If he is to steer Reddit to a multibillion-dollar IPO, Huffman will need moderators to be on his side. Additional signs of dissent will chip away at Reddit’s value to investors.
Already, Reddit’s perceived worth is under pressure. According to Pitchbook, the company has raised more than US$1 billion and was valued at US$10 billion at the time of its last funding round in August 2021. No more: Fidelity, a major investor, in April slashed its valuation by 41 per cent.
Reddit hasn’t been the only tech company to see its IPO prospects diminish. Last year was the softest in nearly 15 years for IPOs, and there are a few major listings planned for this year.
But Reddit has additional vulnerabilities: It has never managed to become an advertising powerhouse like its bigger social-network peers. Other ideas to turn things profitable have been in short supply. Fear of upsetting the delicate vibes of Reddit’s community has led to a kind of innovation paralysis.
TURNING TO AI
But there is a new opportunity, thanks to the recent explosion of interest in artificial intelligence.
Reddit, it turns out, is a fantastic resource for those looking for the mountains of data – human conversations – needed to create powerful tools like ChatGPT. And while billions of dollars of value have been created by using Reddit’s data, Reddit itself hasn’t directly benefited.
Huffman is right to want that to change. The new developer fees are part of the process of making the most of Reddit. Next time a company wants to scrape Reddit’s data, it might need to pay.
For all the latest business News Click Here
