Reddit community braces for change after site raises $50 million

Social news site Reddit has raised $50 million from celebrities such as rapper Snoop Dogg and actor and musician Jared Leto, raising concerns among the loyal Reddit community that changes may be ahead for the popular website.

Also joining in the funding round, which raises San Francisco-based Reddit’s valuation to $500 million, were famous angel investor Peter Thiel and Y Combinator president Sam Altman. The cash infusion is unusual for the company, which had previously raised just $80,000, a remarkably small sum for a Silicon Valley Internet company. The new money will be used to improve the company’s infrastructure, including adding more staff to its current workforce of 51.

And in another unusual twist, Reddit said it would offer shares to some of its users. Reddit has a devout following of users who contribute to the many forums, debates and question-and-answer sessions on Reddit.

“Investors are giving 10 percent of our shares from this round to people in the Reddit community,” Altman wrote in an Ask Me Anything (AMA) session on the site.

Users may be able to get those shares in the form of bitcoins or another digital currency. Reddit’s chief executive Yishan Wong wrote on the website that  “We are thinking about creating a crypto-currency and making it exchangeable (backed) by those shares of Reddit, and then distributing the currency to the community.”

Wong contributed his own money into the funding round.

Reddit was created in 2005 and was part of the inaugural class at Y Combinator, the Mountain View-based accelerator that has helped launch some of the valley’s most successful tech companies. Its founders are Alexis Ohanian, a Y Combinator partner and investor, and Steve Huffman, who also went on to start travel search website Hipmunk.

The site has also at times been embroiled in controversy — following the Boston Marathon bombing last year, Reddit users misidentified suspects and initiated an online manhunt for innocent people.  The site was also at the center of the celebrity nude photos leak, with users reposting the content and spammers linking to to the images.

In an interview with VentureBeat, Wong said: “Sites involving very large numbers of users end up being very complex, so there are waves of good PR and bad PR, affected by a lot of micro events in unpredictable ways. I experienced this at Facebook, and it sort of comes and goes. We just focus on making the site good for users, because that’s the underlying reality.”

Image from Reddit.com

 

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