One Way to Reform Reddit: Give Users a Share in Profits

Now the bad news: Although Breaddit sells more sandwiches than just about any deli in town, the business is nowhere close to reaching its potential. While much of the food has been critically acclaimed, the store suffers chronic problems with its workers, all of whom are unpaid, many of whom are anonymous and some of whom are anarchic trolls. These troublemakers regularly churn out sandwiches that risk turning off the wider public — the meats are racist, the cheese is sexist, the bread is poisonous, and some meals are served with a side of hacked celebrity photos. So how do you build a thriving deli out of a kitchen that also produces so much steaming garbage?

Naturally I'm talking about Reddit, the popular and frequently controversial online message board. Last week, Ellen Pao, the site's interim chief executive, resigned after another in a string of clashes with Reddit's users. She was replaced by Steve Huffman, one of Reddit's co-founders. People unaccustomed to Reddit are easily confused by its peculiar jargon and impenetrable design. Thinking about the message board in terms of a small business clarifies Reddit's challenges, as well as its opportunities. In particular, the sandwich shop analogy suggests one obvious flaw in Reddit's current structure. A deli that relied on volunteer chefs would be a disaster. What goes for Breaddit goes for Reddit: To produce better fare, it may be time for the site to move away from its reliance on volunteers to run its operations.

Instead, Mr. Huffman could consider reviving and accelerating an idea floated by the tech investor Sam Altman, who led Reddit's $50 million fund-raising round last year and is now on the company's board. That plan is to give Reddit's users a financial stake in the company's success by rewarding Redditors with equity — a move that could align the aims of Reddit the company with Reddit the community, turning a sometimes rage-prone message board into a placid worker-owned cooperative.

Mr. Altman's plan has hit regulatory complications, and neither he nor the company has yet figured out the mechanics for giving Reddit users a stake. But in an interview this week, Mr. Altman reiterated his goals.

"My whole idea is that someday the community should be owned by itself," he said. "So this is a way to start — and then hopefully when the company goes public, somehow Reddit users would get a preference in buying shares."

Mr. Huffman didn't immediately respond to a request for comment.

Mr. Altman's idea could solve some of Reddit's thorniest challenges. Though Reddit's aggressively ugly sections often make headlines, they aren't the only problems the new chief executive will face. As defenders often insist, most of the site's vilest posts are stuffed in faraway corners of the site, hidden from all except those purposefully looking for them.

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The site must also address other issues: Reddit isn't very easy to use on smart phones, and it is technically and visually daunting to newcomers. Its internal technology is said to be underwhelming and, after years of operating as a neglected division of the magazine company Advance Publications, its management structure is sclerotic. After around two months on the job, Bethanye Blount, the company's chief engineer, resigned this week because, she told the technology site ReCode, she did not think Reddit "could deliver on the promises being made to the community."

Still, with more than 160 million visitors a month, Reddit remains enormously popular, and if properly managed, could become a thriving business. "Reddit is this amazing community that grows out of a core branch of Internet culture — the old bulletin boards and chat rooms," said John Borthwick, the chief executive of Beta works, a company that builds social start-ups. Mr. Borthwick said Reddit had spawned its own branches — sites like Imgur, Giphy and even arguably Tumblr and BuzzFeed grew out of a cultural ethos shared with Reddit. "The branches off it are monetizing," Mr. Borthwick said. "So can Reddit monetize? I think the answer is yes."

But that gets to Reddit's biggest problem — the tensions that flare up whenever Reddit's executives move to clean up or otherwise improve the place with the aim of making money from it. Often, the dust-ups occur because Reddit's users have little incentive to go along with the whims of the company's corporate overlords.

The hundreds of volunteer moderators who spend countless hours on Reddit frequently say they feel cut off and blindsided by decisions made by the company. It was one such decision — the sudden dismissal of an employee who had been a popular liaison between the company and the moderators — that set off the most recent uprising, in which hundreds of moderators briefly took their Reddit sections down. The community's suspicion is only natural; though the moderators spend much of their time keeping Reddit running, it is the company's executives and investors who currently stand to gain the most from changes to the site.

"The last thing Redditors will accept is that feeling like someone's trying to cash them out without their knowledge," a user named VWSpeedRacer wrote in an "Ask Me Anything" session, a sentiment that has been widely echoed across the site in recent weeks.

"You have two competing forces now," said Neetzan Zimmerman, the senior director of audience and strategy at the politics publication The Hill and a longtime watcher and user of Reddit. "You have the users and Reddit the company. And if you're a Redditor and you love Reddit how it is, you might be looking at what's happened recently and saying, 'Everything's great, we won.' "

But the two sides would feel less antipathy if they were financially bound together. If Reddit's moderators had a stake in Reddit's future, the company would have a harder time keeping users in the dark — they would need to be treated as valued employees, or even fellow owners.

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Redditors are obviously not in it for the money; like the scores of volunteers who edit Wikipedia, many spend their time on the site free because they love it. But Reddit — unlike Wikipedia — is a for-profit company, and if the users benefited from Reddit's financial success, Redditors would have an incentive to fight for, rather than against, reforms and interface changes that would make the site more accessible.

If it is true, as Reddit's defenders often argue, that the good in Reddit's community far outweighs the bad, a financial stake would give the good an incentive to minimize the bad.

This might sound like a gimmick — even some Redditors have been skeptical of the equity plan — but giving users a financial stake in online communities has been on the rise, said Gina Bianchini, the chief executive of the social networking company Mightybell. She points to Teespring, an online T-shirt company, and Mass drop, a site that lets communities join together to get discounts on specialty goods.

"If I'm a Reddit moderator, I go to my group and say, 'Do you guys want to sell T-shirts?' " she said. "The community buys the shirts, the mods get a share — and Teespring also makes a killing from something as simple as selling T-shirts."

Mr. Altman says he prefers sharing equity with users rather than revenue, but he was open to ideas for both. "You want people to act like owners, not renters," he said. He added that plans for distributing equity to users were being investigated, though no decisions had been made.