For months leading up to his resignation, Yishan Wong looked beat down. Employees say he was noticeably stressed and no longer enjoying his work. One business associate who stopped by the office in October thought Yishan was just having a bad day, but the bad day never seemed to end.  Running any company is stressful; running Reddit is stressful on another level. In less than two months’ time, Reddit had found itself at the center of a nude celebrity photo controversy, forced remote workers to relocate to San Francisco following a massive round of funding, lost one of its most beloved and longest serving employees and faced the public outbursts of another who had been fired. As CEO of Reddit, Yishan was criticized for his handling of most of those issues.  Yishan took over as CEO in early 2012 after Reddit was spun out into an independent company, knowing it would be a tough job. According to those who know him, Yishan felt a sense of purpose to make sure no one ruined the social news site he had been using since its early days. It was Yishan who was in charge while Reddit dealt with controversies over users posting jailbait, creepshots, hate speech, gun sales and an infamous witch hunt for the Boston Marathon bombing suspects.  In the end, those who know him believe he was undone more by a long commute and a sense of losing control over his family life for a website that was itself impossible to control and not his creation to begin with. He pushed to move Reddit’s office to Daly City, a place that one writer described as the “Bay Area’s equivalent of purgatory.” Many employees hated the Daly City idea and the board disagreed with it too.  That proved to be the final straw. Yishan abruptly resigned as CEO of Reddit.  Yishan did not respond to our requests for comment on this story, but over the course of several weeks he posted a series of unusually candid comments on Quora, which may offer clues into his thinking. On Oct. 4, he wrote that raising a large funding round is “very daunting because now you are responsible for wisely spending all this money.” On Oct. 24, he responded to a question about working at fast-paced tech and finance companies with a mental illness, noting there can be so much pressure “that you’ll sometimes start to act like… someone with a mental illness.” And on Nov. 13, the day after his resignation was announced, Yishan confessed on Quora that “I’m basically completely worn out.”  Yishan had rubbed employees the wrong way early in his tenure as CEO and there were complaints later that he wasn’t such a great communicator. But his intentions were good: He didn’t need a big paycheck, having worked at Facebook and PayPal early on, and he didn’t seek out fame or media attention. He worked at Reddit for Reddit. So his resignation stunned employees, friends and investors. After all, who in their right mind quits over office space?  “I realize that this sounds non-credible (and it's certainly one of the craziest professional things I've ever been a part of),” Sam Altman, the lead investor in Reddit’s $50 million funding round, wrote on Hacker News about Yishan’s decision to resign. “But it's actually what happened.”  Altman had quietly run the company for eight days before announcing that Ellen Pao, Reddit’s head of strategic partnerships, would take over as interim CEO. Perhaps more notable to the general public, Alexis Ohanian, the company’s cofounder and “Mayor of the Internet,” announced that he would return full-time as executive chairman. “This time it felt right,” Alexis told Mashable.  Just like that, the DNA of Reddit’s leadership team had changed all over again. Because of office space. That night, Reddit cofounder Steve Huffman succinctly summed up the situation in an email to Mashable: “It wouldn't be Reddit if they weren't dysfunctional.”  Alexis and Steve bootstrapped Reddit in a competitive market and sold it as quickly as they could for fear it might all fall apart. Under Conde Nast, the company that acquired it, Reddit’s team felt starved of resources. One by one, the founders and early staff quit. The difficulty of managing a large and sometimes controversial community fell to a newer group of employees who were less comfortable tinkering with the site than the founders who created it. Now one of those founders was coming back to fix Reddit. But maybe Reddit can’t be fixed.  This is the story of how a bootstrapped startup with a funny name and no initial ties to the tech scene outlasted better-funded competitors, survived founder drama, endured tensions with its parent company and later navigated life as a standalone business — all in order to build the front page of the Internet. Traffic doubled year after year, even in the worst of times, with the site now reaching 175 million users per month.  Reddit is a case study for how a website can attract a large and dedicated user base, in spite of some chaos and lack of direction inside the company, and then struggle to convert that popularity into a viable business. It’s a reminder that sometimes the hardest thing for a tech company isn’t building a devoted community, but figuring out what to do with it.  Traffic was never the problem. Everything else was.  Steve Huffman and Alexis Ohanian were hungover and still in shock on a train slowly making its way back down the East Coast. The day before, the two college friends and aspiring founders learned they had been rejected for entry into a promising new startup accelerator. That night, they washed down their frustration with a few too many margaritas and Dos Equis beers.  “Why the fuck did we come all this way to get rejected by somebody who already knew the idea?” Steve recalls thinking on that long train ride.  A few weeks earlier, Steve and Alexis had used their spring break senior year to make the trek up from Charlottesville, Virginia, to Cambridge, Massachusetts, to hear the influential entrepreneur and essayist Paul Graham give a talk called How to Start a Startup. When the talk finished, Alexis told Paul they were working on a startup and had come all the way from Virginia to be there. That was enough to get a private meeting with Paul that same night at Cafe Algiers.  “Let’s hear it,” Paul said to Alexis and Steve after they sat down for coffee.  “It” turned out to be My Mobile Menu, a mobile app that would let users place orders at restaurants ahead of time. Paul liked the idea and later invited the duo to come back and pitch it formally at his new program, Y Combinator. They assumed it was pretty much a done deal — their ticket to building a real company.  Yet here they were making their second return trip from Massachusetts to Virginia in barely a month with nothing to show for it but mounting frustration. Steve alternated between working on his final college project — a web app to help students choose their schedules — and ranting about the absurdity of their situation. Alexis attempted to write his senior thesis on the bombing of Dresden. Meanwhile, he was trying to calm Steve, something he had done and would do many times. Always the positive thinker, Alexis tried to use the rejection as motivation to double down on the company.  Steve was turned on to programming at the age of eight by his dad, an engineer at General Motors. His parents later divorced, but both remained supportive of his passion for programming, making sure there was always a computer in his room. On the weekends, his dad would often talk to him about businesses he’d like to own one day — a go kart rink, a mini golf place, a bar. His dad never left that engineering job, but Steve continued teasing startup ideas of his own when he got to college.  During freshman year at the University of Virginia Steve met Alexis, a hallmate at his dorm. Alexis was an only child and extremely close to his parents. He created his first website on Geocities for Quake II, tying together two of his passions as a kid — gaming and making websites. When Alexis was a teenager, he took a job demoing software for customers at CompUSA, which he says taught him how to be a public speaker. By the time he got to college, he knew how to win people over. As his former college professor Mark White told us, “What he is now, he was then as well.” The biggest difference: he had green hair then.  Alexis initially modeled his look after the bassist of Metallica, whereas Steve was bookish and blond. At 6-foot-5, Alexis also towered over Steve. They might have looked like an odd couple, but they were fast friends who complimented each other perfectly.  Steve could be introverted and moody, with what friends dubbed The Huffman Scowl, but he was a technical genius in the making with confidence in his own vision for products. Alexis wasn’t a coder, but he was ambitious, had design chops and was a great promoter comfortable talking with lawyers, media and corporations. He was also nearly unflappable — even when things went off the rails.  Back in Cambridge, their critics were having second thoughts about My Mobile Menu. Their idea was all wrong: They wanted to build a mobile app, yet it was 2005 and there were no app stores yet. They wanted to work on a tool for the food industry, but they would have to build those relationships from scratch.  However, Jessica Livingston, cofounder of Y Combinator, was impressed by their long trip and determination. She felt “very maternal” toward them and started calling the pair “muffins,” a term of endearment. “I literally just wanted to have them around, but we all agreed their idea sucked,” she says.  One day after rejecting them, Paul called Alexis on his cellphone to say they could join Y Combinator as long as they ditched their idea, returned to Boston immediately and pursued something different. Alexis and Steve got off the train at the next station, hopped over to the other side of the tracks and waited for the next train heading north.  Jessica opened up her email that day and found a new message from Paul. When she saw the subject line, she knew. “Muffins saved.”  Steve had previously lined up a full-time job with Image Matters, a Virginia-based software startup where he’d interned as a software engineer during school. Alexis’ post-college plans weren’t quite so concrete. Instead, both spent the final weeks of college at the University of Virginia brainstorming designs and names for their new project.  They had met with Paul privately after that long train ride and hashed out ideas. As Alexis later recounted in his memoir, Paul told them to forget mobile and focus on the browser. They talked about frustrations with sifting through noise on websites like Slashdot, a tech news site, and Del.icio.us, a social bookmarking service. Then they turned their attention to the “popular” section of Del.icio.us, which collected the most bookmarked links. They thought there was something more to be done with that.  What the Internet needed was a website that highlighted the most shared links, not just the most bookmarked links, making it easier for users to discover content. What the Internet needed, the three decided, was a “front page.” Y Combinator would give them $12,000 to get that project off the ground.  “We looked around for things the world seemed to need,” Graham recalled in an email. “The reason we knew there was a need for something like reddit was because people were already using del.icio.us/popular as a de facto reddit.”  Paul and Steve suggested names, but Alexis came up with “Reddit” in the college library, as in: “I read it on Reddit.” He also came up with the now iconic Reddit alien logo and stuck with it despite pushback from Paul. After graduating, they moved into an apartment in Medford, Massachusetts, and began working on Reddit full-time as part of Y Combinator.  For all the success that Alexis and Steve would go on to have, they weren’t the most impressive would-be founders in the group.  Multiple members of that inaugural class assumed that if anyone would find success, it was Sam Altman, who was working on a location-focused social app called Loopt. Aaron Swartz, the young programming prodigy who later turned into a prominent Internet activist, was developing a startup called infogami that would help users build websites. Justin Kan and Emmett Shear, who would later go on to co-found Twitch, were also part of that class working on an online calendar app called Kiko.  “I actually giggled when I heard it,” Emmett recalls of hearing the name “Reddit” for the first time. Then again, the small class was full of startups with silly names, thanks to domain squatters making it difficult to claim simpler ones. “I had no idea how big it would get. I don’t think anyone did.”  