Reddit, the self styled “front page of the internet”, has raised $50 million in Series B on a $500 million valuation with intentions to give back 10% of the round’s equity to the community which could then be used or traded in as a cryptocurrency.
The round is led by Sam Altman, CEO of Y Combintaor, with participation from
Andreesen Horowitz and Sequoia Capital, as well as individual investors like Peter Thiel, Ron Conway, Jared Leto and even Snoop Dog.
With more than 5 billion monthly page views and 115 million uniques each month, Reddit is one of the biggest content sharing sites in the world. According to the company blog post, the funding will go toward staff expansion for product development, community management and better tools around moderation and community.
“I’m willing to be very patient. I don’t have any particular timeframe in mind. I believe that the community is very valuable and that the value will continue to increase. It’s up to the company if they want to share cashflow details, but they run the company efficiently,” comments investor Sam Altman.
What’s interesting is the plan to give equity to members of the community, a rare and unique opportunity. In essence the investors in this particular funding will be allocating 10% of their shares back to the Reddit community. The company hasn’t described how this will be done, but if Reddit CEO Yishan Wong has any say, it may be given out via a unique cryptocurrency.
He writes: We are thinking about creating a cryptocurrency and making it exchangeable (backed) by those shares of reddit, and then distributing the currency to the community. The investors have explicitly agreed to this in their investment terms.
Nothing like this has ever been done before. Basically we have to nail down how to do each step correctly (it is technically, legally, and financially complex), though in our brief consultation with an ex-SEC lawyer, he stated he could find nothing illegal about this plan. Nevertheless, there are something like 30 different things we have to pull off to make this work, so we’re going to try.
(Also, I know this totally contradicts what I said over here but that was before Sam proposed this plan to me, and the idea of being able to distribute ownership of reddit back to the community – a long-held dream of many of us, frankly – is important enough to try and do this)
Again, we want to emphasize that this plan is in its earliest stages right now and could totally fail (if it does, we will find another way to get the shares to the community somehow), but we are going to try it because… well, because we are reddit and we do these kinds of things.
How would this work? Presumably each share would be cut into smaller bits – one share being worth 1,000 Creddits, for example – and the community at large would receive coins based on their contributions. This equity, thus sliced, could be bought, sold and traded between users. As Wong notes, this is still a very early-stage effort but could pave the way for some very interesting equity moves ahead.