Alexis Ohanian on Life After Reddit | The Circuit with Emily Chang

I mean, it's caffeine, lots of it, a few cups a day. And I really genuinely love what I do. And then when the thing that you love doing also compensates you really well for it, like why would I not want to do it?

Bring it. Yeah. Oh, yeah. And what's nice, you can say that. We failed to trademark it, so it's all yours.

I'm just a very impatient person. And I also think the middle-aged me was empowered by the internet because, you know, I managed to talk my parents into getting me a computer. I managed to talk them into, you know, it was a big investment and then an internet connection. And even though they had no idea what I was doing on that computer, I found strangers on the internet willing to help me with learning how to code. And at the time, I mean, even just HTML, CSS, web design felt so empowering because I could build a website anyone in the world could see. I didn't have to really ask for any permission. And there was something really powerful about that that I got addicted to. And I'll also never forget video games got me into programming. And I had downloaded the Quake 2 source code. I was able to change the power of the default blaster to instantly kill a monster, which doesn't seem like that big of a deal, but as soon as I was playing a version of this game that I loved that I had just remixed, I had just changed the source code to make this thing do my bidding, it felt like a superpower. And so that feeling that software provided and then the access to the knowledge freely given by experts to me, a dorky kid in my parents' house was life-changing. And I think that altered my brain chemistry enough to think, okay, this tool can be so enabling, so empowering. And then by the time I was getting ready to graduate from high school, my dad, who had been a travel agent his whole life, he had started his own small travel agency a few years earlier, just before the rise of the OTA, the online travel agency. So my poor dad's business went from making, you know, a little bit of money every time you sold a plane ticket to zero. They were slashing agent commissions because the future of travel agencies was dead. And I watched software, this technology, the internet that I thought was just a fun toy alter my family's entire trajectory. And I saw what it did to my dad and his business. Thankfully, he endured. He pivoted and he figured out a way.

And I saw, well, I want to be on the other side of this disruption. And so those forces shaped me entirely from middle school to high school. And I just haven't gotten over it, I guess.

It was a nod to my daughter Olympia. I didn't want to name the firm after her literally because my wife pointed out if we had another kid and spoiler, we had another kid. That kid would be jealous. So good call. And then the nice story that ties into it is in that first Olympics, the first event was a foot race. Interestingly enough, that was run by a number of folks, you know, the best athletes in the world. And there was this cook who heard about the event, true story, gets called up, decides, I'm going to go compete, runs this event, and he's the first ever Olympic champion. He wins the race. A cook, my god, what a great story. And it is. It's also an even better story when you realize he wasn't the best athlete in the world that day. He was the best athlete who got invited. The Greeks didn't invite a whole ton of people who just were outside of the Greek world. Millions of people, many of whom were probably faster than that Greek guy. But worse, you know, women were not even allowed to watch the Olympics back then, let alone participate. So, they were missing out on greatness in their own midst. And the lesson for us that we've architected the firm around is this idea of, you know, when I reflected on my own career at that point five years ago starting this firm I thought well damn this feels like I'm kind of celebrating the cook and yes very proud of it but our job especially as the earliest investors in many of these ambitious ideas is to not feel in any way comfortable with the fact that we've done enough to seek out greatness everywhere and whether that is in the ideas whether that's in the founder we have to push ourselves because otherwise we're just celebrating that cook and we have this idea of always being on the starting line. That's our, I ripped off the Jeff Bezos day one thing, but that's our version of it. And I know, I mean I have 776 tattooed on my body. This is the last, literally on my bicep. This is the last company I'm going to start and I'm so proud of what we do and how we do it. And I do believe, you know, if I got to leave my daughters in the morning to go work on the firm, I want a really good reason why. I do love the time I spend with them and I'm choosing to work, but I'm choosing to work because I think one, it's going to be financially beneficial for the family, but also more importantly because I want them to be really proud of that and to see these are the things dad does to be useful and to have an impact and again provide outsized returns, but at the same time do so in a way that aligns with values and in a way that I hope makes them really proud when they're teenagers and they can ask me hard questions. I want to have the best answers possible.

The fact that you know that number is one of the reasons why because you know I've built an entire operating system called Cerebro that runs our firm. So we actually have data. We know where we spend our time. We know how many intros we make for founders. We know our median response time to founders. We literally put them live on the homepage because it was so frustrating to me that our entire industry kept talking about how useful they were and oh, how value-add they were, but they never actually provided evidence. If I was out pitching my company and all I did was use adjectives to convince investors why people love my product, I'd get laughed out of a room. They'd say, 'Just show us the data. What are you using all these words for?' And yet, every VC does exactly that when making the case to founders. So, I let the data speak for itself. And we want to build a culture of accountability to our founders to each other and just build with software in order to scale our networks in order to scale our distribution in order to scale all the things that software does really well.

