The Underdog Story of Reddit

0:28All right, this was not supposed to be a podcast. Let me give you the background. Reddit goes public today. Interesting. Fine. I don't really care. I didn't participate in the stock or anything. I wasn't really looking at the chart, but I did read Paul Graham's essay about Reddit and it's titled The Reddits. It's on the YC blog. Paul Graham has known these guys for nearly 20 years now. And so he wrote this post today that had so many little breadcrumbs that I thought there were like, as I was reading this, every paragraph was firing off like a connection to a different lesson learned like my my brain of frameworks was literally like lit up like a christmas tree with some of the things he was saying and i just wanted to like say them out loud to you i wanted to i'm i'm imagining you i'm imagining you eating cereal as you're reading this and then you have like one bite in and like you you just this is my bowl my salad i'm eating look it's half eaten because i was like oh shit i gotta put this down i gotta record this and so um we didn't plan this but let's do it all right so i'm reading this essay And I want to give you kind of like point by point of what I think is really interesting.

1:31And by the way, Paul Graham is the, I guess we have to give context now because this is like a podcast. Paul Graham is the founder of Y Combinator and Reddit was one of the first companies. Reddit was the first company in the first batch. But actually what's more interesting is in that post, Reddit is not only the first YC company in the first batch ever. It's actually the reason that YC exists. I don't know if you do this, but this is kind of cool. So Paul Graham, in this essay, he says, why C started because he went to the Harvard like computer club or something like that and gave a talk, which by the way, is how many interesting things have started.

2:06I also believe this is kind of how Apple started. Wasn't there like a, he, they gave a talk or a demo at the homebrew club. This is how Tim Ferriss started the four hour work week. He taught a class at Princeton. And there's this principle, which is if you ever want to learn something, try to teach it. And that, that has led to many people writing books. So Tim Ferriss did it. Then he wrote a book near I Al. Same thing when he wrote his book hooked, same thing. He's like, I first was just giving a talk somewhere to give the talk. I had to sharpen up my thoughts. By the end of that, I was like, shit, there's something to this.

2:36And it's the same thing happened here. Paul Graham gave a talk at the school called how to start a startup. He's gives us talk. And then from the talk, he's like, dude, I should create like a vehicle to invest in like these earlier, younger founders. He's like, at the time founders were thought to be like either older or just super young prodigies. But he's like, I think this college student age, I think that's where you could start companies from. So that's why he creates YC. So he gives the talk. He meets with Steve and Alexis afterwards, and he's impressed by another thing. So the second interesting thing, he gave this talk at Harvard.

3:09They didn't go to Harvard. These guys go to school in Virginia. They took a train up from Virginia to hear this talk because they used to follow his blog. So Steve loved his blog. He convinces Alexis, hey, come with me to go see this guy talk. They go up there. It's not like a show. There's no tickets. It's like, you know, 30 person room and he's there. And so Paul was so impressed that these guys came from Virginia. He's like, they wanted to meet for coffee. He's like, okay, no problem. You guys came from such a far way. I'll do it. There's a principle there in the like 80 % of success is just showing up or like when in doubt, like just go, just take the train, take the flight, just show up, put yourself in positions for good things to happen.

3:50And that's what they did. And it's a high agency move. they could have easily a not gone, um, you know, showed up and not told him, but they, they went there, they took the train, they told him, and this is the first of many high agency moves that they pull. He talks about later how they actually ended up rejecting these guys from YC. So he, he gives the talk, decides to create YC reaches out to the guys. Like, Hey guys, I was inspired by meeting you guys. I actually created something called YC for people just like you. You should fill out the application. They fill out the application, but he hates the idea.

4:20So he rejects them. Their idea was ordering fast food off your phone. DoorDash. But there was no smartphones. So there is no DoorDash. They basically had to go to cell phone carriers and fast food chains and do it all manually so that you could do it over text message, SMS back then. And you have to set the context even here about them showing up, which is Paul Graham's a big deal now. Paul Graham funded Airbnb, Dropbox, whatever. He's a big deal. Back then, he had just sold a company for I think 30 or 40 million dollars, which was a big deal back then. And I guess he had some extra money and he was blogging, but he wasn't like a big deal.

