Will Reddit's IPO Be Successful?

1. 0:00 – 0:30

   Reddit files for IPO: valuation target, user scale, and a power-user share program

   1. KSKara Swisher0:00

      Reddit has filed to go public, finally. This will be the first major tech IPO of the year, and the first social media IPO since Pinterest in 2019, if you can believe it. The pa- the platform's bankers are looking for a valuation of at least $5 billion, not too big. It has 73 million daily active users and one of the most visited websites in the US. In an unusual move, Reddit will reportedly offer 75,000 power users the chance to buy shares at the IPO price. I think other companies have done similar things. First off, Reddit has been around since 2005.

2. 0:30 – 0:57

   Business model and controversy: ads dependency and data-licensing deal with Google

   1. KSKara Swisher0:30

      Um, this will be a test for IPOs in general. The adverti-... Their business is largely advertising, um, and, uh, now they just... There's been the... Probably the most controversial thing is this licensing, uh, data licensing agreement. They just announced a $60 million deal with Google last week, which I think people inside who use the company are not happy about. Um, so any thoughts? Talk to me, talk to me about this IPO.

3. 0:57 – 1:27

   IPO market “thaw”: bullish public markets and the hunt for a breakout deal

   1. SGScott Galloway0:57

      Well, uh, first off, everyone's sort of waiting for the market to thaw, the IPO market, and it probably is beginning, or the atmospherics are lining up just because of the acceleration in the markets. The markets are reaching new highs and NVIDIA has totally inspired... Kind of the animal spirits appear to be returning. And there's several IPOs lined up and everyone's waiting for one to really pop, whether it's gonna be Reddit or Shein, which is kind of the biggest now, the biggest fast fashion company in the world. I like Reddit a lot.

4. 1:27 – 1:52

   Reddit’s traffic rank as the bull case: “third most trafficked site in the US”

   1. SGScott Galloway1:27

      I actually think this IPO could be a, a real winner because, uh, I mean, the first thing I did is very basic. I type in "most trafficked sites in America." Number one is Google, number two is YouTube, number three, Reddit. And number-

   2. KSKara Swisher1:43

      Yeah, my kids use it.

   3. SGScott Galloway1:43

      ... and number four is Facebook, number five, Amazon, number six, Pornhub, number seven, Wikipedia-

   4. KSKara Swisher1:49

      Mm-hmm.

   5. SGScott Galloway1:49

      ... and number eight, Yahoo. And my attitude is-

5. 1:52 – 1:56

   A quick detour on rankings: Yahoo’s surprising placement and Twitter’s decline

   1. KSKara Swisher1:52

      Yahoo over Twitter? (laughs)

   2. SGScott Galloway1:53

      Isn't that crazy? I'm a shareholder in Yahoo.

   3. KSKara Swisher1:55

      No, Twitter's probably dead. Yeah.

6. 1:56 – 2:40

   Attention vs. ad dollars: why Reddit might be under-monetized relative to its reach

   1. SGScott Galloway1:56

      But my thesis around Yahoo is the same as my thesis around Reddit and that is, remember those charts they always used to put out 10, 15 years ago saying, "Newspapers command 7% of people's attention, but they get 18% of the advertising revenue, whereas the internet is 30% of people's attention-"

   2. KSKara Swisher2:13

      Mm-hmm. Yeah, I remember that.

   3. SGScott Galloway2:13

      "... but only 9% money."

   4. KSKara Swisher2:16

      Yeah.

   5. SGScott Galloway2:16

      And over time, the two calibrate-

   6. KSKara Swisher2:19

      It's shifting.

   7. SGScott Galloway2:19

      ... their two... They normalize. They come in line with each other.

   8. KSKara Swisher2:21

      Mm-hmm.

   9. SGScott Galloway2:22

      And so when you look at the most trafficked sites in the world, they are usually, you know, one plus trillion-dollar companies.

   10. KSKara Swisher2:29

       Mm-hmm.

   11. SGScott Galloway2:29

       And so this company is gonna go out supposedly at a valuation of five billion, and it's the third most trafficked site in the United States? Enough said.

   12. KSKara Swisher2:36

       Yes, it's a bargain.

   13. SGScott Galloway2:37

       They should be able to-

   14. KSKara Swisher2:38

       It's a bargain for potatoes.

   15. SGScott Galloway2:38

       ... they should be able to figure this out.

7. 2:40 – 2:51

   Monetization reality check: heavy ad reliance and vulnerability to ad market swings

   1. KSKara Swisher2:40

      They still rely on advertising quite a bit, like that, that... If you look at the numbers-

   2. SGScott Galloway2:43

      (laughs)

   3. KSKara Swisher2:43

      ... it's, it's a really heavy, uh... And so they're, they're subject to the vicissitudes of the market.

   4. SGScott Galloway2:48

      So does Meta.

   5. KSKara Swisher2:48

      I get it. I get it, but you're right. Um-

   6. SGScott Galloway2:49

      So does Google.

   7. KSKara Swisher2:50

      ... this is a very-

   8. SGScott Galloway2:50

      Alphabet's all advertising.

8. 2:51 – 3:13

   Platform governance and brand risk: moderation history and ‘shaggy dog’ identity

   1. KSKara Swisher2:51

      This is a, this is a much smaller company. Like, I've interviewed its CEO, Sam Hu- uh, I mean, um, uh, Steve Huffman quite a bit as... I like him. He's, he was really first on figuring out content moderation. They, of course, had a terrible back and... You know, around some really heinous sites there, um, on the site. Um, you know, it's always been a little bit of a shaggy dog of a social media site and very-

9. 3:13 – 3:28

   AI ‘spice’ and data licensing: the Google deal as a new narrative for growth

   1. SGScott Galloway3:13

      But they, they did this $60 million deal. They're, they're, they have-

   2. KSKara Swisher3:16

      Yeah, 60 million.

   3. SGScott Galloway3:16

      ... a little bit of that AI spice on their-

   4. KSKara Swisher3:19

      Yeah.

   5. SGScott Galloway3:19

      ... on their, you know, on their-

   6. KSKara Swisher3:21

      Yeah.

   7. SGScott Galloway3:21

      ... on their meal.

   8. KSKara Swisher3:22

      Yeah.

   9. SGScott Galloway3:22

      They got 60 million bucks. I think that's gonna go up, or they might take the content in-house. Th- this is their risk.

   10. KSKara Swisher3:28

       Yeah.

10. 3:28 – 3:40

    Avoiding the Snap/Pinterest trap: can Reddit translate traffic into durable growth?

    1. SGScott Galloway3:28

       They can't be Pinterest and Snap that have kind of gone sideways and always end up being the little engines that couldn't.

    2. KSKara Swisher3:34

       Yes, that's correct. That's what I was thinking. Yeah.

    3. SGScott Galloway3:35

       But if they, if they continue to be one of the most trafficked sites in the world, they can put an AI spin on this.

    4. KSKara Swisher3:40

       Mm-hmm.

11. 3:40 – 8:08

    Scott’s investing intent and the bigger signal: Reddit or Shein as an IPO market catalyst

    1. SGScott Galloway3:40

       At five bill- I mean, let me just be transparent. I'm gonna try and get stock in this thing.

    2. KSKara Swisher3:44

       Right.

    3. SGScott Galloway3:44

       I think this thing... I think this could be either Shein or Reddit are gonna set the IPO market on fire, I think.

    4. KSKara Swisher3:51

       Oh. Well, Shein is a, is a retailer though, of course, right? So

Episode duration: 7:56