| SAN FRANCISCO
SAN FRANCISCO Dec 28 Social news hub Reddit
snagged an interview with Barack Obama last year. The big get
for 2013 was reaching 90 million unique visitors a month,
according to the company, on par with the likes of eBay
. This season, even Microsoft co-founder and
philanthropist Bill Gates joined its Secret Santa gift exchange.
Now, the self-dubbed "Front Page of the Internet" is going
for a milestone it has been trying to reach since its founding
in 2005: profitability.
After years of fitful experiments with paid subscriptions
and display advertising, Reddit, with just 28 employees, has
begun pouring resources into building an electronic bazaar.
Company executives say they increasingly believe such a
venue is the answer to their long search for reliable revenue,
complicated in part by their fans' mistrust of advertising.
If Reddit Gifts, as the burgeoning bazaar is known, brings
sustainable profitability, it would mark a turning point for an
outfit that has exerted an outsized and sometimes controversial
influence on Internet culture yet languished financially.
Reddit estimates over 250,000 items have been purchased over
the holiday, mostly as part of the 50 or so mostly geek-oriented
Secret Santa gift exchanges - where zombie- or fantasy-themed
presents, say, change hands - that users have created.
Although Reddit won't disclose details about how much money
it has made from Reddit Gifts or its overall financial
performance, it takes a 15 to 20 percent cut of every purchase.
Usually priced between $10 and $25, the goods reflect
Reddit's young and geeky user base, from collages of cats in
steampunk apparel to coffee mugs branded by Imgur.com, a
repository of funny Web pictures, to an entire category
dedicated to bacon-related products. More than 250 merchants
supply gifts curated and "up-voted" by the community, much as
articles and links are elevated on the Reddit site itself.
'JUST GROW THINGS'
The gift exchange made headlines this month after Gates
signed up and surprised a Reddit user by sending her a travel
book and a stuffed cow, symbol of the charity he donated to in
The company, which is hoping to position itself as a bona
fide shopping destination year-round, estimates that only 14
percent of its marketplace revenue comes from the
Christmas-season gift exchange programs.
Yet those sales alone could put Reddit firmly in the black,
said Dan McComas, the head of Reddit Gifts. He added that the
company may choose to reinvest funds in e-commerce customer
service and infrastructure.
Chief Executive Yishan Wong, a former Facebook executive,
said Reddit was "kind of" breaking even and denied that pressure
was mounting on his team to turn a profit.
In 2011, Reddit was spun out as an independently operated
subsidiary by corporate parent Conde Nast, an old-line magazine
empire best known for publishing Vanity Fair, Vogue and The New
Yorker. Industry observers surmised at the time that the move
was a step toward eventually selling off a stake to outside
"Our backers are saying, 'Don't worry about making money,
just keep money and grow things,'" Wong said in an interview.
"But I would like Reddit to be self-sustaining because I think
that's a healthy way for a business to run. It means that what
you're doing provides real value, and Reddit Gifts is so
promising because it can do that."
Wong said he saw potential in Gifts earlier this year and
began staffing up the effort to eight people.
Although Wong is giddy about Gifts' impact on its finances,
what scale the business could reach remains unclear. Wong said
he did not envision Reddit posing a threat to folksy arts and
crafts e-tailers like Etsy; Reddit could carve out a space with
a geekier sensibility.
"I don't believe in going after someone else's market, but
going after a new market of our own could be huge by itself,"
THE NICHE FACTOR
Facebook struggled for years to develop a marketplace
because its users aren't in a shopping mindset when they log on.
The same could be said for Reddit, known for its forums on
politics or technology rather than for deals or flash sales,
said Krista Garcia, an analyst at eMarketer, a consulting firm.
A media company that enters the e-commerce business may also be
caught off guard by the complexities of logistics or customer
service, she added.
"Reddit and commerce is an odd pairing, but there is more
potential there versus Facebook because it's more niche," Garcia
said. "I could see them tapping into a much more passionate
audience. They need to bring the right products and merchandise
that's unusual or unique."
Reddit's place at the vanguard of Internet culture - where
jokes and memes gain traction alongside political debates or
discussions of breaking news - is also far from assured in a
fickle Web arena. Rivals like Digg.com have rapidly declined.
The site's hands-off attitude toward content has drawn
criticism, particularly about some loosely moderated forums
where, for example, pictures of women being beaten are freely
Reddit's reputation also suffered after forum members
mistakenly identified a missing Brown University student as a
suspect in the 2013 Boston Marathon bombing. The rumor, which
was recirculated by mainstream journalists, blazed across
Twitter before authorities said they were seeking Tamerlan and
Conde Nast acquired Reddit for a reported $20 million in
2006 but largely left it running independently for five years,
as its viewership ballooned fivefold.
ComScore estimates it drew 21.7 million unique desktop
visitors in November, up from 8.7 million a year ago. Reddit's
own estimate is more than four times that.
The company struggled for years to find a suitable business
model because its community identified with an antiestablishment
ethos and distrusted heavy advertising, Wong said.
Reddit Gifts was born in 2009 as an independent project
created by McComas, a software developer and longtime Reddit
user. He was brought on in 2011, and with Wong's blessing has
been hiring staff to work out of an $800-a-month apartment in
Salt Lake City.
Unlike Reddit's sometimes laissez-faire approach to
moderating its forums, Reddit Gifts will be curated to be
"family friendly" as it grows, said McComas, who envisioned
limiting the number of merchants to give them more individual
Brian Linss, a former Yahoo technician who lives
near Portland, said he has supported himself making TV- and
film-inspired artwork since he began selling on Reddit six
While he was able to make $1,500 to $2,000 during a "great"
month on Etsy, Linss said he now makes four times as much in a
good month, where his posters about the hit cable series
"Breaking Bad" move swiftly.
"Reddit is trying to assemble those merchants, and I think
there's a huge gap in the market for it," Linss said. "People
that didn't have access to that geek culture before now have an
easy portal to things that they're not going to find at their