4:57It was like a, this was like a very like, this is like the... It was a blog for hackers, for programmers who are entrepreneurial. Which is almost like as ridiculous as when Twitch was coming up. You're like, people watch video games online. It's like, this guy's just blogging about this type of internet stuff. That's not even that cool or interesting. It's a very small market. By the way, Twitch also in that first batch and Emmett, best friends with Steve, the guy who created Reddit. All right. So anyways, more principles. So the first one is if you want to actually learn, try to teach. Giving a talk is actually a really good gateway into either books or companies or whatever.

5:31If you can't articulate in a 45-minute talk a bunch of really insightful things that get other people excited, it probably won't work as a book or company. And in reverse, even if you're not planning to do it, it's a great way to generate sharp ideas is to go try to teach a class. Second thing, taking the train, showing up. All right, great. Now here's the next one, trusting your gut. So like I said, he's inspired by these guys. He creates YC because he meets these guys, but their idea he hates. He hates the order food off your phone. He's like, that's too hard. And he says, at the time, I didn't realize that the game I'm supposed to be doing is sort of betting on people, not ideas.

6:08I thought at that time, I'm supposed to be betting on ideas and I hated their idea. So they rejected him. And he's like, you know, Jessica, his wife, who he credits as having like the best kind of like people detector of anybody he knows. She was like, oh, you rejected the muffins. And he's like muffins. And she's like, yeah, that's what I call those guys. Steve and Alexis. They're like so endearing. They're like a little poodle. Like, you know, they're like a little puppy. She called the muffins. She's like, oh, that's sad. I like the muffins. And he's like, yeah, but I didn't like their idea.

6:36She's like, I feel like we should have the muffins in YC. Like they're the reason you created this. Why would you not accept them? So he calls them back up. they're on the train ride home to Virginia. And he says, guys, I want you to be in YC, but like we got to, I'll fund you only if you're going to change your idea. And how much was funding? Was it$15 ,000? Yeah, like nothing. Yeah. So basically like a summer. Yeah, exactly. But it was the, it was the, somebody believing you and you was the real currency there. They're on the train ride home from Virginia. They just get off at the next stop and then hop on the next train going back up North again.

7:11And they like immediately seize the opportunity, which is another kind of like, again, these were all like little breadcrumbs of successful things, successful, like successful actions, successful behaviors that it doesn't surprise me that a Reddit comes out of something like this. On his side, it was trusting his gut, Paul's side, trusting his gut that he wanted these guys involved. He should bet on people, not ideas early on. And for them, it was being willing to hop off the train and just take the next train up north again. So he gets there. Now here's the next interesting idea. Some of the best ideas are found, not thought of, discovered, not thought of.

7:48So Paul Graham had been blogging and his blog was not too big of a deal back then. It was, you know, okay. Not what it is today. But he noticed that a lot of his traffic to his blog was coming from a website called Delicious. Do you remember Delicious? Yeah. Was it really a website or was it like a bookmark? It was a bookmarking tool. It was a way to save the stuff you liked, like bookmark for later for yourself. But they had one little side feature called delicious.com slash popular. And slash popular was basically just an aggregator of all, like, what are the most popular bookmarked things that day?

8:21It was a side feature, sort of a throwaway idea for them. But what Paul Graham noticed was he's like, damn, I get actually a lot of traffic from the slash popular tab of delicious. It's not the main product, it's the side product. And so he took that, he's like, guys, you need a new idea. Here's an idea. The delicious slash popular thing is cool. What if there was just a page that was like the front page of the internet? It's like, what are all the most interesting links of the day that you should go check out? Just take the side thing and let's make it the main thing. That's a pretty wild thing to think about because back then, so they started in 2005, which meant Google was only eight years old and AdWords was probably new.

9:01I don't remember when Facebook was started, but right around then, like internet advertising, I guess was still pretty new. Dude, they weren't even thinking about advertising. They were just thinking, what's a cool thing that should exist on the internet? What's a cool, useful product? That same idea I heard again many years later when I met Ryan Hoover. Ryan Hoover was the founder of Product Hunt. But what most people don't know is before that, he was blogging. And then I reached out to him and I was like, hey, I really want to hire you. I tried to hire him. He wanted to join. And my team was like, he didn't pass the interview process for some whatever reason.