Steve had only been building Reddit for a couple weeks, but Paul Graham was already pressuring him to launch the website.  “Paul was so up our ass,” Steve says. “He was giving me so much sh*t about why this thing hadn’t launched yet.” Paul said he shouldn’t try to make it perfect right away and Steve acquiesced. In late June 2005, he and Alexis launched Reddit — a “super sh*tty” version that was the shell of a website with three links submitted. The first link ever posted to Reddit, a story about the Downing Street memo shared by Alexis, was downvoted by Steve.  Once the website launched, Paul published an essay on his influential personal website linking to Reddit. The traffic spiked and so did Steve’s temper. “I didn’t know he was going to do that,” Steve says. “The Slashdot comments were panning Reddit. This one guy wrote a blog post about how sh*tty Reddit was. It was a frustrating day.”  In the weeks that followed, Steve and Alexis scraped news sites and created fake accounts to populate Reddit with links so visitors wouldn’t see a stale page. They asked friends to post whatever they could. Sometime in August, Steve went nearly a day without working on Reddit — a rarity for him. Before going to bed that night, he finally thought to check the site and noticed there was new content on the front page that hadn’t been posted by him or Alexis.  That, he says, was “the biggest turning point.”  When Reddit first launched, the founders were focused on Del.icio.us, but their peers at Y Combinator saw a more direct competitor: Digg. Like Reddit, Digg aspired to be the homepage of the Internet. Unlike Reddit, Digg was founded by a minor celebrity in the tech world, Kevin Rose, and raised a significant round of funding in October 2005. Within weeks of launching, Steve and Alexis became aware of the real competition — and the competition became aware of them.  “When they first came out, I remember looking at them and saying, ‘They are a copycat, they’re a clone,’” says Owen Byrne, the Canadian developer who built Digg’s original website. “It became fairly obvious fairly quickly that they were more than just a clone. They were a viable competitor.”  It would take time and new features for Reddit to emerge as a real competitor. At the end of 2005, after a long argument between the founders, Reddit introduced what now seems obvious: the option to post comments. Fittingly, the first comment posted was critical of the company.  They decided to let users create their own custom reddits, or subreddits, in early 2008. That ignited the Reddit community and truly differentiated it from Digg. Alexis had been in favor of a more traditional tagging system, but Steve pushed for subreddits.  Over the years, users have created subreddits for Technology, Books, Atheism, EarthPorn, GIFs, Shower Thoughts, PhotoshopBattles, FoodPorn, bra fittings, squirrels eating pizza, RetroGamePorn, and thousands more. These would serve as more intimate and engaging forums for users and, in some cases, offer new opportunities for advertisers to reach users with specific interests.  Joshua Schacter, the founder of Del.icio.us, says he proposed creating a similar feature called Islands, but Yahoo, which acquired the startup in late 2005, was against the idea. The same was true at Digg. “I actually advocated for something like subreddits,” says Owen from Digg. He had planned to call it “Personal Digg,” but founder Kevin Rose, who he refers to snidely as the “arbiter of coolness,” balked at the feature for fear of “potential chaos that would bring.”  Rose was right: it would bring chaos. Reddit users later created subreddits showing pictures of minors and creepshots of women. It is what makes Reddit volatile, but also what makes it vibrant. For Steve, the thinking was simple enough: let the users decide for themselves. Or as Erik Martin, Reddit’s former GM, describes Steve’s thinking, “Make the users do the hard part.”  “I think that was the feature that made them beat us,” Owen admits.  At the end of that first summer, Alexis and Steve left their Medford apartment and moved in with Y Combinator class member Christopher Slowe in Somerville, Massachusetts.  Chris was 25, a few years older than the Reddit guys. Memamp, a startup he began working on as a side project while in grad school, had been accepted into the Y Combinator program, but soon enough it hit a wall.  His apartment became the new Reddit headquarters and Chris effectively became the third member of the team. “We had two mornings in a row when Reddit would crash at 6:30 and I’d wake up at 7,” Chris recalls. “After two mornings of me waking Steve up, he showed me how to restart Reddit.” Chris was hesitant to join the startup officially because he was still in grad school, but Steve finally convinced him to become their first employee in November.  The three would work together on the site from 9 at night until 1 or 2 in the morning while sitting in chairs that had to be taped to the floor because the entire apartment was slightly slanted. Then Chris, the old man of the group, would go to bed while the others played World of Warcraft until 6am. When he left for grad school in the morning, the founders had just gone to sleep. Then Alexis and Steve would wake up at 2 or 3 in the afternoon and begin the routine all over again.  “You don’t even notice the fact that you don’t have a social life because you don’t have time to have a social life,” Chris says of that time.  Then they got their fourth teammate: Aaron Swartz. Aaron was only 19 when he joined the Y Combinator program, but he had already developed a reputation. In his teenage years, he helped create RSS, the ubiquitous tool for news feeds, and worked for Creative Commons. He joined Y Combinator to work on Infogami, a website for building websites, and later agreed to merge his company with Reddit, helping the founders on their site in exchange for some help on his own.  He eventually squeezed into the three-bedroom apartment with Chris, Alexis and Steve in February 2006. They would be the only four employees of Reddit until the site was acquired later that year.  