This is the billion-dollar question. Especially at early stage, it is overwhelmingly the founder. I have just become more and more confident in that fact. The more time I've spent being an early stage investor and I've been very lucky to be an early check in amazing companies. I mean Coinbase, Instacart, Ro Health, Flock, Flexport, Patreon, great, great companies. The commonality there always comes back to the founder, often the CEO, but at least one founder who is really the one that you're betting on. And it's understanding how much they empathize with the customer, how relentless they're going to be in building the taste that they have. And that kind of comes back to the empathy. It's one thing you have to have that foundational empathy for the customer, but then it's also crucial to have the taste to say like this is good enough or this isn't good enough. And then timing is the one thing we can't control where we still factor it in. And I have to be sympathetic to that because you know Y Combinator rejected the initial idea which was my mobile menu or for short. It was a, this is 2005. I came up with that name too.

And the idea was you could order food from your phone, but again it was 2005, so no smartphones. It was a text message. And because I'd worked in Pizza Hut, and we would get those orders in the kitchen that would come in through the printer. It just made sense to me that, you know, why not just send the message, have the customer send the message, have that go through. Anyway, YC thankfully rejected it because it was too early. The tech was going to be too hard to build into restaurants especially. And they said, 'Come back with some other idea.' And the next day, as it goes, you know, we came back with this idea and met with Paul and ended up being Reddit software in a browser first, not on the phone. And so timing killed my company, but in the best way possible because we didn't spend the next, god, we would have spent the next four or five years trying to build and then the smartphone revolution would have happened and we probably would have run out of money before then. So timing is one thing we have to try to anticipate best we can knowing the founder can't affect that. But really, it's a bet on the founder. Can they pull this off?

So, like you said, it's a power law business. So, a disproportionate number of the returns that first 56x DPI fund that came from Coinbase and Instacart. There were probably another 50 investments in that first fund that went to zero. And that's fine. That's the power law. So just like the power law dictates returns in venture especially early stage power law also dictates how venture firms stack up and I think you're in a business where there are these outsized mega firms right the Sequoias, the a16z but also the sort of newer generations like the Thrives and they will continue to get more and more capital as they clearly are, you know, the big dogs with the war chest that can double down in those big winners at the later stage. And at the early stage, there are firms, I like to believe 776 is one of them, that can win against all comers and that have a clear value proposition and want to be the best early. And we'll double down on the bigger winners. We just wrote a check in a Stoke, a SpaceX competitor that's been doing well that we had seeded. But like there's a middle of VC firms that are just as the kids would say mid that are probably going to have a really hard time because they can't get into the deals that the biggest and baddest firms can easily get into and have the capital to get into and they're not able to get in or maybe even identify those early stage companies that we feel like we have an edge in. And so I think it's going to be a hard time for them but also for the industry as a whole. Look the biggest trend I had a chat with Sam Altman at the Robin Hood Summit. That's the foundation, proud board member here in New York. I was interviewing him and one of my clips with him went viral because he said it's only a matter of time until there is a one-person billion-dollar company and that has stuck in my head. It's echoed in my head actually for years since, you know, for pure software businesses for sure founders will need less and less capital going forward which is a threat to venture. I think again if you're in that middle, you're going to have a hard time. If you're where we sit and you know you can still be that first check, really what it means is less dilution as founders can get to profitability sooner. They don't need to take on more funding, which means you're not getting diluted just like they're not getting diluted. And I think it ends up still being a big win. And then it's interesting, you know, venture now has spent a lot more time in the more costly spaces. So just like I said, we did our first space tech investment five years ago. We're doing more hardware than ever. You had a great interview with Palmer Luckey. He was very, I was very proud to have been able to invest in ModRetro, his electronics, consumer electronics company. Hardware has always been something that's really excited me as a software guy because it's always felt, well, harder as the name would imply, but as a software guy, you're very in awe of folks who build with atoms. I'll speak for myself. Software feels easy by comparison. And I love the fact that Venture is now pushing itself to be more ambitious so that we get to invest in companies that are building reusable rockets or video game consoles or supersonic jets or the things that we do.