9:33So they were like, ah, we don't think he's got enough experience or something. And I really liked Ryan. I was like, hey, man, so sorry. Like, let's keep in touch. I feel like our paths are going to cross again. Three weeks later, he emails me about an idea. He's like, hey, maybe instead of a job, I should start something. And what he tells me, he goes, I got, he goes, like you, I like to go to Hacker News every morning. Back then, that was my routine. We both used to go to Hacker News every morning. Still is. But my favorite tab is not the main page of Hacker News. It's the side page, the show section where you can go.

10:01It's like a show and tell where you could show what you're building. Because if you go to Hacker News, you click show. It's only like links to cool products that people are just like, hey, I want to show you guys. I made this. Hey, I want to show you guys. I made this. He's like, what if there was something that was just the show tab? Let's make the side thing the main thing. And so that's what Product Hunt became. And Product Hunt then became this sensation in Silicon Valley. He ends up selling the company for$20 million. And it was this success for Ryan. And so this is like Reddit kind of had that same idea, that same thing where it took the side page of Delicious.

10:33And so there's something to this, which is one great place to discover ideas is look at your invoices or look at your P &L. Look at the cost section. I think that's one great place to find investments or ideas. Another one is look at your traffic referrals. And if you ever notice referrals coming from someplace, that's interesting. Another one is what's a side feature, your favorite side feature of a different app that actually could be a standalone app in itself. And so there's something to that philosophy. One quick story. Scott Belsky. I talked to Scott Belsky. Scott Belsky is a famous entrepreneur and investor.

11:05He told me that when he was in his early 20s, he had a website and he noticed that he was getting a lot of traffic from this brand new website called Pinterest. And so he reached out to the founder of Pinterest and was like, Hey, what's this thing? Tell me all about it. And he wasn't getting a lot of traffic, like 100 people a day or something like pretty small. And the guy was like, Yeah, it's just this thing I'm working on. I'm going to raise a little bit of money at a$3 million valuation. Do you want to invest? Scott goes like, well, I only have like 50 grand in my name, but I guess I'll give you$15 ,000.

11:33And he did. That went on to make probably$100 million. That same week, he started getting traffic from a website called StumbleUpon. And he goes and does the same thing. He talks to the guy StumbleUpon. They're not raising, but he becomes friends with Garrett Camp, who goes on a couple years later to found Uber. And he invests in Uber as well. $15 ,000 also made something like$100 million because both times he was getting traffic from these brand new websites that he thought were interesting. Exactly. That's what I'm saying. These are breadcrumbs that it's not specific to the Reddit story. This is everywhere.

12:05And those are perfect, perfect examples of the same principle. It's kind of like the art of noticing. Like if you can notice where you're getting traffic or notice that, hmm, this keeps growing every month, you might find something earlier than everybody else. So that's another one. All right. Here's another principle that I found interesting. The name Reddit was not meant to be the name of the site. They wanted to call it snoo.com, S-N-O-O. And today the Reddit mascot's name is Snoo. And Reddit was kind of like their placeholder name for it. It was the working title. And it was like, we're going to change when we actually launch this thing, we're going to change it.

12:43But like for now, it's this snoo.com was too expensive. So they couldn't afford it. And, um, this is so common. Like we're so often wrong about names. Uh, some people get really precious about names early on, but Paul Graham advised these guys to just like, just pick a name that kind of like feels right, works right for you right now. You can change it later if you need, but also he urged them to ship it fast. He's like, I think we could build a fast version of this. And Reddit actually launched in three weeks after they went through the, after they got it admitted to YC, which is incredibly fast.

13:13and then from there they just started iterating. That's awesome. That's amazing. Next thing, do you know how they got their early traction? Have you heard this story? It's a good one. Yeah, basically Steve Huffman and Alexis, I believe what they did is they just created a bunch of fake usernames and they just would submit constantly different links to look like many people were participating because the way that a site like Reddit or any community works is you typically have 99 % of people going to view stuff and only 1 % of people actually submitting stuff. So they had to submit content in order to create supply.

13:49Exactly, exactly. Nobody wants to be, nobody wants to come into a dead room and just start dancing, right? Like if you go to a nightclub, there's nobody on the dance floor, you're not going to go either. So they had to fake it till they make it, right? I think that's kind of the principle here was fake it till you make it, gone right. And this was, they were the users. I think they talked about like, they created, I think, 30 different accounts and they would just not only submit the links for Reddit, but they would then comment and they would comment as different personalities. And I think Steve talked once, like, he's like the first day I logged on and the comments under a link were not from me was like this hallelujah moment.

