As Reddit prepares for an initial public offering that could come by the end of 2023, it's looking to flatten its management structure, and employees say the company has become bloated with executive- and director-level employees.
Reddit filed for an IPO in December 2021, when demand for new tech stocks was at a fever pitch. It said it surpassed $100 million in advertising revenue in the second quarter of 2021. It has also made large investments in artificial intelligence, acquiring the machine-learning startup Spell in June 2022 to help customize ad placements.
Since then, demand for tech stocks has dropped. Reddit laid off 90 employees in early June as it aims to reach profitability. Its revenue growth has slowed, The Information reported.
To prepare for the intense scrutiny of the public markets, Reddit is whipping itself into shape; managers told employees in product earlier this year that the goal was to do "less but better." Part of the mandate could include slimming down middle management.
Reddit is also examining areas of its business where it could squeeze costs. It recently announced a controversial decision to charge for access to its API, or application programming interface, which enables developers to build tools that connect to Reddit. It argued that it couldn't support third-party apps that use Reddit's content but don't provide any money in return. As a consequence of new fees, the popular third-party client Apollo was forced to shut down. According to an FAQ sheet, Reddit only intends to charge developers who use the API heavily and monetize their apps (Apollo charged its users about $13 a year).
Insider spoke with five current and former Reddit employees, who requested anonymity as they were not authorized to speak to the press or had signed nondisclosure agreements to receive severance. They described some leadership moves and road-map changes that caused what one employee described as "thrash."
The 18-year-old social-media company has long had a culture of "trying to do too many things and doing them really poorly and not finishing them at all," the same employee said. Internally, they said, the company would now focus on "having a simplified product plan and sticking to it."
A Reddit representative declined to comment on this story and pointed to a blog post about the company's acquisition of Spell.
A flattening at Reddit
Reddit executives presented a distribution of managers to direct reports during its quarterly leadership summit in May in New York City. The distribution showed that many managers oversaw four to six people. Managers who attended the summit told employees that leadership suggested the company would in the second half of the year consolidate teams with managers overseeing fewer than six employees, two employees said.
Employees say this could mean more managers may leave through managed exits.
Reddit is not the only tech company flattening its leadership structure. Meta CEO Mark Zuckerberg said earlier this year that the company would reduce its number of product managers and directors to make it more efficient. Meta had given managers the option to be demoted, with the expectation that many would choose to leave. Shopify has also tried to flatten its organization.
Lost trust in leadership
Reddit employees said they lost trust in leadership after a series of missteps. For example, they said they were repeatedly told before the company conducted layoffs in June that layoffs wouldn't happen.
Product road maps changed in May as the company focused on the API changes and on boosting content creation by users.
The recent change to charge for access to Reddit's API also led to protests from moderators. While many employees supported the API changes, they said Reddit's moderators deserved credit for helping grow the site. A former employee who left in April argued that company leadership should have invested more in supporting moderators and that building tools for Reddit's moderator community "has never been a priority" for leadership.
"Reddit has long had staff who have worked hard to provide a better mod experience, but the will to improve this has never come from the top, and Reddit has yet to fund them to the extent they need to," one employee said.
On top of that, Reddit hasn't been able to fully integrate Spell's technology since its acquisition, two employees familiar with the matter said. One employee described Reddit's CEO, Steve Huffman, as having pushed through the acquisition despite opposition from vice presidents and directors, as well as bringing its founders as vice presidents and directors "despite Reddit not needing more of either."
Leadership shake-ups
Reddit had some leadership changes earlier this year. Jack Hanlon, who was the vice president of feeds, AI, search, and data, parted ways with the company in March, he and the company confirmed. Hanlon led product and engineering for several areas of the company, including machine learning and data science.
In May, Reddit's head of data science, Jose Lobez, was replaced by Tyler Otto, who'd joined Reddit from Hipmunk, a travel website Huffman founded.
Three employees described Lobez's departure as a surprise, as he was well liked within the data-science organization. "He basically grew the data-science organization himself — a big cultural figure internally," one said. They described Lopez as "pretty open both with reports and about the org as a whole," adding that he "helped deal with interorganization disputes pretty well."