Steve and Aaron lived in one crowded room together and became close for awhile. To Steve, Aaron was like a younger brother. They would work together all day until Alexis showed up late afternoon. Alexis had taken it upon himself to promote Reddit by placing stickers with the logo all over Boston and reaching out to members of the media. Reddit gained some press in 2006, but Digg was still the media darling.  Behind the scenes, there was plenty of drama at Reddit. One month after launch, Alexis’ girlfriend had an accident in Germany and fell into a coma. Later that summer, he found out his mom had been diagnosed with terminal brain cancer. In interviews years later, his voice would still crack when talking about her illness.  “My mom’s first words to me when I saw her in the hospital after the diagnosis were ‘I’m sorry,’” Alexis says. “That’s the kind of woman she was, because she wanted nothing more than for her son to succeed in following his dreams.”  In those crucial early months at Reddit, Alexis had to juggle his family issues with the demands of a startup. “I spent so many hours at my mom’s bedside, laptop in hand, motivated by her strength and love, that I had no choice but to keep pushing forward,” he says.  “He would go home a lot,” Steve remembers. “There was definitely this very heavy burden on him.”  By the spring of 2006, Chris had moved into an apartment with his girlfriend and was focusing more time on finishing his Ph.D. Aaron, Steve and Alexis moved into another three-bedroom apartment in Davis Square, but Aaron’s behaviour shifted. He would go days without coming out of his bedroom. Some close to him say he was frustrated by the lack of traction for Infogami, compared to Reddit.  “I don’t want to be a programmer,” he wrote in a blog post on his personal website on May 27, 2006, before teasing plans to write. “Perhaps, I fear, this decision deprives society of one great programmer in favor of one mediocre writer… Even so, I would make it. The writing is too important, the programming too unenjoyable.”  “It felt like it was on the verge of collapsing,” Steve says of that time. “Digg was kicking our asses. There were a bazillion other sites doing what we were doing.” It was all he could do to keep Reddit running. “Me, Alexis and Paul came to the conclusion that we should sell this thing or we’re dead. Let’s get some money out of this thing before it falls apart.”  The first time Kourosh Karimkhany looked at Reddit, he was struck by a post someone had written about how R2D2 and Chewbacca were actually the central characters of the Star Wars series.  “I was a Star Wars geek and thought it was fantastic!” he says.  Kourosh had heard about Reddit from his wife who had heard about it from her friend Rachel, a writer at Wired, who had met Alexis. At the time, Kourosh was in charge of mergers and acquisitions for the media giant Conde Nast. “My mandate was to find cool digital companies that could help Conde Nast digital grow,” he says. “My bosses wanted me to go find something in hot new areas like social networking and community-driven stuff.”  Reddit seemed promising. It had a growing community, though Kourosh admits now he may have been fooled by the fake accounts. It had a platform and technical team that could potentially help Conde Nast’s other platforms. And it would probably be cheap to buy, at least by Conde Nast standards.  In March, Kourosh reached out to Alexis to start a conversation. He didn’t talk about an acquisition at first, but rather about letting Conde Nast license Reddit’s technology. The pitch, in a nutshell, was that Conde Nast wanted to turn one of its domains, Lipstick.com, into a Reddit for celebrity and lifestyle news. Conde Nast offered to pay $10,000 a month to the Reddit team, mostly to keep the team from pursuing other acquisition deals. That sounded like a fortune to the founders, so they agreed to do it.  “We were like, ‘Oh my god, we could last forever on this!” Chris says. The result, as Kourosh describes Lipstick, “looked like Reddit, but pink.”  Several months earlier, before Chris or Aaron had joined the team, Steve and Alexis had held acquisition talks with Google and Yahoo. Google liked the founders and made a small offer, more or less an acqui-hire. Yahoo was less impressed and characterized Reddit as “a rounding error.”  Conde Nast finally made an offer in the summer of 2006, after Kourosh had completed a time-consuming deal to buy Wired.com, but talks dragged on for months. The founders shopped Reddit around to other companies, including Washingtonpost.Newsweek Interactive and The New York Times.  “We talked to The New York Times a bit,” Steve says. “We left thinking these guys are so stupid, they’re dead. We were trying to hold back laughter about how f*cked they were.”  Most of the team were ready to take the Conde Nast deal, but sources say Aaron didn’t want to sell and work for a corporation. He held up the talks by nitpicking the contract. With no other serious bidders, though, it was just a matter of time.  Conde Nast announced on Oct, 31, 2006 that it had acquired Reddit for an undisclosed sum, only 16 months after the social news site had launched. Those familiar with the deal say it was for less than $20 million, a fraction of what Reddit is worth today, but it was a huge amount then.  “I was so jealous,” says Emmett Shear, their friend at Y Combinator who would later go on to sell Twitch to Amazon for nearly $1 billion. “I thought it was amazing. They had done the thing that we had come to Y Combinator to do: they had built a successful company and sold it.”  “When we sold, I was very, very happy. I wanted to be a millionaire,” Steve says. As the years went by, he would have regrets. “I wish I knew what I know now. It was just starting to click. It still felt very dysfunctional. It’s frustrating that we never quite made it.”  “We didn’t know what we were doing,” Chris says. “There was no 30-year-old among us.”  It was a cold night in Cambridge when the acquisition was announced. The four Reddit employees celebrated by going out to a relatively calm Halloween party. Alexis dressed as Jack Sparrow, Steve went as a bunny and Chris tried to be a punk rocker with blue hair.  Aaron, still frustrated with the acquisition, wore a Reddit t-shirt and tweed jacket to the party. When people asked what he was, he answered: “I’m a conformist.”  