14:22It's like, Holy shit, we did it. We got enough of that critical mass, that chicken and egg problem. We solved it. We got the ball rolling. And importantly, they had also set the culture. You did this. I thought really, really well. When you launched trends, I got to see you launch trends from a idea to a three, four, 5 million a year recurring revenue product. And all it was, was a Facebook group. And in that Facebook group, there was a research reporting too, but the Facebook group, I think it was actually the main product. It was. And you were so damn active. And I was like, oh, this is how you build a community.

14:56Every day you would go in there and you'd be like, hey, what's up guys? I was just thinking about this interesting thing. I'm like, no, the fuck you weren't. You were like, you were like, I have to stoke this fire. Otherwise this fire is going to go out right now. And I used to write posts on other people's behalf. I don't know if you've ever, if you did this at the time. You asked me, you were like, hey, can you post this in the group? I'm like, did I ask you that? And then you copy pasted this huge thing. And I was like, okay, I guess it's well written. So like, sure. So you got us, you were basically our fake accounts.

15:24Yeah. And I got, I couldn't remember if this was pre MFM days. So if this was pre Sean being famous and I would like get other popular people and write on their behalf and be like, hey, just post this. And yeah, it worked out really well. He'd be like, hey, can you go comment? Like you'd message 40 of us. He'd be like, please go comment on this thing. This baller just joined and I want this to feel really active for him. Like I want him to feel overwhelmed. And I'm like, okay, what do you want me to say? You're like, say this. And I went and I would go comment that. And then that guy would be like, wow, what a community.

15:54This is fantastic. And like that first impression was so good because of that. That's what the Reddit guys did. And I found, by the way, you have to do that. I've had to do that in that case to about 2000 people with Hampton. I only had to do it to about 300 people. And so the numbers that you actually have to do that for, like the new members or whatever the community is, the website visitors, it's actually not that high. Dude, those numbers sound so high. You did it for 2 ,000 members? That's crazy. I don't remember exactly, but that doesn't seem... But now Trends, I think, had 20 ,000 members.

16:25The way I remember it was sort of like the first 150 days, you were tending to that fire. You would not let it just go out. Yeah, so it was only about six months that I had to do that. What's the other point? All right, next one. Okay. Talent filters. So one thing Paul Graham says, he goes that the reason Steve showed up at that talk was because he followed my blog, which was about Lisp. Lisp is this like obscure programming language that I think Paul Graham created, if not created popularized, but I think he created it. And he's like, the thing about Lisp is, he goes, it's one of those languages that few people will learn except out of your own intellectual curiosity, meaning it's like, it's not, you don't learn it to get rich or to get famous or any of those things.

17:11If you go through the rite of passage of learning this thing and being interested in it, you are just wired a certain way. And you are somebody who pursues your intellectual, like your intellectual interests and pursuits. It's like, I guess, pretty elegant. If you do code and lisp, it's like really elegant in certain ways. But again, it's like cursive or calligraphy. It's like, you don't need to learn calligraphy, but if you do, you probably have like eye for design, right? The Steve Jobs thing. Sure. So same sort of thing. So that got me kind of interested that there are probably like a dozen things that I can think of that are like this.

17:42Amazing talent filters. We talked last week about that startup Cognition that came out and raised a bunch of money and they have this like AI software programmer that's like, you know, better than ChatGPT that writing code. And that guy was like in the math Olympiad, right? He was like his sport when we were playing, you know, basketball and soccer and stuff like that. He was like, you know, sitting there at a, on a stage buzzing in and answering like really hard math questions or the spelling bee. It's like things that you do, if you can become obsessed and degenerate, degenerately obsessed about certain things, you're wired a certain way and you are almost like predisposed to success.

18:21Then, you know, it's like, all I got to do is introduce you to the idea of the stock market. Trust me, all your like fucking world of Warcraft grinding is going to apply really, really well over here. You just have to get exposed at the right time here's a list poker yeah board games yes uh it's sports specifically individual sports so if you're world-class like an end like a swimming track of field cycling wrestling those types of things all right the video games one is obvious let me give you a wild card magic i'm not talking about like cards but like ta-da like that type of magic every 12 year old boy i don't know any 12 year old boys who did not think magic was the shit and bought a magic set for sure If you could trick me on levitating or make a coin come out of my ear, that took a lot of hard work.

