By supporting the ability of anyone to build on top of Reddit’s platform, Reddit created an invaluable user research arm that also provides a long-term competitive advantage by keeping potential competitors and their customers contributing to Reddit. This an incredibly difficult thing to do, and they seem suddenly blind to why it was worth it.

In a recent Verge interview with the CEO Steve Huffman:

PETERS: I want to stop you for a second there. So you’re saying that Apollo, RIF, Sync, they don’t add value to Reddit?

HUFFMAN: Not as much as they take. No way.

(and I’m going to ignore for the moment questions on how they’ve handled this, monetization, and so on, focusing only on this core value they’ve created and are destroying)

A vast community of people all working on new designs, development innovations, and approaches, responding immediately to user feedback to try new things – compare this to what you have to do internally. 

Every company I’ve been at has a limited user research budget to discover their customers and their needs, and as limited room to get feedback on possible solutions by building prototypes or even showing paper drawings. To entirely focus on new ideas? You might be lucky to get a Hack Day once a quarter.

If you have a thriving third party development community, you have an almost unlimited budget for all of these things, happening immediately, and on a hundred, a thousand different ideas at any one time, and those ideas are beyond what you might be able to brainstorm.

It’s a dream, and once you’ve done the hard work of getting the ecosystem healthy, it does it on its own. Anything you want to think about you’ll find someone has already broken the trail for you to follow, and sometimes they’ve built a whole highway.

You can think small, like “how can we make commenting easier?” There will be a half-dozen different interpretations of what comment threading should look like, and you have the data to see if those changes help people comment more, and if that in turn makes them more engaged in conversation.

And it goes far beyond that, to entirely new visions of how your product might work for entirely new customers.

If you’re sitting around the virtual break room and someone says “what if we leaned into the photo sharing aspect, and made Reddit a totally visual, photo-first experience?” in even the best company you’re going to need to make a case to spend the time on it, then build it, figure out how to get it cleared with the gatekeepers of experimentation… 

Or if you have a 3rd party ecosystem as strong as Reddit’s, you can type “multireddit photo browser” or something into a search engine and tada, there you go, a whole set of them, fully functional, taking different approaches, different customer groups. I just did that search and there’s a dozen interesting takes on this.

Every different take on the UX, and every successful third-party application is a set of customer insights any reasonable company would pay millions for. Having a complete set of APIs publicly available lets other people show you things you might not have dreamed possible (this is also a hidden reason why holding back features or content from your APIs is more harmful that it initially seems).

Successful third party applications give you insight into:

• A customer group
• What they’re trying to do
• By comparison, how you’re failing to give it to them
• A minimum number to what they’re willing to pay to solve that problem

Even when these applications don’t discover something that’s useful – say someone builds a tool that’s perfect for 0.1% of the user base, but that tool requires a lot of client-side code, so it’s just not worth it to bring that into the main application. It’s still a huge win, because those users are still on the platform, participating in the core activities that make the system run, building the network effects (and, because you’re a business, making money in total).

And if those developers of these niche apps ever hit gold and start to grow explosively, you’ll see it, and be able to respond, far earlier than you would if they weren’t on your platform.

That’s great!

The biggest barrier for any challenger app isn’t the idea, or even the design and execution, it’s attracting enough users to be viable, and surviving the scale problems if it does start to grow. By supporting a strong third party application ecosystem, you’re ensuring that they never solve those problems – their user growth is your user growth. They don’t have to solve the problem of solving the scaling infrastructure because you did. It will always make short-term sense to stay with you.

Instead of building competitors, you’re building collaborators, who will be pulling you to make your own APIs ever-better, who are working with you and contributing to the virtuous cycle at the heart of a successful user-based product like Reddit.

I know, from the outside we just don’t get it. Reddit’s under huge pressure to IPO, and the easy MBA-approved path to a successful IPO is ad revenue, which means getting all those users on the first-party apps, seeing the ads, harvesting their data, all that gross stuff. And we can imagine that the people pushing this path to riches look at all of these third party apps and say “there’s a million people on Apollo, if they were on our app, we’d make $5m more in ad revenue next year.”

This zero-sum short-sighted thinking may not be the doom of Reddit – they may well shut down all the third-party apps and survive the current rebellion of moderators and users (and the long-term effects of their response to it).

It was and could have been such a beautiful partnership, where Reddit thrived learning, cooperating with, and improving itself along with its outside partners. As this developer community now looks to rebuild around free and decentralized platforms like Mastodon, it’s easy to see how Reddit’s lost ecosystem might eventually return to topple them.