The morning after the Halloween party, Chris called Steve to grab pizza at their usual spot. That’s when he heard Steve had already moved to San Francisco to work on Reddit out of Wired’s office, owned by Conde Nast. All Steve brought with him was a single suitcase full of clothes.  The first months with Conde Nast went well enough. They were able to hire some extra help like Jeremy Edberg, who they’d met in the early days of Reddit, though the hiring process took awhile. When the Reddit team needed servers, Kourosh would just cut them a check.  Reddit continued to gain more traffic and press after the acquisition. Conde Nast mostly left them alone. And the founders were rich.  “What was fun about [Steve and Alexis] when they were at Conde Nast is neither were working that hard. They had time to hang out,” says Emmett, who had moved to San Francisco to work on his next project, Justin.tv. “Everyone would work for eight hours a day. We’d have dinner, go out for drinks. It was kind of idyllic.”  It certainly wasn’t idyllic for Aaron. The Reddit team assumed Aaron would take his newfound wealth and quit after the acquisition to pursue his next big thing, whatever that might be. Instead, he continued working for Conde Nast — that’s using the term “working” loosely.  At the end of 2006, he “disappeared” from the office for a month and surfaced in Europe. Early the next year, he published a blog post that some took to be a suicide note, which scared his cofounders enough that Alexis called the police. Conde Nast quickly became fed up with his eccentric behavior and asked Aaron to resign, but he resisted. According to one source, Aaron was ultimately fired for having a “meltdown.”  Aaron resumed fighting big corporations rather than working at one. He led the charge against the Stop Online Piracy Act and championed the need to keep information free in the public domain. The latter got him into trouble: He was arrested in July 2011 for allegedly hacking into an MIT database and downloading more than 4 million academic articles. Federal prosecutors planned to take Aaron to trial in early 2013, threatening him with up to 35 years in prison.  On Jan. 11, 2013, nearly six years after he was pushed out of Reddit, Aaron committed suicide in New York. He was 26 years old.  “It just makes me sad,” Alexis told one publication after his death. “There’s no satisfactory explanation for it.”  The layoffs came in November 2008. With the recession raging and the publishing industry spasming, Conde Nast cut positions at Wired.com, Portfolio.com and other publications. Kourosh, the exec who had spearheaded the Reddit acquisition and helped manage the team after, was let go too.  “There was a hiring freeze that lasted for years,” says Mike Schiraldi, a veteran Reddit user who was hired right around the time of the layoffs. These were leaner times and Reddit didn’t generate enough revenue for Conde Nast to justify new hires. “It was basically the worst thing that Conde Nast did to Reddit. It was a time when the site was going through incredible growth.”  Steve echoes this complaint. “I couldn’t hire. I would find these candidates and [HR] would never send an offer letter. I remember being really pissed about it.”  A source close to Conde Nast at the time offered a different take on the situation. Most of Reddit’s team were fresh out of college with little experience requesting resources in a major corporation. Reps for Advance Publications, the media company that owns Conde Nast, did not respond to our request for comment.  Either way, the effect on Reddit was the same. The frustration over hiring combined with a desire to move on to something new after four years drove the founders to leave as soon as their contracts with Conde Nast expired.  “Our contracts are coming to an end this Halloween and we're leaving reddit,” Alexis wrote in a blog post on Oct. 27, 2009, announcing his and Steve’s departure. “The most important thing we both want you to know is that the reddit you know won't be any different.”  Reddit’s team should have been riding high in 2010. Digg, their chief rival, began to self-destruct that August when it released a now infamous redesign, which was built more for publishers and advertisers than core users. Within days, users revolted by flooding Digg’s front page with links to Reddit.  Digg’s demise may have shifted how the media thought about Reddit, but it didn’t have much impact on the company itself. Reddit received a burst of new users for the first couple days after, but that was short-lived. Traffic seemed to double on Reddit every year before Digg and would continue to do so after Digg’s redesign.  There was no single defining Reddit moment, employees say. Traffic just kept growing.  As it turned out, Reddit had bigger things to worry about. The site had lost its founders and was struggling to boost revenue through advertising for its parent company to justify providing more resources. It needed more employees, therefore it needed more money.  Mike summed up the situation in a blog post titled “reddit needs help.”  “We've been kinda bummed at reddit these days,” Mike wrote in the post, published July 9, 2010. “It seems like every week something comes up that slows performance to a crawl or even leads to a total site outage. And we almost never get a chance to release new features anymore.”  Mike asked the community to consider paying for Reddit Gold, a new premium membership service with some as yet-undefined special features. Reddit Gold had been a running joke among users for some time, but now Reddit’s employees were pitching it seriously.  There was one catch: Conde Nast didn’t know about it. Mike and Chris waited to publish the post until noon on a summer Friday, usually a bad time to make a product announcement, but a time picked deliberately because they knew Conde Nast executives had left for the weekend. They figured their owners might not be pleased with Reddit asking for money rather than generating it through advertising, but they hoped to earn enough revenue that first weekend to prove it wasn’t such a bad idea.  It was Mike’s idea, but Chris, now the most senior person left at Reddit, gave the go-ahead in part because he knew he’d soon be following Alexis and Steve’s footsteps out the door. What did he have to lose?  