Reddit Execs Ellen Pao and Jena Donlin Get Serious About the Site’s Business (Q&A)
Vjeran Pavic for Re/code
Reddit is one of the biggest sites on the Web. Now it just needs to start making it rain.
Since 2005, the online community message board and link-sharing site has risen from an esoteric bulletin board service to the self-proclaimed “front page of the Internet,” boasting nearly 112 million unique visits and 5.4 billion page views per month. Its traffic-driving oomph is so powerful, Reddit often takes down sites that make its front page (also known as the Reddit Hug of Death).
The problem is, despite its massive traffic and Internet popularity, Reddit isn’t the money-making machine it wants to be. Reddit won’t disclose its revenue, but as of last year it’s not a profitable site, and most of its ad products are still largely experimental.
If Reddit has its way, that won’t be the case forever. The company has charged Jena Donlin and Ellen Pao with the task of turning the popular site into a successful business.
Among other things, Donlin and Pao (who previously worked at Kleiner Perkins as a venture capitalist) work on partnerships with outside brands and potential advertisers, while playing around with how to grow some of the site’s more nascent revenue streams.
That’s not an easy feat. The Reddit community has long been critical of traditional Web advertising, and the company’s long, complicated history with part owner Conde Nast has only served to make monetization efforts that much more difficult.
Now, spun out on its own with a fresh CEO and a host of angel investor advisers to offer guidance, Reddit wants to get bolder about making money — its own way — while trying not to scare off its very, very strong community of Redditors.
We sat down with Donlin and Pao for some insight into what’s up with the company’s most recent monetization efforts. Below are lightly edited excerpts from our conversation.
Re/code: So tell me a little about Reddit’s history with monetization. Is it true you all have been adverse to most traditional forms of advertising?
Jena Donlin: I wouldn’t say it’s an aversion. I would say that what we’re trying to do is make it consistent with the user’s experience on Reddit.
So we have what we call sponsored headlines, which are blue sponsored links, which were introduced back in 2009. Those are five dollars to just put up an ad within any subreddit and you know the ad looks and acts just like Reddit content. You can comment on it, you can vote on it, it can link out or it can be a self-post.
Ellen Pao: We think Reddit is about communities and it’s about authentic engagement. And we really want to build that space within Reddit for the advertisers to have that same type of conversation, versus trying to do something that’s not authentic on the site that people are unhappy about. So we’re trying to figure out ways to monetize within the structure that people are used to in ways that are very authentic.
Sounds like the so-called “native ads” thing everyone loves to talk about. Do you have to work with advertisers or are the types of people taking out ads the ones that know Reddit already?
Donlin: I think it’s a balance of both. A lot of good ideas don’t just come from Reddit Incorporated, they come from Reddit users.
Sometimes its a collaboration between us and a brand, and sometimes it’s just a user that has an app and wants to explain it and wants to tell people about it.
That’s something that both Twitter and Facebook (as well as the rest of the ad industry) are trying to do — make compelling ads that people actually want to interact with. That also seems really tough, given how difficult it can be sometimes to crack the Reddit community, and how willing that community is to buck against things it dislikes.
Pao: Some advertisers will have someone on their team who understands Reddit, and can tell when an ad isn’t going to work. But sometimes they want to pass ideas by us.
So Nissan, for instance. We spent some time walking through ideas and working with them. I think as time goes on, people will be more and more able to do that for themselves. There’s more awareness of Reddit and there are more people on [these brands’] teams who are hardcore Redditors.
Is it common to have those big brands like Nissan on Reddit?
Pao: We’ve got a lot of tech companies, we’ve got a lot of movie studios — we’re starting to see it more widely adopted. UPS is a partner. Amazon is a partner. Nissan, Microsoft.
Donlin: Generally, the larger brands are higher touch from our team. We have strategists and salespeople that work directly with them.
We do have a small ad team compared to most other sites, like BuzzFeed — I think they probably have hundreds of people. We have ten or so people that are dedicated to sales in some form.
We still only have about 40 people on staff. And we’re an engineering company to an extent. We’re figuring out how to keep that engineering mentality but also make sure that we’re, you know, growing the businesses in other ways as well.
I’m glad you brought up BuzzFeed. How do you feel about them often ripping off Reddit content wholesale, and then repackaging it and selling ads against it on BuzzFeed.com? That seems like territory you’re ceding to their massive sales force.
Donlin: I don’t think that we look at it that way. I guess everyone’s a competitor and no one’s a competitor, if that makes sense.
