had reached $500 million.
Huffman, now Reddit’s largest individual shareholder, returned as CEO in 2015 to address operational crises. His compensation package has since granted him 3.1 million shares (2.3% of the company), alongside stock options and $190 million in cash and investments.
His comeback was no small feat. Reddit was grappling with lax content moderation, toxic subreddits, and the "Great Reddit Blackout"—a protest by moderators after a popular employee was fired. Huffman introduced the platform’s first content policies, banning spam, harassment, and illegal activity while quarantining offensive but legal content.
Advertising became Reddit’s primary revenue driver, with Huffman building the business from scratch. Unlike Meta and Google, which rely on user data for targeted ads, Reddit uses contextual cues (e.g., parenting subreddits trigger baby product ads). Last quarter, ad revenue hit $549 million, accounting for 94% of total sales—up from $12–15 million when Huffman returned.
New challenges loom, from AI ethics (Reddit’s data is used to train models) to balancing free speech with moderation. Yet Huffman remains confident: "Whatever you’re going through, someone on Reddit has been there and shared their story. That’s our strength."
Born in Virginia, Huffman learned coding early and met Ohanian at the University of Virginia. Their first venture—a mobile food-ordering app—was rejected by Y Combinator, but their second pitch (Reddit) secured $12,000 in funding. Launched at age 21, Reddit’s user base snowballed, leading to the Condé Nast sale.
After a stint at travel startup Hipmunk (acquired and later shuttered), Huffman rejoined Reddit in 2015. Under his leadership, daily active users grew from 12 million to 116 million, aided by multilingual support that boosted international users by 31% in a year.
Reddit’s second revenue stream comes from licensing its data to AI firms. Once free, its API now charges fees, and the company has sued AI firms like Perplexity for unauthorized scraping. Deals with Google ($60 million) and OpenAI ($70 million) underscore the value of Reddit’s human-generated content—ranked as the top source for Google’s AI Overview and second for ChatGPT.
Analysts note these fees may be undervalued. "This is just the starting bid," said Baird’s Colin Sebastian. "As Reddit’s leverage grows, future deals could command higher prices."
To hedge against AI dependency, Huffman launched "Reddit Answers," aiming to make the platform a go-to search engine. AI compiles responses from real users, linking to original discussions.
Despite AI’s impact on search traffic, Huffman remains bullish. "Language models need Reddit to survive," Sebastian noted. "They can’t thrive on synthetic data alone."
Huffman, an active Redditor with thousands of posts, recently engaged with a user celebrating a 500% gain since Reddit’s IPO. His reply? A smiley face.
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