Why Reddit Founder Made Nothing on $6.4 Billion IPO

Reddit’s journey from a college dorm room idea to a publicly traded entity capped off with a $6.4 billion IPO on Thursday, cementing its place as the newest social media company to go public.

Yet, Alexis Ohanian, the co-founder whose early vision shaped Reddit, was not among the beneficiaries of the corporate milestone, or the financial windfall attached to it. Ohanian, conspicuously absent from the company’s S-1 filing and not listed among those owning more than a 5 percent stake, had parted ways with his ownership after selling Reddit to Condé Nast in 2006.

On Thursday, as Reddit’s stock surged by nearly 50 percent, Ohanian’s reflections were absent from financial celebration. Instead, his thoughts on X and through other mediums have been of encouragement and thanks to fellow colleagues and founders.

“I’m most happy today for all the people who took a big chance coming [to] join us in 2014 when I came back as chairman for the turnaround,” he said in a tweet on Thursday. “Y’all the real MVPs for taking that risk when NO ONE could’ve imagined this for reddit.”

Newsweek made attempts to reach Ohanian for comment on the IPO and his subsequent ventures. While we are aware that Ohanian has instructed his team to decline press inquiries, we reached out to ensure a comprehensive perspective. As of publication, there has been no response.

The Reddit story began in 2005. Initially conceived as “mymobilemenu,” a food ordering platform similar to Uber Eats, Reddit was eventually re-conceptualized as the “front page of the internet” by Ohanian and co-founder Steve Huffman. Startup accelerator Y Combinator played a role in the pivot, helping them shift from the food ordering concept to the well-known social media platform it has become.

Ohanian and Huffman, roughly one year later, sold the platform to global media company Condé Nast for roughly $10 million.

The sale was driven by personal reasons including his mother’s terminal cancer diagnosis, he said in a video interview with Inc. magazine and was a way to validate his work and achievements to his family.

In 2014, Ohanian returned to Reddit to steer its reinvigoration as the company had experienced tumultuous years marked by leadership changes and community unrest. He took on the role of executive chairman—for which he was given a company stake—with a goal to guide the strategic turnaround and ensure the platform’s growth and sustainability.

During that period, Ohanian focused on enhancing community engagement, improving product development, and fostering a company culture capable of moving Reddit from a startup to a more structured organization.

He would remain in this position until 2018, but kept a seat on the board, as he shifted his focus towards broader advocacy and entrepreneurial efforts. Those efforts included his engagement with Initialized Capital, an early-stage venture fund he co-founded which allowed him to mentor up-and-coming tech innovators.

Ohanian, who is married to Tennis star Serena Williams, vacated his board seat in 2020 amidst the global turmoil following George Floyd’s death and the ensuing Black Lives Matter protests.

Reddit had long faced criticism for harboring communities that engaged in hate speech and racism, with subreddits like r/The_Donald and r/BlackPeopleHate being particularly controversial.

Despite Reddit eventually banning the problematic communities, the platform faced backlash for its delayed and indecisive actions. Ohanian’s 2020 decision to resign from the board and advocate for a Black replacement aligned with his growing desire to promote meaningful change and amplify underrepresented voices in tech leadership.

Still, while the co-founder didn’t benefit financially from the Reddit IPO, he has carved out a successful path in the business and investment realms.

His early investment in Coinbase through his former venture fund Initialized led to significant returns as Coinbase became a major player in the cryptocurrency exchange market with a public valuation at over $62 billion. Beyond Initialized, Ohanian launched SevenSevenSix, a venture capital firm focused on startups using blockchain and non-fungible tokens (NFTs) in social network contexts.

Through those ventures, Ohanian has been involved in charitable efforts, donating $1 million to former NFL quarterback Colin Kaepernick’s ‘Know Your Rights Camp’ funded by his Coinbase stock proceeds.

Who Made Money in Reddit’s IPO if Not Ohanian?

Current Reddit CEO and co-founder Huffman did. According to the company’s ownership document filed with the SEC, Huffman owns over 4.1 million shares, which is worth over $200 million at current share prices.

Other key stakeholders reaped substantial rewards as well. Advance Magazine Publishers, the parent company of Condé Nast, owns a stake that is worth over $2 billion.

Other major beneficiaries include Chinese technology company Tencent, whose stake is valued at over $753 million, and various entities associated with OpenAI founder Sam Altman, whose stake is worth about $595 million.

“So many people did the real work to get Reddit to this tremendous moment,” Ohanian said of the IPO on Thursday, “I’ve got much more to do.”