This weekend, the CEO of Reddit tried to defend r/TheFappening, a section of his website trafficking in illegally obtained nude photos of young female celebrities. His argument? "Every man is responsible for his own soul." Not long after, Reddit backtracked and shut the page down anyways. Perhaps it was out of concern for Reddit's upcoming A-list Silicon Valley investors?
Last night, Re/code broke the news that top tier venture capital firms are close to buying $50 million of Reddit stock because they think the host of The Fappening is now worth $500 million. If the deal closes at that price, it means Reddit's value has gone up $100 million since 2013, when Reddit was seeking financing at a $400 million valuation.
According to Re/code, the list of investors in the round may include Andreessen Horowitz and Sequoia Capital as well as Reddit cofounder Alexis Ohanian (now a partner at famed accelerator Y Combinator), and "some individuals associated with Y Combinator."
Deals like this don't happen in the week since the photos were disseminated. Investors have been interested in Reddit's claim to 133 million monthly uniques and its influence on the media, regardless of what the "content" contains.
Like the CEO said, it's every soul for himself.
Advance Publications, the parent company of magazine publisher Condé Nast, is currently Reddit's largest shareholder. Condé Nast bought Reddit in 2006 and spun it out a couple of years ago as a " re-incorporated independent entity."
Other shareholders include employees. After the funding deal closes, Advance would still own around 50 percent of the company, sources said.
There's never a good time to reveal that you're handing over $50 million to a Hydra that grows two cesspools for every one you cut off, but r/TheFappening was universally reviled before it was shut it down. Now, public scrutiny is back on Reddit's laissez-faire attitude towards policing the kind of users who have to be reminded that they have a soul.
Reddit’s CEO on why PicsOfDeadKids won’t be banned like TheFappening: “we don't ban subreddits for being morally bad” pic.twitter.com/lYklca0xtU
— Neetzan Zimmerman (@neetzan) September 7, 2014
Yishan Wong—who started the CEO job at Reddit in March, 2012, well before the "Jailbait" scandal—seemed to piss off both Redditors and critics will his too little, too confusing explanation for what gets banned. In the soulful blog post, Wong said he considers Reddit "not just a company running a website where one can post links and discuss them, but the government of a new type of community." But just look at the Update to the post to see what you can expect from this "government":
For Andreessen Horowitz, Reddit fits perfectly into their new media trifecta. The firm has invested in Imgur and Buzzfeed and there's a symbiotic relationship between both of them and Reddit. Re/code implies that bringing Ohanian into the round is designed to please the users behind the user-generated content.
The involvement, sources said, is thought to be important in making such an investment palatable to the often volatile Reddit community.
In the current climate of impending lawsuits and universal privacy dread, would-be investors should be thinking about more than Reddit users. Both Ohanian, an affable fellow who once tried to run for President of the Internet, and AdvancePublications have both managed to evade the responsibility for what gets shared in squalid sub-reddits. A $500 million valuation may mean the kind of professionalization we've seen at Buzzfeed and with Bitcoin, another Andreessen Horowitz specialty.
At the very least, $500 million means more people to ignore pertinent questions.
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[Image via Getty]