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Popular social platform Reddit files to sell stock in an unusual IPO

MICHEL MARTIN, HOST:

The social media site Reddit will soon be known as RDDT on the New York Stock Exchange. Becoming a public company is considered to be a sign that Reddit wants to grow its presence and profile, but why now? We're joined by NPR tech correspondent Bobby Allyn, who is here to explain. Good morning to you, Bobby.

BOBBY ALLYN, BYLINE: Hey. Good morning.

MARTIN: So why now?

ALLYN: Yeah, the short answer is it's really been a long time coming, right? But let's back up for a moment. Reddit was founded back in 2005, which feels like forever ago now, by Steve Huffman and Alexis Ohanian. And they launched the company from their dorm at the University of Virginia. You know, they were these two kind of, like, nerdy gamers, and they launched the site as a place, you know, for people to gather and chitchat anonymously in this very freewheeling way about politics, culture. They were sharing memes.

But it's had a rocky history, Michel. The company has had many, many ups and downs over the years. Until pretty recently in the company's history, Reddit was known for its, you know, laissez faire approach to online speech. You know, for a long time, it was sort of the Wild West on Reddit, right? And there's been a lot of racism, a lot of harassment, a lot of trolls, leaked celebrity photos, you name it. For a while, it was a really dark place.

MARTIN: OK, so then what happened?

ALLYN: Right. Well, in recent years, Reddit has tried to clean up its act. It now has strict rules for what is allowed and what isn't, though of course it's far from flawless. Remember the whole GameStop meme stock craze? That was all started and fueled on Reddit. Anyway, the company now is really working hard to try to polish its image, right? And with this push, it's trying to make more money. It's started charging some developers for access to its site, developers who are, you know, making these third-party apps that lots of people were using to access Reddit. The company said, you know, it was just done giving stuff away for free. CEO Steve Huffman talked to NPR last year and said the company is nearly 20 years old and that, quote, "it's time that we grow up and start behaving like an adult company."

MARTIN: That's interesting. That's an interesting phrase. So I guess - I'm thinking that an adult company means make money. So how does Reddit make money?

ALLYN: Well, like all social media platforms, advertising, right? But Reddit, like the rest of the online world right now, is really dealing with a pretty intense pullback in digital advertising. So Reddit is having to reinvent, and so, like everyone else in tech right now, it's turned to artificial intelligence. But it sees dollar signs in being a customer of AI, which is unique.

What I mean by that is, you know, Reddit is inking deals with AI companies to license the vast corpus of content on Reddit. So all these comments and images and funny back-and-forth, all of that will be used to train AI models like ChatGPT and Google's Gemini. And Reddit is going to be paid for it now, right? These licensing deals could become a serious line of revenue for Reddit, and they are going to need it because now they're pitching investors and Reddit is not a profitable company. So, you know, squeezing as much as they can to try to find new ways to make money is really the focus right now.

MARTIN: Bobby, before we let you go, could you say more about Reddit becoming a publicly traded stock? Is there anything about their announcement that jumps out to you?

ALLYN: Yeah, you know, one thing is pretty unusual, and it's that Reddit plans on setting aside stock for regular users of the site. And for some of them, this will be determined by so-called karma. And this is not, you know, spiritual good will. Karma, in Reddit terms, is a score that the website gives that gauges their contributions to the Reddit community, so how often they post, how positive those posts are. And, you know, these folks - you know, the people who moderate 100,000 message boards on Reddit are doing it in an unpaid way. They're just very passionate about it. And so the company says they hope allowing Reddit users to have a chance to buy stock as part of this IPO will be their way of giving back to these power users that really have made Reddit exist for years and years now.

MARTIN: That is NPR's Bobby Allyn. Bobby, thank you.

ALLYN: Thanks, Michel. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Michel Martin is the weekend host of All Things Considered, where she draws on her deep reporting and interviewing experience to dig in to the week's news. Outside the studio, she has also hosted "Michel Martin: Going There," an ambitious live event series in collaboration with Member Stations.
Bobby Allyn is a business reporter at NPR based in San Francisco. He covers technology and how Silicon Valley's largest companies are transforming how we live and reshaping society.