Oh boy, lots. Well, obviously, look, YC's changed a lot since then. The easy one is the advice that I would keep the same, which Paul Graham put it on everyone's shirt, and I think it still holds true, which is make something people want. In 20 years now, I can say having started multiple companies, seeded many, many more, that founding principle never goes away. And if anything, in this new world where attention is so scarce and you have to work so hard to get your first hundred, first thousand, first 100 thousand, whatever customers, making something that people truly want and best case scenario, getting them to like prove it by paying money, that's the thing you wake up for every morning. Even in building the Formula 1 of track and field with Athlos, all we tell our team day over day over day, no matter how much press we get the day before, no matter what big moment happens with a brand partnership, no matter, we have to re-earn attention all over again the next morning, everyone has forgotten, the internet has moved on. Earn it again. And that mindset, whether it's earning it again with our athletes, with our brand partners, with our fans, like that never goes away. And so that is more important than ever. Probably the biggest thing I would change is, okay. So in 2005, it was an eclectic group of folks in that first YC batch. It was not normal to want to do a startup in 2005. And that was the genius of YC. They realized this opportunity before everyone else did. Let's give, for us it was $12,000 for two college kids to go build a company. Maybe it could one day be worth billions. Sam is the one exception. I think Sam very much, he knew exactly what he wanted to build. He knew, I think he had a road map to what tech could be in the world. Speaking for myself, I was just happy to not have a boss. I was just happy to build something that I cared about every day and build something that just seemed fun. I think the founders for today need to know just how much responsibility they have and actually most of them do in what they're building. We can't hide from the fact tech is undeniably the highest leverage industry in our world. And you can look at the market caps of the biggest companies in the world or you can look at just the fact that this technology shapes so much of our world. And so what I would tell founders is look and again most of them have, they're way less naive than I was 20 years ago. They are very aware of this fact. And so I would say move decisively, move earnestly, be aware of what you're building and know that like this responsibility starts right now for building something that is going to have a very big impact on the world. And if you are successful that that's undeniable now and I think hopefully it also raises everyone's game up because we can no longer just sort of dismiss it as like yeah sure you know we built an app for cute cat photos that people vote up and down. It is, I think, very clear just how big this all really is.

Look, I think as an early stage investor, those Frontier Labs been priced out for a minute. We may or may not have some shares in Anthropic, though. Directly on the cap table, not those weird seven-layer deep SPVs that I've seen floating around.

Yes. But you know for an early stage VC I think where I've gotten most fired up is at the application layer. So I seeded Flock that was like a decade ago. Aelis is another one. Both computer vision startups back in like 2014, 15 when it was still really basic computer vision. No one really called it AI because we still hadn't obviously crossed the threshold. But why those were compelling is that they were solving a real problem people were willing to spend money for and it was, you know, a simple enough technology that like you could do today. Where we've gotten really excited is a good example would be a company like DOI based here in New York that has brought to life this fashion avatar, the thing we've all wanted since Clueless. In this case you take a few selfies, you take a couple full body photos and you have a beautiful looking avatar that you can now drop in a URL for any shopping website, a Louis Vuitton, it could be Old Navy and see yourself in those clothes near instantly. And so, you know, that was a company we had funded pre-launch when it was just an idea and a couple of founders. Thrive actually just invested quite a bit of cash in that company in their latest round. And we're hopeful like that ends up being where again, if you go back to what makes a consumer app viable and popular, it's a lot of the same founding principles that made Reddit successful. And it's about building a great product that people love. And I think those foundation folks are going to keep thriving on some level. Obviously, a lot of money is going into all that to keep building. But where I get excited is how are users actually going to fall in love with a product that does something so damn well that even when Google launches their, I think Google had some version of like, oh yeah, try on your clothes. No startup has ever actually been killed by Google launching a product because they don't understand how to create a really amazing user experience in that way. And if anything, it just gives you more validation.

Emily, you should talk. You've got a prolific career yourself. I mean, I think what is it? I mean, it's caffeine, lots of it, a few cups a day. And I really genuinely love what I do. I told you I hang a responsibility over me that's probably not healthy but it fuels me to do more, do better, really earn what I have or try my best to. And like I said, I mean, I do genuinely love it. And I think there is that adage, that cliche about, oh, if you do what you love, you never work a day in your life. And I truly feel lucky that I've lived that. I've lived it basically since college. And it's a hell of a drug. And then when the thing that you love doing also compensates you really well for it, like why would I not want to do it?

