Reddit Readies for IPO as it Works Toward Profitability 

Reddit is praying investors will click the “upvote” button.

The social media website — and home of the best relationship dilemmas since Jerry Springer — filed paperwork on Monday announcing its intention to raise up to $748 million in its upcoming initial public offering, pegging its valuation around $6.4 billion. The Reddit IPO has been a long time coming, but now the company is raring to go, despite the fact it has never once turned an annual profit. Hey, it worked for Uber, didn’t it?

You Live by the LLM, You Die by the LLM

Reddit isn’t the most high-maintenance of social media platforms. The vast majority of curating and managing its esoteric subreddits (the myriad forums that make up the site) is done by the users themselves. In its IPO filing, Reddit compared its moderation approach to a “democratic city, wherein everyone has the ability to vote and self-organize, follow a set of common rules, and establish community-specific norms.” 

However, turning user information into advertising dollars, the typical social media playbook, has yet to yield an annual profit for Reddit since it was founded in 2005. In the past year, Reddit has been on the warpath trying to eke out more value from its platform and ended up majorly upsetting its power users in the process. But Monday’s IPO filing mentions a whole new revenue stream: being a training ground for other companies’ Large Language Models (LLMs). Reddit is selling itself as an invaluable source of “authentic and constantly updated human-generated experience,” i.e. if you train an LLM on it, it will learn to sound like real people, or at least, like people who post on Reddit. The only problem is that by licensing the Redditverse out to AI companies, Reddit may be signing its own death warrant:

• Reddit entered a new partnership with Google in February that gave the tech giant access to Reddit’s data for AI training purposes, one week after Bloomberg reported Reddit had signed a $60 million-per-year AI training deal with an unnamed company.
• That amount is nothing to sniff at, but Reddit warns in its filing that LLM-powered internet services could eat into its business. “Redditors may choose to find information using LLMs, which in some cases may have been trained using Reddit data, instead of visiting Reddit directly,” the company said.

Keeping It In the Sub-Family: While some Reddit users have become disillusioned in recent months, the company is trying to win them back by offering them stock. It’s even starting up a whole subreddit dedicated to answering questions about the IPO called r/RDDT, according to its filing. It’s kind of like if Twitter were to go public and then respond to users’ tweets about the process which, to be honest, sounds like just the sort of thing Elon Musk would do if he hadn’t spent $44 billion taking the whole thing private.