Wall Street bets on Reddit

SPEAKER_2 (0:03)

No two countries that both have a McDonald's have ever gone to war. Well, you know, that's kind of gone by the wayside now.

So I think we'll just be inevitable that countries think about on-shoring to anticipate what will happen when we get into one of those crisis episodes.

SPEAKER_3 (0:21)

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Ethan Wu (1:00)

Reddit is home to 73 million of the internet's most intelligent commenters, and the company is going public. One of the biggest US debuts in quite a while has generated a lot of attention. And the question really for Reddit is, is it a good business, and can it survive in Metta's world? This is Unhedged, the markets and finance show from the Financial Times and Pushkin. I'm reporter Ethan Wu here in the New York studio, joined by my boss, Robert Armstrong, who despite not being a Reddit user, has just written two articles.

Robert Armstrong (1:14)

But you are a Redditor, that's the important thing. I just crunch the numbers.

You're a Reddit guy.

Ethan Wu (1:20)

Well, I wouldn't call myself a Reddit guy necessarily, but I have been on in some capacity for the past, I don't know, like decade or so. I joined in middle school to follow like gaming forums.

Robert Armstrong (1:27)

What's the last thing you read about on Reddit?

Ethan Wu (1:30)

There's a subreddit called Mildly Vandalized that I was looking at recently, which is just like petty acts of vandalism on science.

Robert Armstrong (1:37)

It's funny, because that was our second choice for the name of this podcast.

Ethan Wu (1:41)

Mildly Vandalized Markets News, that's what we like to present.

Yeah, so it's weird communities like that, like R slash Mildly Vandalized or whatever it might be, that is the product, right? Being sold to advertisers and ultimately to investors.

Robert Armstrong (1:57)

I think you've put your finger on something that is central to whether this is a good business and central to just the future of the site, which is looking at it from the outside, reading the IPO filing documents, browsing the site a little bit for the first time. Clearly, what is special about this place is the work that the users put in to make it a better place and a more interesting place. Not just upvoting and downvoting things, but more importantly, moderating the individual Reddit conversations and so forth.

And the overarching question, I think Wall Street is asking, and users of the site are asking, this becomes a big public business that makes money and that everybody knows how much money it's making and the C-suite is making all this dough. Are the Redditors cool with that?

Ethan Wu (2:50)

Yeah.

Robert Armstrong (2:51)

And if they're not, it's going to change the business and change the site.

Ethan Wu (2:55)

Just to take it back a step, for people that may not know exactly how Reddit works or haven't used it before, the basic premise is that it's a big form with a lot of sub-forms called sub-Reddits.

People make posts on the sub-Reddits and then can comment on those posts, and both the posts and the comments can be upvoted or downvoted by other users. So it's a form with a user-generated rating system on all of the content, which is supposed to mean that the cream rises to the top, the most popular stuff is more visible, the junk sinks to the bottom, no one ever sees it. And that feature, alongside the fact that you can create these sub-Reddits, these little micro communities dedicated to shared interests, has meant a different type of engagement.

Robert Armstrong (3:40)

And the sub-communities, the sub-Reddits, are self-regulating. They have rules.

Ethan Wu (3:45)

This is crucial.

Robert Armstrong (3:47)

That are stated by a moderator, and that moderator does work to keep that sub-Reddit a kind of positive and useful place.

Ethan Wu (3:55)

This is crucial. So when you set up a new sub-Reddit, if I wanted to set up r slash unhedged, right?

I am then the moderator of r slash unhedged, and I can decide, okay, what are the rules we're going to put in place? How are we going to enforce them? What kind of culture do we want to promote? Those tools are given to the volunteer moderators who are users fundamentally.

They can curate a sub-Reddit's expectations, rules, community, culture. And that is kind of core to the Reddit product. It's why people want to go on it.

Robert Armstrong (4:23)

And so does all of that and the good vibes associated with that, is that able to survive the transformation to a properly profit-making, publicly traded entity? I think that is a huge question.