On Reddit IPO

en | zh-hans

I only got around to reading Reddit’s S-1 today, with a primary focus on the platform’s internet metrics. So, some facts, as of the end of 2023:

Reddit’s growth strategy is built on three pillars: ads, data licensing, and user economy.

Ads #

The market size is estimated to be $1 trillion (excl. China and Russia), with an 8% CAGR, reaching $1.4 trillion in three years. Reddit also expects to have a share in the segmented search business ($750b by 2027).

The success of the ads business of internet companies at the end hinges on how accurately they can profile their users, and then convert this into leads. Generally, the wider the business reach / the larger the ecosystem, the more data is being accumulated, the more frequently ads banner are being updated real-time, and the more precise the profiling and strategies become (Take Alibaba as an example, from daily consumption to Fintech). Advertising is also a rapidly evolving sector with AI advancing, e.g. gaining insights from search histories, connecting dots between keywords for more precise labelling and recommendations etc.

Reddit values anonymity, but of course this remains at the user-to-user level, meaning users may not know who they’ve been talking to, but the ad system will still continue to label users’ demographics. Though users are allow to leave false info or blank profiles, or to turn off customised advertising altogether, their interactions within communities still exhibit certain behavioural patterns which belong to certain groups to be identified and labelled. This works the same across all content-driven algorithms / products (YouTube, TikTok, Instagram, etc.) while in contrast to the relationship / network-driven products like Facebook (though now they all try their best to adapt content-driven models). I know that Reddit relies on community communications / comments, but this is nothing like network-driven but rather a place full of primary and secondary information generation and distribution. Reddit firstly categorises users into different interest groups based on their interactions (read, reply, vote, comment…), then goes into subcategories (e.g. Food & Drink -> Cooking, for someone recently visiting r/gifrecipes), and layers on other dimensions like device and location.

In some ways, Reddit shares some similarities with Xiaohongshu (it’s an emerging social media platform for Chinese speakers, if you know, you know).

  1. Precisely label users by interests, and have high conversion rates
  2. Lots of human-generated useful content enough to be used as a second search engine

But their user personas are fundamentally different ever since their own beginning. Reddit’s appears somewhat young and financially capable, they usually take rather a long period of time to make purchasing decisions, which is very different from Xiaohongshu’s cause mostly of the time people go to Xiaohongshu to search what’s the best to buy.

In all, Reddit’s ads business and content-driven logic is sound, and the growth strategy mentioned in the S-1 are also solid. But they really need to be wary of:

  1. The not-so-good user profile (as mentioned earlier)
  2. User habits and the underlying growth slump:
    • Gen Z is no longer interested in texts: how do we increase user engagement (represented by the screen time spent on the platform) and the willingness to create contents (represented by posts’ recency)?
    • Users tend to enter the platform via search engines instead of Reddit’s own Explore page

Data Licensing and User Economy #

Relevant strategies and plans are briefly mentioned. My guess is that there would be 1) API for individuals and small businesses (roughly $0.24 per 1,000 API calls); 2) maybe some contracts with larger B2B businesses. They use the broader AI market for sizing which is estimated at $1 trillion by 2027. (quite conservative than I imagined)

The user economy model is rather familiar for us. 1) platform-based: subscription (existing Reddit Premium), digital goods (avatars, NFTs, etc.), some in-app purchasing (games); 2) commission-based: firstly led by incentivising content creation, and they could also adapt e-commerce by adding a user-to-user marketplace (no matter it is for selling digital or physical goods). This segment is estimated generously compared to other estimation, and the very unclear demand underlying, currently at $1.3 trillion and expected to reach $2.1 trillion by 2027.

In all, this IPO came too late as everyone’s attention has been shifting to short videos; the valuation is too optimistic, overestimating its main users’ purchasing power and willingness, and the scale and possibility of the user economy.

en | zh-hans


战略上给了三板斧:广告、数据授权、用户经济(User Economy)。

广告 #



Reddit匿名性(anonymity)的价值观停留在user-to-user和demo层面,网友之间可能不知道对方是个什么角色,但系统内还是会继续label用户的。用户可以选择不设置年龄性别这类硬标签,或者直接把整个个性化广告的开关关掉,但在社区上的interactions依然具有某些特定的行为习惯以供识别。所有内容算法为驱动的产品都是如此(YouTube、TikTok、Instagram等),对立面是Facebook为代表的人际关系驱动(当然现在我们知道大家都在往内容驱动做)。 虽然Reddit社区的核心是conversations/comments,但这显然不是一种有现实意义和强转化的关系,而是信息的二次传播和生产。 Reddit先根据用户阅读、回复或vote过的帖子,初筛用户到兴趣组里(或者从sub出发,sub也能打上兴趣标签),然后切二级(例如Food & Drink下的Cooking,一个最近访问过r/gifrecipes的用户就属于这个兴趣组),再layer上用户的device和location等等其他允许获取的特征。


  1. 兴趣标签精准、广告转化率比较高
  2. 足够多活人内容,具有往搜索引擎发展的内容资本



  1. 不太乐观的用户画像(如前述)
  2. 用户习惯以及习惯背后的增长颓势:
    • Gen Z越来越看不下去一点文字,还怎么提升engagement(以使用时长为代表)和内容生产意愿(以用户搜索结果列表中帖子的发表时间为代表)?
    • 最大的入口不是Reddit主站,而是搜索引擎,但搜索引擎都快自顾不暇了。

数据授权、用户经济 #

靠授权Reddit上的帖子用于AI/LLM训练,没细讲,大概就是对个人和小批量客户开API(Reddit自己大体估计的价格是在$0.24/1000次API调用的水平),大型to-B可能可以走contract之类的。市场规模用的是broader AI market,到27年$1万亿(估计得比想象中保守)。

用户经济的模式大家也比较喜闻乐见了,主要在平台自己做加法(订阅:现有的Reddit Premium;digital goods:头像挂件、比较geek的NFT之流;未来预期还有游戏什么的,就属于氪金增值了),或者激励内容创作、开放user-to-user marketplace等抽佣上,所以也能包括实体商品。这一块儿估计得很大,预计目前是$1.3万亿、27年$2.1万亿,但也是最虚的一块儿,看不到什么需求。


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