OpenAI’s CEO, Sam Altman, stands poised to reap substantial financial gains following Reddit’s public debut, thanks to a strategic sequence of investments in the online forum platform dating back to 2014. As revealed in the company’s prospectus, Altman commands a significant 9.2% of the voting power as Reddit prepares for its initial public offering (IPO).
Altman, whose current focus reportedly revolves around mobilizing significant funds for chip development aimed at addressing the escalating artificial intelligence computing needs of Microsoft-supported OpenAI, has consistently diversified his investment portfolio across numerous startups over the years.
Notable among these are Asana, which made its debut on the New York Stock Exchange in 2020, and Instacart, which entered the Nasdaq market in September of another year. Preceding his involvement with OpenAI’s inception in 2015, Altman held the position of president at Silicon Valley accelerator Y Combinator, granting him exposure to a plethora of burgeoning enterprises.
In 2014, Altman spearheaded Reddit’s $50 million Series B funding round, a decision fueled by his nine-year daily engagement with the platform, as he recounted in a blog post. Reflecting on Reddit’s evolution, he remarked, “Reddit is an example of something that started out looking like a silly toy for wasting time and has become something very interesting. It’s been an important community for me over the years—I can find like-minded people that I can’t always find in the real world.”
During the initial half of 2021, Reddit commenced another fundraising endeavor with a Series E round, during which Altman injected $50 million. Later in the same year, Altman further bolstered his support for Reddit with an additional $10 million investment, coinciding with the company’s successful accumulation of $512 million in funding. By this juncture, Altman’s earlier $50 million investment had accrued a noteworthy 45% increase in value.
Thursday’s filing disclosed that the allocation of Reddit’s Class A and Class B stock spans across five distinct entities, positioning Altman to command a larger shareholding than even CEO Steve Huffman. Notably absent from the filing was Reddit’s disclosure regarding the quantity of Class A shares earmarked for sale during the IPO.
Until 2021, Altman retained a seat on Reddit’s board, as attested by the filing. Reddit confirmed in January 2022 that Altman had recently relinquished this position, prompting Huffman to express gratitude for Altman’s invaluable contributions: “Sam was an incredible board member and provided invaluable support and counsel to Reddit and myself over the years. We’re deeply grateful for the impact he made on the company.”
Presently, Altman’s focus lies in amplifying the adoption of OpenAI’s offerings, which include the widely popular ChatGPT chatbot. Reddit acknowledged in its filing the emergence of competition from expansive language models capable of generating human-like text in response to minimal written input.
Notable contenders in this domain include Google’s Gemini, startup Anthropic, and ChatGPT. In tandem with its IPO, Reddit plans to extend share offerings to select users and moderators, affectionately dubbed as Redditors. For Altman, this development is likely viewed favorably.
Expressing his sentiment in a 2014 blog post, Altman lamented the discrepancy between user-generated value and ownership rights, stating, “It’s always bothered me that users create so much of the value of sites like Reddit but don’t own any of it.”
Notably, Altman pledged in the same post that investors participating in the Series B round would allocate 10% of shares to Reddit users, indicating his aspiration for heightened community ownership over time.
