A Product Market Fit Show | Startup Podcast for Founders
00:25:18 · Chris Slowe
[00:25:18] S0: No, the nice parts about working inside of Conde Nast is they did leave us to our own devices. Actually there was a couple nice parts. A fun fact, Reddit was actually started in Somerville, Massachusetts not too far from where YC was based, which was in Cambridge. A lot of that first summer batch was actually all in Massachusetts, not in California. It wasn't until that winter when YC decided to do a second batch. They decided to do the winter down at Trevor Blackwell's office in Palo Alto, I want to say; definitely down the peninsula, because why would you purposely inflict east coast winters on your startup plus doubles the surface area for like, oh, if you can tap the east coast for some knowledge, you can also tap Stanford in that area. The side effect to that though was that when we got acquired, Conde wasn't sure where to put us and the nearest property they had they could stick us next to was going to be wired which is based in San Francisco. The side effects of getting acquired are like, "And we want you all to move out to California." I'm like, okay. We all moved out; worked out of the wired office for four or five years. If anything, that was probably more fun than anything else was just getting to talk to folks who have been reading their articles for like the last five, 10 years being in the bay where the center of the tech universe even then and just generally being left to own devices because of course Conde's mothership is really in New York.
00:26:43 · Pablo Srugo, Chris Slowe
[00:26:43] S1: I think we were talking about this before, you guys kept the team pretty small even after the acquisition for a while, right? [00:26:50] S0: We never had more than 10 employees up until 2011. I left in 2010; late '10. At that point the company was four engineers and some support. They had one sales person who was actually Conde asked employee. We saw other folks who were on the business side but it was one community manager just to start. [00:27:10] S1: How come? These days, if you're the next clubhouse, you think you're the next clubhouse, let's say, you raise a lot of money and you hire a lot of people. How did you do it with tent?
00:27:19 · Chris Slowe, Pablo Srugo
[00:27:19] S0: That's the side effect of also being acquired at that point is that we did have a P&L and we were very heavy on the L because it was very hard to get the P. It turns out that where the logic of the acquisition was a little wrong was trying to get people to advertise on style.com is not difficult. Trying to get the same advertisers to advertise on Reddit is extremely difficult. Let's just say the vibe is very different. It's like high class style publication versus a bunch of -- It was actually very difficult to get even – to get to even cover our own costs was actually very difficult, and so hiring was also difficult. One thing that also hit us was you might recall 2008 was a big economic downturn; another reason where actually the acquisition was really great because we would've ended up in a pretty tough spot trying to get funding 2008, 2009. That period of time there was a company-wide hiring phrase at Conde because they were worried about the downturn. That meant if we were growing or not, we couldn't hire. If anything, it taught us to be fairly lean and fairly efficient with our tech. That's also the year where we migrated into the cloud. We actually were very early AWS users mostly because it was a lot easier to get servers by putting them on a corp card than it was to actually have to deal with procurement and getting them shipped out and having to rack them up ourselves. [00:28:51] S1: By the time you leave in 2010, do you remember the size of Reddit? Was there meaningful revenue or were we at 10 million users a month or so?
00:28:51 · Pablo Srugo, Chris Slowe
[00:28:51] S1: By the time you leave in 2010, do you remember the size of Reddit? Was there meaningful revenue or were we at 10 million users a month or so? [00:28:58] S0: Yeah, when I left, it was in the vicinity of 10 million users a month and the revenue was not large enough to be worth mentioning on this podcast. I do remember in 2010 we launched Reddit Gold, which was our first attempt at doing some something like a subscription model on Reddit. I think in that first week, we raked in the, at the time eye watering number of a hundred thousand dollars from users just donating to Reddit. That was a completely insanely large number in the scheme of things like. That was larger than the last couple months of ad sales, if I remember right at the time. [00:29:36] S1: What's crazy to me as an outsider is just that a company that today does nearly a billion dollars in revenue, revenue five years in had trivial amounts of revenue. It's just crazy how long some of these things can take until you I guess get the balance right and can really start monetizing. [00:29:50] S0: A hundred percent, and I think the flip side of it though is that what we didn't appreciate at that point was that the product had, again, to use modern terms, it had immediate product market fit. The magic of Reddit was there was never any question about we never even thought about marketing. There wasn't any need to market. There wasn't any need to do any lead gen. [00:30:11] S1: People listening right now, they just hate you.
00:30:11 · Pablo Srugo, Chris Slowe
[00:30:11] S1: People listening right now, they just hate you. [00:30:15] S0: I know, but it's again, it's one of those things where we didn't realize the time that was an unusual thing. The fact that we had to work really hard on the revenue side, it wasn't until the modern era where we really started doubling down in revenue and the last basically 2015, 2016 on was a really had to go hard at it and figure out how to solve that particular problem. For the early days, the problem was never the users. If anything, there were days where we're like, "Oh, cut, can they just stop coming for one day so we can clean up this database?" I mean, great. I just want to take the whole site down time; I need to run a full vacuum, like just let the vacuum finish. [00:30:57] S1: Tell me the – so then you shift. In 2010, you and Steve decide to go off and do Hipmunk. What's the story there?
00:30:57 · Pablo Srugo, Chris Slowe
[00:30:57] S1: Tell me the – so then you shift. In 2010, you and Steve decide to go off and do Hipmunk. What's the story there? [00:31:11] S0: Similar story, which was that I never come immediately but I come eventually. I come quickly. It took a little away time. Steve left in end of 2009 and then went off and came with an idea with a friend of ours, Adam Goldstein, to build a travel meta search site called Hipmunk and I ended up joining about a year later end of 2010. I would say that to go back to my point about product market fit, part of the design choice around Hipmunk was let's make a very nicely designed site and product that has immediate ways to get to revenue and that we just have to deal with – let's find a path where we don't have to deal with complaining users and we can get to revenue and really nice product. We succeeded in all directions and then realized that of course that the hard part is getting people to actually come to your site is very difficult. Steve and I talked about this in Retrospect, it's like we just had this notion that we were going to turn it on and people would just come. That has been the story with Reddit. If anything, we built it with notions of scale that are just hilarious in Retrospect of like, oh yeah, we like a couple of architects who are used to dealing with huge scale in Reddit. We'll just make this thing fast and really scalable and easy to scale up, and scaling was never the problem. It was getting users to come. If you could get somebody to come back twice in a year, that was a rampant success.