I'd like to think that I had a perspective before. It's crazy. It's only been eight years since becoming a dad, but I really can't think of what I was thinking back then. Like I feel like a very different person now in how I see the world. And so I don't know how much I'd attribute to, I don't know. I think undeniably having a couple daughters, especially black daughters, just gives me a different perspective on navigating the world. And so, look, at the end of the day, I'm looking to make investments to generate the biggest returns. And I think it is a very obvious thing that our industry, tech, has been largely defined by dudes and, you know, a lot of white guys. But what's really interesting here to me is the more touch points I get into different industries, different cultures, just different things for someone in this role, both as an entrepreneur and an early-stage investor. I am trying to learn from every experience I have. This is probably to a fault, and my wife's commented on it a few times because apparently it's not a normal thing. I am trying to pay attention to everything because I'm trying to learn. I'm trying to connect some dot to something that goes back to some business that I have started or I have invested in. And I think that's probably what made me effective in that role building Reddit because at the end of the day, you're just scrolling through infinite conversations trying to connect dots and understand community trends and all that sort of thing. And I think that's made me a very good investor. And look, there are companies, there's one company hopefully we'll have announced by then. It's a robot that is assisting stylists or braiders in braiding natural hair. It's called Halo Braid. And this is a product very excited to invest in. Yinka, who's the CEO, she's going to build the Dyson of natural hair. And that is probably an easy, very obvious example of a thing that I would have been maybe aware of before, but now that I've lived through just how long some of these braiding sessions are and tried my best to help, I understand. And there's, look, there's an incredible tradition there that's important to preserve. And it's not removing the human from it. It's just making her life much easier. This can take six, seven, eight, nine, ten hours. Like it can go for a very long time. And here's an entrepreneur solving a problem that probably a lot of other founders would not even be aware of. And yet, again, I mean, you could take a quick search and realize just how big the industry is around all things natural hair. And if you believe that robotics are going to play a much bigger role in our lives and in our homes the next few years, as most of us do, a lot of folks are going to look at, you know, how do I build the next robot that's going to wash dishes or clean up some trash, which is fine. That's a big problem. There are lots of people trying to solve that. This is an industry laying in plain sight where you have a founder who's taking a different perspective that is not going to have real competition, I think, for a very long time and be able to dominate in a space that's going to be incredibly valuable. And so again, it comes back to that starting line. How am I making sure we are seeing as many pitches as possible from as many sectors, as many founders, so that we're not just satisfied with the random cook who won that day. We're really finding greatness everywhere.

Zuck did. He spent a lot of time, dad. Zuck is a great girl dad as well. Here's the other part too. I knew I was only having daughters. I will only have daughters. I'm sure of it. And I needed it. It was important for me. I think it softened me in really, really important ways to understand, especially as an entrepreneur you really get afflicted with this disease where, and you know whatever it's a thing you really think you're the most important person you really think you are the main character and I think guys in particular we're a little more prone to this affliction okay and becoming a father is one thing because in that moment you're like oh I'm not the most important person like this little human is but then when you have a daughter, it softens you in another way that it's hard to explain. I haven't had a son, so technically I don't know what to compare it to, but I know how much having these little girls has given me a different window because, you know, I feel like I can sympathize or empathize with my wife to a certain extent, but there's something about it being your child where now all of a sudden like you really are connected to me in a deep, deep biological and sentimental and just emotional way. And there's such a sweetness to these girls that just makes me feel, I don't know. You see how I live my life publicly online. Like I keep it 100 with folks for better or for worse because that's just how I'm wired. But when I come home to them and I get that hug, it just feels different. And these girls just bring out the best in me in a way that I'd like to believe a son could, but it's a little different. And at the same time, I do feel like I never quite do enough as a husband or a dad. There is that tension and I try to speak about it openly and plainly because plenty of professional women have to deal with this day in and day out. Like dads feel that too. Dads feel it too. And that was probably the best part about, there were lots of great things about becoming a father. But one of my favorites was getting to know men who I already really respected, you know, wildly successful in so many industries who then let me into this club once I became a father. And they started to tell me about the good times, the bad times. And I'm like, 'Guys, like, this has been on your minds the whole time and you only talk to other dads about it.' Like, this conversation needs to get normalized. So, young men before we even think about having a family are seeing this other path to excellence. That is, yes, career-driven as all hell, but also aware of the fact that like probably the best thing I'll ever do is going to be these little humans that I help bring into the world and raise and so I like seeing that. There's definitely been a shift now in the meta, I feel like, in the last five years. And you know trying to do it all like everybody.

