The front page of the internet has a lot more money in the bank, with Reddit confirming $50 million in new funding. More interesting than the amount raised, however, was that investors promised 10 percent of their new equity in the company will be shared with community members, a highly unusual move. While the exact mechanics of how these shares will be distributed to users is not yet clear, lead investor Sam Altman told The Verge that it will most likely use a block chain method similar to the systems used to create and distribute Bitcoin.
"Community sites should own themselves."
Altman is the president of the startup incubator Y Combinator, but before he was an executive there he was a founder going through the program. "I went through YC the same class as Reddit, and so I was one of the first dozen or so users," he explained. "My thought at the time was these community sites should own themselves. For years I couldn't think of a great way to do that."
With the emergence of a decentralized system for creating currency, and contracts, Altman says it was time to try something new. "The block chain came along and I thought, huh, this might the biggest evolution of corporate structure since the limited-liability corporation. So we don't know exactly how it will work yet, but all the investors are committed to allocating these shares to the community if we can find a way to make it work."
"Money can become worthless very quickly."
Those other investors include big-name venture capital firms like Andreessen Horowitz and Sequoia Capital, along with prominent angel investors like Peter Thiel and Ron Conway, plus a smattering of celebrities like Jared Leto and Snoop Dogg. Reddit CEO Yishan Wong downplayed the funding, writing on Reddit's blog that, "An investment like this doesn’t mean we’re rich or successful ... Money can become worthless very quickly, value is something that is built over time through hard work." The new funding will be used to add staff, pay rising infrastructure costs, and develop new tools for community management and moderation.