South by Southwest

Reddit co-founder Alexis Ohanian reflects on the 'giant fail' that changed his life

Alexis Ohanian, Co-Founder and Executive Chair of Reddit.
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Alexis Ohanian, Co-Founder and Executive Chair of Reddit.

Being rejected from Y Combinator may have been the best thing that ever happened to Reddit co-founder Alexis Ohanian. Of course, he didn't know that at the time.

"When I think of 'giant fail setback,' it would be getting rejected from Y Combinator," says Ohanian, responding to a question from the audience at the end of his talk in Austin, Texas, at the SXSW Conference and Festivals Friday.

Y Combinator is the most prestigious Silicon Valley start-up accelerator. It has launched successes such as including Airbnb, Dropbox and Stripe.

"They were smarter than us and said, 'No, no, it's too early for this. Don't do it.' They rejected us." -Alexis Ohanian, co-founder of Reddit

In 2005, Ohanian and his co-founder Steve Huffman were working on a business called "My Mobile Menu," a kind of food ordering mobile app. But since the iPhone hadn't yet come out (it debuted in 2007), Ohanian and Huffman were pitching the idea before smartphones were ubiquitous.

"Unfortunately, folks at Y Combinator were smarter than us — or, fortunately, I should say, they were smarter than us, and said, 'No, no, it's too early for this. Don't do it.' They rejected us," says Ohanian.

The day after they were rejected by Y Combinator, Ohanian remembers, he got a call from Paul Graham, a co-founder of the accelerator and a legendary investor in Silicon Valley.

"I was like, 'Hello?' And he was like, 'Alexis, we still hate your idea.' 'Really? You called just to say that? We were on our way back to Virginia,'" Ohanian says. But Graham continued: "'No, no, we like you two. Come up with another idea and we will invest. Whatever it is.'"

The next idea Ohanian and Huffman had was Reddit, and Y Combinator gave the two founders a check for $12,000. Today, 280 million people visit the site every month. (Y Combinator now invests $120,000 in accepted start-ups.)

The rejection, and subsequent encouragement and investment, "changed our lives," says Ohanian.