After announcing the new option, Mike and Chris went to lunch at a nearby Indian restaurant and stared at their phones. The emails started pouring in from users eager to sign up for Reddit Gold, whatever it was. The team quickly built some features and watched as more donations came in. When the Conde Nast execs returned on Monday, they saw headlines in the tech press about one of their properties begging for money. They were flabbergasted, until they heard that Reddit had made six figures from the stunt in a single weekend.  Reddit Gold was here to stay.  When Reddit first launched, the founders assumed it would generate revenue the same way most social websites did: through advertising. But they didn’t exactly put much thought into it.  "In 2005, we thought, 'We're going to get lots of traffic and advertisers will take care of the rest,'” Alexis told Mashable in an earlier interview.  Alexis and Steve had the luxury of ignoring the monetization side. They raised a little funding, secured a licensing deal, then sold Reddit fast. For the first few years it was part of Conde Nast, revenue wasn’t the top concern. The real reason Conde Nast acquired Reddit, according to two execs close to Conde Nast then, was so the ad sales team could lump Reddit’s audience together with the audiences for their other tech-focused digital properties, including Wired.com and Ars Technica. Reddit significantly increased that segment’s number of uniques. It was also a ploy to get the attention of advertisers by showing Conde Nast had a hip, innovative tech property.  The strategy worked — to some extent. Reddit was a conversation starter with advertisers, but many of those advertisers were skittish about placing ads on Reddit.  “There aren’t very many advertisers who want their ads to be seen by atheist, libertarian, porn-loving Ron Paul fans,” says Kourosh, the executive who handled M&A for Conde Nast. “It sucked. It was a difficult sell… But it got us in the door.”  Part of the problem, as Reddit’s team would realize later, was that the sales team at Conde Nast was accustomed to reaching out to big name brands that marketed in their glossy magazines. What they needed was to approach gaming companies and t-shirt businesses and sure, maybe something related to Ron Paul. Reddit’s team were also unwilling to release much real estate on the website for ads. They predicted it would turn off users.  Still, Reddit’s expenses were low by Conde Nast standards — a handful of employees, some servers, free user-generated content — so the company didn’t worry much about Reddit’s revenue or lack thereof. Throughout the late 2000s, Conde Nast kept digital and print operations separate and analyzed the finances of each separately. Reddit was part of the fast-growing digital section — any losses it incurred could be easily offset. According to one source close to Conde Nast, that changed around 2010 when the media giant decided to reintegrate the digital side into Conde Nast proper. Suddenly Reddit’s losses were harder to ignore.  In September 2011, Conde Nast spun out Reddit into an independent business. The arrangement would let Reddit hire a CEO, pick out an ad sales team and figure out its own route to profitability. It would also largely get Reddit off Conde Nast’s plate and help Reddit distance itself a bit from corporate associations.  Reddit gradually built up its own ad sales team to sell space to more relevant companies on the main page and on certain subreddits. However, the ads (or “sponsored links”) were confined to a single customized unit near the top of the page and another box off to the side. Unlike social networks like Facebook, Reddit’s ad targeting capabilities were — and still are — handicapped by its users’ anonymity. For those reasons, ad revenue never seemed to scale as quickly as Reddit’s expenses. Even with additional revenue streams from Reddit Gold and a gift exchange service, profitability always stayed just out of reach for Reddit.  By the time Reddit spun out, Chris was long gone from the company. “I felt really awful about leaving them,” he says. But it had been “a really long four years.” He and his wife were ready to settle down to have kids.  Reddit was about to get its chance as a standalone operation, yet all four original employees had already left the building.  Two days after Reddit became independent, the site’s first paid employee, Jeremy Edberg, wrote a checklist of attributes for his ideal CEO: Someone who really gets online advertising. Someone who is “technical” and understands how to monetize vast amounts of data. “Someone,” he wrote, “with a deep love for good, simple products.”  “Then they ended up hiring Yishan who basically fit my description,” he says.  Yishan Wong got his start working at PayPal in 2001, one year before it was acquired by eBay, and rose up the ranks to run the company’s architecture group. He moved over to Facebook in late 2005, when it was still a small company, and eventually became director of engineering. He had technical skills. He’d worked at a company focused on online advertising. He sounded great. All he was missing was CEO experience.  “He was one of the best managers at the time,” says a former colleague who worked with Yishan at Facebook. But, as the team at Reddit would eventually find out, “he’s always a little unpredictable.”  Reddit announced hiring Yishan as CEO in March 2012. He met with several members of the early team, but he didn’t do much outreach in advance with current employees, which soured their view of him from the start. In time, the staff recognized Yishan was truly passionate about the site, which helped win some over. After all, it was that genuine desire to protect the values and culture of Reddit that kept employees engaged even in tough times. But their frustrations with Yishan remained.  Those who worked under him describe Yishan as subtle, a bad communicator and a person who holds some “extreme” views on things. One colleague pointed to his activity on Quora, a popular Q&A site on which he followed conversations about chastity, bitcoins, depression and the “decline in nuclear families amongst African Americans.”  