We can’t exist without other sites online. But at the same time what we’re trying to do is make sure that people still want to come to Reddit and can enjoy Reddit. And there are some gray areas where we’re kind of figuring out what that means or how to approach that.
Pao: And the idea is to build a community that lasts for many, many years, versus “let’s try to get as much money out of them in the next year,” and, you know, worrying about what happens later. So for us the priority is creating this environment that people are really excited about.
Are advertisers worried about some of the more disturbing content? I’d imagine it would be hard to sell ads against some of the more gnarly things I come across on the site from time to time.
Donlin: We consider ourselves the front page of the Internet. So that means there’s stuff that most people like, and there’s stuff that only certain people like and other people don’t like.
We’ve been able to kind of manage that through Subreddits (which are essentially topic-focused subsections of the site, in which users can discuss specific subjects). So each Subreddit is a separate community, and those members of the community decide what they want to see. If you don’t like it, you can get out of that Subreddit and you don’t have to advertise there.
But if you do like it, then you’ve got people who are like-minded and who are interested in seeing the same content.
So tell me how to target ads if I’m an advertiser. You don’t use tracking cookies on the site.
Donlin: Our Subreddits are essentially people organized and opted-in around topics.
That’s something Twitter is trying to do well.
Donlin: It’s trying, but it’s hard. But we have topics built in.
Pao: Flipboard did the same thing. It started very topic-oriented because following people is hard.
On Twitter I follow some people who follow certain sports that I really could care less about, and I can’t really filter those out. It’s a difficult problem.
Let’s talk about Reddit Gold, another one of your revenue products.
Donlin: Reddit Gold is very authentic to the site. [After someone purchases Gold for themselves or another person], they’ll get access to “the lounge,” which is a Subreddit only Gold members have access to. And its fun, it’s lighthearted.
I think Reddit Gold is really fascinating in terms of how people use it on the site, and how you’re creating value. I see strangers gift Gold to others anonymously all the time.
Donlin: It’s a lot about good will, as you said. People are really excited about Reddit. They use it a lot and understand that it’s a free service and they would love to see Reddit succeed so they contribute to express their love for Reddit. It’s great.
Pao: People like to reward people who have great comments. So in addition to rewarding Reddit, a person may have had this great experience that they shared, or wrote something really personal, or did something really positive. So another Redditor may want to reward that person, and the easiest way to do that is with Gold on Reddit.
Thus far, it’s been a largely symbolic gesture, as far as I can tell. What else does Gold do?
Donlin: You also get Gold benefits which are special deals corporations offer only to Gold users and some of them are really great. So UPS, Beta Brand, Uber, Lyft, for instance.
Pao: A big thing for us here is that it has to be brands where there’s strong customer service. We want everyone to have the same experience as if we were running the service.
I wonder about how reliable Gold is as a revenue stream, especially if it rests largely on good will.
Donlin: Yeah. It’s a subscription service, so the goal is to find really loyal users who are willing to renew. And if we can’t make it exciting for them to have this good will to renew every month, then we’ve got to keep working on it.
Lastly, let’s touch on Gifts, your third revenue stream.
Donlin: So this is interesting because it’s the best aspect of anonymity.
It started out with two Redditors who were interested in creating this great Secret Santa experience for people. And so they weren’t part of a business, they were just doing it out of their own good will, but they said how cool would it be to do Secret Santa on Reddit?
Pao: It was so great, they decided to do more exchanges. And then started Reddit Gifts which was just giving strangers gifts based on their Reddit profiles. We ended up buying them two or three years ago. They started up a marketplace where they brought vendors from different places and we sell some of our own stuff on it.
It has grown a lot. I think it was last Christmas or last holiday season it was over 100,000 people participating in a Secret Santa exchange. Including Bill Gates, Shaq, Pee Wee Herman.
Last question: What’s the biggest thing we’re missing about Reddit?
Pao: The coverage we see is either business focused, or it’s about the content that comes out of Reddit. I think there’s very little on helping people to actually become Redditors. Because once you become a Redditor, this conversation becomes a little bit easier, and you understand how your business can fit within that framework.
That’s interesting. It’s sort of like Twitter — once people “get it,” they’re usually hooked. But sometimes it’s really tough for them to “get it” at all.
Pao: It’s a known problem for us, and we’re working on it.
In the next year, you’ll see we’re experimenting with some ways to make it easier for new people to find interesting stuff, and to just have an easier understanding of what Subreddits are and how to find them and how to use them.