Inside Reddit’s journey to an IPO has been marked by challenges and changes, as employees describe a company in flux. The social media platform has filed for an initial public offering expected to happen by the end of 2023, but it is facing internal issues related to its management structure and profitability.
In December 2021, Reddit filed for IPO, riding the wave of high demand for new tech stocks. The company reported surpassing $100 million in advertising revenue in the second quarter of 2021 and made significant investments in artificial intelligence, acquiring the machine-learning startup Spell in June 2022 to enhance its ad placements.
However, demand for tech stocks has since decreased, leading Reddit to lay off 90 employees in early June. Its revenue growth has also slowed down. In preparation for going public, Reddit is seeking to streamline its operations and reduce costs. Managers have informed employees that the goal is to do less but better and may involve downsizing middle management.
The company is exploring ways to control expenses, including a controversial decision to charge for access to its application programming interface (API). This move has sparked protests from Reddit’s moderators, while some employees believe that the company should have invested more in supporting them.
According to current and former employees who spoke anonymously, Reddit has been plagued by frequent pivots, unfinished projects, and a culture of trying to do too many things poorly. The company now aims to simplify its product plan and stick to it.
As part of the effort to streamline the organization, Reddit is considering flattening its management structure. This approach aligns with similar moves by other tech companies like Meta and Shopify, both of which have sought to reduce the number of managers to improve efficiency.
However, employees have expressed a loss of trust in Reddit’s leadership due to a series of missteps, including previous assurances that layoffs would not occur. The product roadmap has also changed, with a focus on API changes and content creation by users.
Furthermore, Reddit has faced challenges in fully integrating Spell’s technology since its acquisition. The CEO’s decision to proceed with the acquisition despite opposition from other leaders has been criticized. Additionally, there have been leadership changes earlier this year, including the departure of the vice president of feeds, AI, search, and data, as well as the replacement of the head of data science.
Reddit’s journey toward an IPO is not without obstacles. The company is navigating internal issues related to its management structure, trust in leadership, and integration of acquired technology. As it prepares for public scrutiny, Reddit seeks to streamline operations and control costs. However, the path to a successful IPO may require overcoming these internal challenges while maintaining employee morale and trust.