Even a more experienced CEO might have floundered in that environment. Too many changes were happening at once: Early employees had left, a new CEO was taking over and Reddit was trying to find its footing as a standalone entity. “I think everyone was a little bit unsure of what was going to happen,” says Max Goodman, who joined Reddit a few months before it spun out.  In his hiring announcement, Yishan revealed that he had been using the site since 2005 and firmly believed that being independent would help Reddit prosper. Then he included a line that proved to be very telling: “I'm not looking to step in and make ‘big, bold changes’ - I think reddit is great...”  As a sentiment, it made sense to assure the community he would hold true to the Reddit of old. As a strategy, it did not. Yet, it represented the thinking of Reddit’s staff.  “A lot of people felt that we were sort of caretakers,” says one former employee who worked there at time. “We were always very reluctant to make changes.”  In that sense, Reddit found itself in a similar position to Twitter, another company in the social space that launched one year after Reddit and lost its founders one by one (though for very different reasons). Like Reddit, Twitter continued to grow its user base and influence despite internal dysfunction. Like Reddit, Twitter’s team was often nervous about making big changes to the product in the absence of its creators — at least until it went public and investors began pushing for changes.  The technology landscape was shifting from desktop to mobile, but Reddit still didn’t have an official mobile app. The number of users, subreddits and posts continued to balloon, but the site lacked discovery tools. As Reddit became more influential, the media highlighted the worst of its users. The team needed to adapt.  On Sept. 29, 2011, Anderson Cooper publicly shamed Reddit. He had just discovered the disturbing “jailbait” subreddit, where users posted images of underage teens.  “You might be just as surprised as we were to learn where these pervy grownups are finding these images,” the respected news anchor informed his audience. “They’re being posted on a site that’s part of one of the most respected publishing empires on Earth... We’re talking about a site called Reddit.”  The child pornography issue had started to flare up on Reddit that year, prompting some “community management debates” internally, according to Max. It only added to the list of things for employees to be stressed about. “We were wrestling with the community just as much as the organization growing.”  One year later, Anderson Cooper 360 revisited the subject by featuring an interview with the moderator behind the jailbait subreddit. In one of his first major statements as CEO, Yishan responded to the report with a pledge to remain hands off.  “We stand for free speech,” Yishan said. “We are not going to ban distasteful subreddits.” As he admitted to moderators, though, the whole situation left Reddit “in a bit of a pickle.” That stance would only become more complicated. A few months later Reddit users posted the identity of a Boston Marathon bombing “suspect.” But they were wrong, forcing a senior member of Reddit’s team to apologize.  In August of this year, nude images of several celebrities leaked online and were quickly spread on a subreddit called The Fappening, a masturbation reference. The images led to an unprecedented spike in traffic to Reddit — for all the wrong reasons.  "This nightmare of the weekend made myself and many of my coworkers feel pretty awful," Jason Harvey, a systems administrator at Reddit, wrote in a long post after it happened. "A lot of members on our team could not understand what we were doing here, why we were continuing to allow ourselves to be party to this flagrant violation of privacy, why we hadn't made a statement regarding what was going on and how on earth we got to this point. It was messy, and continues to be."  Yishan eventually put up a perplexing blog post stating yet again that Reddit’s team supported free speech, even for the most unsavory content. He argued that “every man is responsible for his own soul.” Almost simultaneously, Reddit decided to ban the Fappening subreddit, completely contradicting Yishan’s message and further confusing the community.  To make all that more complicated, Reddit was just about to announce its first major round of funding as a standalone company. The funding, $50 million in total, would ensure that Reddit could continue to grow its staff — which had already ballooned above 60 — and add new features. The concern, according to Kristina Lerman, a professor at the University of Southern California who studies social news services, is that investors might press Reddit to make changes that boost revenue but alienate users, as happened with Digg.  “Even though they are die hard fans, if you upset them, they’ll go somewhere else,” she says. “Loyalty is a very fickle thing.”  The first thing Alexis did when he returned to Reddit’s San Francisco office as executive chairman in November 2014 was introduce himself to the team. He thanked them all, including new interim CEO Ellen Pao, for their work at Reddit.  Alexis, now 31, had been away from Reddit longer than he and Steve had worked on it full-time. He had traveled around the world, invested and mentored startups, published a memoir and become a prominent figure in the fight to keep the Internet open in the face of threats from the Stop Online Piracy Act (SOPA) and recent proposals to end net neutrality.  Yet, he had never fully detached himself from Reddit. He wrote often about Reddit on his blog and in his book, talked about his involvement with the company in interview after interview and joined Reddit’s board in September 2011, when it became an independent business. Some close to Alexis say he benefitted from the continued association with Reddit as much as Reddit’s leadership benefitted from its association with him. They legitimized one another, enhanced each other’s brands. The decision to return full-time was significant for both.  “I got a lot of stuff out of my system,” he says of his time away. So when board members began reaching out to him after Yishan abruptly resigned, he felt the time was right. “After talking it over with my dad and girlfriend, it was time for me to come back.”  