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Reddit’s IPO Filing Is Missing Something: Cofounder Alexis Ohanian

Advance, the owner of Condé, owns 30 percent of Reddit with other investors, board members, and employees holding the rest. Among them, OpenAI CEO Sam Altman, an early user and investor in Reddit, has 8.7 percent of the company, according to Thursday’s filing. Some of Reddit’s power users in the US could join the ranks of owners, as it plans to sell them shares ahead of the market debut, similar to how housing rentals service Airbnb set aside shares for some of its dedicated hosts during its IPO in 2020.

Sudden Split

Years after the pair sold Reddit, Ohanian helped draw Huffman back to the company, and Huffman took over as CEO in 2015. Huffman was a groomsman at Ohanian’s wedding to tennis champion Serena Williams in 2017.

But as the pandemic and Black Lives Matter protests swelled in 2020, Ohanian’s concerns about violent communities on Reddit, such as r/watchpeopledie, grew. After Huffman declined to ban them, Ohanian quit Reddit’s board that year with just hours of warning and asked that his replacement be someone who is Black. The company granted that request, appointing in his place Michael Seibel, managing director of startup incubator Y Combinator and longtime friend of the cofounders. But inside Reddit, Huffman blamed Ohanian for leaking board deliberations about the since-banned hateful subreddits and warned staff who remained friends with Ohanian to be mindful of what they discussed with him, according to several former Reddit employees.

Ohanian told WIRED in a recent interview that he hasn’t thought much about his cofounder since leaving the board. Huffman quickly had to move on himself to focus on courting advertisers and new users. According to the S-1, Reddit generated $804 million in sales last year, up nearly 21 percent from 2022. It narrowed losses by 43 percent to about $91 million.

Over 98 percent of Reddit’s revenue last year came from selling ads displayed among posts and comments across its over 100,000 subreddits on topics such as sports and politics. But Huffman in Thursday’s SEC filing described other revenue opportunities: taking a cut of transactions between users in Reddit’s communities such as r/PhotoshopRequest and licensing the content of users’ posts to investors wanting to study the latest consumer trends or tech companies eager to train AI chatbots with real human conversation. Those other sources of revenue grew at only 8 percent last year, though momentum may be picking up ahead of the IPO. Reddit on Thursday also announced a deal to license data to Google to enable the search giant “to improve its products and services.” In return, according to the announcement, “Google will make it easier for people to find, discover, and engage in content” from Reddit.

Reddit could still scuttle plans to go public, and it hasn’t publicly set a date for its stock market debut. A new listing is often marked by company founders and executives ringing the bell to signal the market’s open or close. Whenever it happens, don’t expect to see both Reddit’s cofounders there.