Of all the storied properties owned by Condé Nast, which one is generating the most pageviews?
It’s not Vanity Fair, it’s not Vogue, and it’s not GQ. It’s none of the usual suspects.
The answer is Reddit, the popular news aggregation/community, which is drumming up the most pageviews for Condé, with one billion served last month.
That’s an incredible achievement for a site started by two guys in 2005. It’s even more impressive when you consider it did it under the thumb of what could be considered a stodgy old-media company like Condé Nast.
Reddit is not just a successful website, it’s also an example of how big companies can win in the tricky M&A game.
It would have been easy for Condé to crush Reddit, or starve it. And, truth be told, it almost did starve it. Reddit was complaining about being thin on resources because revenue was light last summer. But, Reddit was given room to figure out its own solutions, and it has grown from 280 million pageviews in July to 1 billion last month.
While Reddit revenue generation doesn’t dwarf its corporate siblings like its pageviews do, it has started to figure out a business models that works. Yesterday it announced its generating enough revenue to hire four new hires new employees, with more to come. (For what it’s worth, we recently heard Reddit ads are outperforming a number of its competitors.)
We asked Reddit’s cofounder Alexis Ohanian how he felt about Conde. He left the site in late 2009, but says Reddit was “rather autonomous” under Condé. Ohanian says the Condé folks basically said, “You’ve done a good enough job in the last year and change to make us want to acquire you, just keep doing what you’re doing to grow the site & community and we’ll support you.”
That sounds exactly right to us. Here’s some lessons we take away from Reddit’s success:
- Buy early. Buying early is scary, because it’s more risky. But what often happens is that if you wait too long, a site will grow so big that it really doesn’t want to be bought anymore. A classic example is Yahoo, which had the opportunity to buy Google several times, but never did.
- Leave them alone! The best acquisitions are often the ones that are supported by the acquiring company, but left mostly autonomous. A great example of that is YouTube, which has thrived under Google, but the best one is Amazon, which typically leaves the companies it acquires alone, like Zappos, Diapers.com, Woot and even IMDB.
- Acquire founders with vision. Reddit’s founders Steve Huffman and Alexis Ohanian stuck around working on Reddit until 2009. Most founders don’t wait that long, and earnouts often don’t mean much. What matters is founders who really really want to do something big, and are given the means to carry out that vision. Huffman and Ohanian kept working on Reddit because they clearly love Reddit. Another example is Andy Rubin at Google, who founded Android. Rubin clearly believes in the vision of the mobile ecosystem Android has created, and Google gave him the means to do just that.
What does this all mean? It means that big companies should really think of themselves as venture capitalists, because not all acquisitions will pay off, and you have to trust people. But Reddit-style acquisitions have the best potential for a big payoff.