Reddit insiders cheered his return. As one employee put it, Alexis has the moral authority that only a founder has, which he can use to endorse and push through new features and standards on Reddit. That said, some we spoke with wondered whether even Alexis had the ability to push Reddit to be more innovative. The company and the community are much bigger and more unwieldy now than when he left.  The vision Alexis has since laid out for Reddit focuses on figuring out mobile — ironic, considering Alexis and Steve originally wanted to build a mobile app a decade ago, but were told not to — and improving discovery for new and existing users. Reddit is expected to put some of that $50 million it raised to hire more mobile developers and community managers to build better tools for users. The funding also gives Reddit a deeper war chest to make strategic acquisitions like Alien Blue, a third party app it acquired in October.  “We need to do a better job with things like mod tools and discovery to make the lives of these varied community moderations a lot better,” he said in an email. “It’s a failure of UX that so many people don’t even understand how reddit works.”  Kristina Lerman, the USC professor, echoes that point. For all its influence, Reddit is still a niche service. “Reddit’s weakness is demographic,” she says. “There is the perception that it doesn’t reflect the mainstream. That it’s very specialized.”  One thing Alexis did not touch on in his initial announcement, nor in his comments after, was monetization. Industry observers we spoke with expect Reddit to introduce more services like its gift exchange and its recently launched crowdfunding platform, which could bring in more revenue. Just how much Reddit can rev up its advertising efforts, however, remains to be seen. Ad execs note the challenges of Reddit’s limited targeting tools, basic ad formats and tough user base.  "The Reddit audience has probably the most honed bullshit detector of any website,” says Ben Winkler, chief digital officer at OMD. “And Reddit has no interest in moderating comments. So not only will your inauthentic advertising get savaged, but that savagery will stay there for all to see."  What Reddit needs to do, according to execs we spoke with, is double down on mobile ads, improve its target efforts and think beyond ads, perhaps providing marketers with a paid insights platform that would help them identify stories and topics that are about to go viral on the web.  The tougher issue, the one that has taunted Reddit in recent years, is how Alexis and the team can handle the scrutiny of its users’ most offensive content. His answer to this is less satisfying. “I don't have a crystal ball, but I know our leadership team is ready,” Alexis says. “We're doing our best to anticipate while also acknowledging that we can't predict the future, only do our best to address it when it happens.”  The six-month plan, as Alexis later described it in a long post, is to develop new software and new policies that would prevent users from bombarding communities with threats and offensive content. He is also in the process of setting up roundtable discussions with friends and experts who have “experience growing safe communities online & offline.”  Steve, never one to mince words or worry about angering users, offers a more blunt response. “When the heat gets too hot on Reddit, I don’t think there’s any shame in saying, ‘We’re going to eliminate this content to turn attention elsewhere.’ I don’t think any double speak is required. This is not what we want to be known for.”  Before Alexis accepted the job, he reached out to Steve for counsel. After leaving Reddit in 2009, Steve moved back to Virginia, got married and enjoyed a brief retirement. He would play Call of Duty and hang out with his wife and her friends, but he felt like he had “lost my purpose in life.” The next year he reunited with a friend to launch Hipmunk, a travel startup, not far from Reddit’s offices. Chris later joined him there as did other early Reddit employees. It may not be as well known as Reddit, but as Steve jokes, it probably makes more money.  After talking through Alexis’s new role at Reddit, Alexis asked Steve if he would consider returning with him as the company’s chief technology officer. Steve declined the offer, citing his commitment to Hipmunk, but when we talked to him shortly after Yishan’s resignation he sounded more open to the idea.  “Over the years, I hadn’t thought about it that much,” he says. “The events of the last couple of weeks, I’ve been thinking about that a lot more.” Mostly, Steve says, it’s “an interesting thought experiment.” Mostly.  “I think Reddit lost two very loud personalities on Reddit,” Steve added, referring to him and Alexis withdrawing from the company and the community years ago. “I don’t think Reddit has ever really recovered from that.”  Moments after Alexis publicly announced his new role, he took a step toward filling that void by jumping into the discussion about his return, which was taking place on Reddit. In the days that followed, he responded to dozens of comments, beating back skepticism over the reason for Yishan's departure, joking about the similarity of his return to Reddit and Steve Jobs' return to Apple, and addressing concerns about hate speech on Reddit. An employee later remarked that Reddit hadn’t seen a top executive take charge of the conversation on Reddit like that in years.  It seemed like a promising signal of what’s to come, but there were hints of pushback Alexis can expect in his new role. Some users criticized his comments about improving the community as “vague” and “doublespeak,” prompting Alexis to offer a weary defense in the comments.  “It may come across as vague right now because it takes time to build great software and I don't want to promise something specific until I know it is practical to build and deploy to millions of people,” he wrote, asking users to have some patience. “Also, I wanna stress that I just got here. I was doing very different things with my life just a few weeks ago.  “I'm trying to adjust as quickly as I can to a very new role and team.”
Reddit's CEO shocked the tech industry by resigning. Yet it's just the latest dysfunctional episode that has nearly undermined Reddit's success.