Plan improves investor confidence – selling data to train AI is extremely profitable

Reddit Inc. getting its artificial intelligence story right was a big part of a successful listing day on Thursday. Shares gained 48% on the social platform's trading debut from its $34 initial public offering price. Now the communities, forum-based platform has to go out and prove that selling user data to AI companies is a viable business. The basic pitch is that Reddit's going to grow 20% a year, in part by licensing its users’ data to builders of large language models. Those LLMs are the very large neural networks that are trained using massive amounts of text and data, including e-books, news articles and websites like Wikipedia. That plan could work because Reddit has exactly that — lots of text. And investors like the idea of selling that data because it will supplement a longer-standing, but still young advertising business that helped Reddit post $800 million in sales last year, although the company reported a net loss of $91 million. “There's the new emerging market of AI, where large language models need data to train on,” Reddit's Chief Operating Officer Jen Wong told me on Bloomberg Technology. “And when you look at Reddit's corpus, 19 years of human experience organized by topic with moderation and relevance, that's incredibly important to building both the chat capability and the freshness of information.”