Who is the competition for Digg? Well, you know, Kevin Rose and I used to be

Arch nemesis CEOs back in the day. Reddit versus Digg. I hated his guts. I hated his guts. I had a GIF of Kevin Rose at a Dignation event. Someone had thrown a Reddit T-shirt on stage. He picked it up. He held it to the crowd. They booed and he blew his nose on the shirt and threw it to the side. And I used to watch this clip probably once or twice a week. And I have a folder, I may still have it, a Dropbox folder where I would have all these things that just called it my wall of negative reinforcement. I had a literal wall when we were starting Reddit where I like when the Yahoo executive called us a rounding error, I put that on my wall. So every day when I went to the office, I could see this guy, you're a rounding error. I won't name him. He's still in tech. And it would motivate me. And then of course the day that Reddit surpassed Yahoo in traffic, I was like, all right, we'll see. Rounding error. And so with Kevin, you know, he it was an innocuous thing. It wasn't like he but he did this and it was so important to me because whenever I felt like a little tired, I felt like I don't really want to do this thing I got to do, man. I watched that clip and I remembered why I needed to prove him wrong.

And so it was great. We buried Digg and I felt like great victory. Awesome. But I never actually met Kevin. And on some level, look, Digg was first. Honest to God, I did not know about it. Neither of us did. I still have the email where I learned about it and I sent the email to Paul Graham and I was like, 'Oh, we have a competitor. It's called Digg.' This was probably six to nine months after Digg had launched. So they were first and I finally met him. This was now years later. It was probably four or five years ago, maybe six years ago. And we absolutely hit it off and I thought to myself, God, why did this take so long? He's a girl dad. I'm a girl dad. We thought about the world in much the same way. We were building basically the same company at the same time with a similar view on community and product and all this stuff. And if I'm being honest with myself, part of the reason I hated him was this kind of like jealousy and a competitive spirit. And there was probably I saw a version of me in him and he was getting things I didn't get. Remember they were, you know, venture-funded, front of magazines. They were the king. They were the champions. We were the sort of runty other company for five, six years. And so as I more understood where that jealousy came from and how that jealousy was really rooted in respect and then I came to realize like I actually love this guy. He's great. God, it changed everything. And so yeah, he told me he was buying back the domain. And I said, Kevin, this is a great idea. Can I do this with you? And so...

Oh, no. No. We're buddies now. I got over that. But remember, I have a wall of negative reinforcement. So the idea that we could build a platform in the AI age that has all the community tools that we know could be better with AI. So imagine a moderator's job is not 90% garbage and 10% community management, but actually 90% community management and 10% sort of garbage collection. AI is what enables that. Those tools help scale the work of the moderators that on most of these platforms spend a lot of their time doing like digital grunt work. That's not satisfying. And then also in this age of AI, can we build a community platform that is authentically human? People are realizing now just how much of our social feeds are fake. I mean, it's striking. I'd say at a minimum it's a third. I think with dead internet theory, I really it could be as much as half are in some way compromised. And so that could be outright a bot. That could be a human posting AI-generated content sort of at scale. That could be an account that gets purchased in order to have the moderator rights in a community. And so what do you do in an age where you know because of AI we are going to become more and more skeptical of every interaction we have? How do you reimagine a community-first platform where you have verifiable humans without saying oh hey you know scan your retina? And so I think Digg can be that and then yeah on a personal level I would love nothing more than to see if we could do it again.

Both. I mean how many founders get the chance to run it back in a similar product in a similar market? I mean I you talk about Palmer, he's definitely one of them. There's a short list of folks who have done that and it would be a lot of fun. It'd be a lot of fun to do.

I think what we found in authentic human online community is it's the last bastion of really high-quality content. And right now I don't think actually I think most of it goes down in the group chats. I think that's where most of that happens today. And so whether you want to know an opinion about a movie, whether you want to know about a camera to buy, there is always going to be real, real value there as long as you can create a space that people believe is authentic and human. And Lord knows we know the LLMs will pay money for that content because they know how valuable that is to train on. But what I worry about is there is this flywheel of if we know these models are trained on content that are now largely botted or AI-generated, that authenticity loop breaks down real quick and that trust breaks down real quick. And so I think we will need to find repositories of real community that are verifiable and engaging. And I think the reason why people will want to come back to them is because you'll be surrounded by so much noise and so much slop. And the stopgap right now is in the group chats, but that's clearly not where it ends. There clearly needs to be some other version of, you know, if you just want to show up and find a community of people who love cameras, where do you go to get authentic, real human reviews of those things?

Pre-NAP. Yeah.

Oh, I mean, this is the infinite startups are the infinite game.