Reddit AI Training Data and IPO
It’s being reported that a deal has been struck to allow an unnamed large AI company to use Reddit user content for training purposes …
The deal is said to be worth around $60M per year, and comes at a time when the company is seeking to maximize its value in the run-up to an IPO.
Google is getting AI training data from Reddit as part of a new partnership between the two companies. In an update on Thursday, Reddit announced it will start providing Google “more efficient ways to train models.”
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The partnership will give Reddit access to Vertex AI as well, Google’s AI-powered service that’s supposed to help companies improve their search results. Reddit says the change doesn’t affect the company’s data API terms, which prevent developers or companies from accessing it for commercial purposes without approval.
Called it. Only question is whether the deal is exclusive or if there’s an option to make it exclusive since $60M is relatively low for exclusivity.
Social media company Reddit filed its IPO prospectus with the Securities and Exchange Commission on Thursday after a yearslong run-up. The company plans to trade on the New York Stock Exchange under the ticker symbol “RDDT.”
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Reddit said it had $804 million in annual sales for 2023, up 20% from the $666.7 million it brought in the previous year, according to the filing. The social networking company’s core business is reliant on online advertising sales stemming from its website and mobile app.
Via Dare Obasanjo:
It was valued at $10B in its last funding round and Sam Altman owns an 8.7% stake.
A few surprises in Reddit’s financials are that it’s still unprofitable in its nineteenth year of existence and if it does list at $5B as rumored then it will be a down round relative to its series F funding round.
Emma Roth (via Matthew Cassinelli):
In an unusual twist, Reddit is also giving an unspecified number of its top users, including moderators and those with high karma scores, the chance to buy shares in its IPO. That’s a privilege usually reserved for professional investors who want to buy stock at a theoretically lower price before everyone else gets to purchase it on the public market.
Previously:
- Google Vertex AI Search
- Reddit API AMA and User Revolt
- Apollo Shutting Down June 30th
- Reddit to Charge for API
- Reddit Raises Even More
Update (2024-03-11): Amy Or, Priya Anand, and Ryan Gould (via Hacker News):
Reddit Inc. disclosed further details of what is set to be one of the year’s biggest initial public offerings, with the company and some existing shareholders seeking to raise as much as $748 million.
Update (2024-03-20): Brandon Vigliarolo (Hacker News):
Ahead of its stock market debut, Reddit has said it’s going to make it easier for advertisers to craft normal user posts and run them as ads on the social network.
Called “free-form ads,” Reddit claimed in a statement this week that the “all-new, completely unique ad format” is designed to improve click-through rates and upvotes – by making adverts look as much like user posts as possible.
To be clear, we understand these free-form ads will be labeled as promoted posts.
Update (2024-03-22): Paul Graham (via Hacker News):
I met the Reddits before we even started Y Combinator. In fact they were one of the reasons we started it.
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I don’t think the startup sense of the word “pivot” had been invented yet, but we wanted to fund Steve and Alexis, so if their idea was bad, they’d have to work on something else.
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Reddit the site (and now app) is such a fundamentally useful thing that it’s almost unkillable.
Ianna Rosa Royle (via Hacker News):
While Reddit’s CEO Steve Huffman has been given a $193 million compensation package, the moderators on the platform are unpaid—and the disparity has not gone unnoticed. Since word got out about Huffman’s pay, users on Quora, Reddit, and X have been ripping into the package.
The staggering figure was included in the company’s U.S. Securities and Exchange Commission (SEC) filing on Feb. 22 as it prepares to launch an initial public offering this week. Huffman defended his compensation in a video on his social media platform this week. Quartz calculates that it’s more than the pay packages for the CEOs of Pinterest, Snap, and Meta — combined.
The stock closed at $50.44 on Thursday, up 48% from the IPO price and giving the company a market cap just north of $8 billion.
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On the bright side, reddit has already been thoroughly enshittified, so I don't see an IPO changing its trajectory that much.
It's somewhat ironic... I've found reddit comments to contain more and more misinformation, and so I hardly use it anymore. Odd that Google thinks it good material to train its LLMs on.