The nerds lost the internet.

I mean, there wasn’t a shift in control or anything. This is just part of the business plan.

Reddit, like many B2C online services, intentionally operated at a loss for years in order to grow.

1. Get capital.

2. Spend capital providing a service that is as appealing as possible, even if you have to lose money to do it. This builds your userbase. This is especially important with services that experience network effect, since the value of the network rises with the square of the number of users. This is the “growth phase” of the company.

3. At some point, either capital becomes unavailable, too expensive (e.g. in the interest rate hikes after COVID-19), or you saturate available markets. At that point, you shift into the “monetization phrase” – you have to generate a return using that userbase you built. Could be ads, charging for the service or some premium features, harvesting data, whatever. Because interest rates shot up after COVID-19, a lot of Internet service companies were forced to rapidly transition into their monetization phase at the same time. But point is, your concern isn’t growing the service as much as it is making a return then, and it’s virtually certain that in some way, the service will become less-desirable, since the service is shifting making a return above being desirable to draw new users. That transition from growth to monetization phase is what Cory Doctrow called “enshittification”, though some people around here kind of misuse the term to refer to any change that they don’t like.

Investors were not going to simply shovel money into Reddit forever with no return — they always did so expecting some kind of return, even if it took a long time to build to that return. I hoped that that changes when they moved into a monetization phase were changes that I could live with. In the end, they weren’t — I wasn’t willing to give up third party clients, if there was an alternative. But it’s possible that they could have come up with some sort of monetization that I was okay with.

If you don’t mean the transition from growth to monetization at Reddit, but the creation of Reddit at all…

The main predecessor to Reddit was, I suppose, Usenet. That was a federated system, and while it wasn’t grown with that kind of business model, it wasn’t free — but typically it was a service that was bundled into the bill when one got service from an ISP, along with email and sometimes a small amount of webhosting. Over time, ISP that provided bundled Usenet service stopped providing it (since it made their actual Internet service uncompetitive for people who didn’t use Usenet service), and because so many people used it to pirate large binaries, the costs of running a full-feed Usenet server increased. Users today that use Usenet typically pay a subscription to some commercial service. You can still get Usenet service now, if that’s what you want – but you’ll pay for it a la carte rather than having it bundled, and the last time I was trying to use it for actual discussion, it had real problems with spam.