19:05I'm into it. eBay flipping was another one back in the day. Sneaker flipping and eBay flipping was definitely another one. Being a Mormon and going on a mission, another one. Being from the countries, the Ukraine, any war-torn country that you have escaped from, great filter. There's a bunch of these. All right, next one. one of the best principles my trainer and coach taught me was that the best products are simply you pushed out. That's how I feel about this podcast. This podcast is just me pushed out to the world. And for whoever likes me, they're going to like this podcast and it's going to feel very second nature to me to create this podcast because it's just me.

19:45And so Paul Graham says almost the same principle without, he doesn't have that catchphrase, but he has to say the same thing about Reddit. He goes, Reddit was successful because Steve has two things. Number one, one, he likes ideas for the sake of ideas. Like he likes ideas just for the sake of interestingness, which is really what Reddit is. Like you go to Reddit, not because it's the top news story, but because it's like mildly interesting or it's fascinating in some obscure way. And that's what makes Reddit really, really special. And that's the type of stuff that Steve really, really likes.

20:16And so naturally it went in that direction, which is like not obvious, actually. Like I think the obvious, if you were like writing a business plan, you would have made Reddit a lot more like, I don't know, the homepage of CNN today, right? The important stories, rather than the quirky, interesting stories that are only just, they scratch your intellectual itch and nothing really else. Dude, that's kind of a weird way to say the product is just pushed out of you. Just ejaculated straight out of you. Yeah, yeah, yeah. You just got to squeeze really hard, grunt a little bit and pop. It's just going to be pushed right out of you.

20:50You just got to make your innie and outie. All right, that's all you're really doing when it comes to entrepreneurship. All right, Steve, I like you. All right, the next one that he says there, he goes, the other thing about Steve, he has that. But then the second thing is he has a very anti-authority streak. So he likes the idea of creating a website that didn't have editors. Because at the time in the internet, all websites that were like editorial news, link submissions, they had this like small class of like the gatekeepers who decided what's in and what's out. And Reddit does not work that way.

21:20Over time, they have a democratic mod thing. But there is no person at the company who decides what gets posted, what gets featured, what gets shown. And he's like, those two factors are just inherent in Steve himself. And so, of course, the product is an extension of the founder. I mean, yeah, that's pretty amazing. I think, what's his name? Jason Fried has had a big part of that in his podcast where he talks about being crazier early on. because if you start a little bit crazy, a little wacky, a little weird, later on, things inevitably become more tightwound, more conservative. And so it's best to do it early on to establish that.

21:59And I thought that, I've always felt that, but I didn't, I wasn't articulate enough to phrase it in such a wonderful way. And that actually is a beautiful way of thinking. And read it exactly that way. The mascot is this like goofy alien creature, right? And it's like, first of all, you don't have to have a mascot. You can have a logo without a mascot. but he has like this alien mascot, but it's like the weird shit got baked in early. Once this thing got big, the idea of like, hey, we're going to introduce this new alien mascot. It'd be like, well, I don't know. Do the numbers support that? Do the focus group support that?

22:32Is this going to risk the traffic? Blah, blah, blah. It's important that the weirdness gets baked in early. Hey, quick message here, because you know that feeling when you send a wire and it actually works? No friction. Well, I've used Mercury for years now, and let me tell you, it just works. And that's why I use it for not one, not two, but eight of my companies. From credit cards to invoices, I have everything in one place. There's no janky dashboard. I'm never told, please visit a local bank branch. None of that tomfoolery. And a few months ago, I landed a big client. And the first thing I did, I sent them a clean branded invoice.

23:04Boom, deal closed, cash in the door. That's the kind of banking experience I want. And that's why I use Mercury. So if you're running a startup and you want banking that feels like it's built in this century, well, go to mercury.com and get started in minutes. Mercury is a financial technology company, not a bank. Bankless services are provided through Choice Financial Group, column A, and Evolve Bank & Trust members, FDIC. I shared an office at 3rd & Bryant in downtown San Francisco with Reddit when they were 13 employees. Like shared an office building. They were on floor three. I was on floor four.