A Pirate’s Guide To A Legendary IPO: How To Write An S-1 That Tells A Story Of A DIFFERENT Future
It takes courage to be DIFFERENT.
Dear Friend, Subscriber, and Category Pirate,
Reddit, the anonymous social networking site, recently announced a $700 million Series F fundraising round led by Fidelity Management, valuing the company at $10 billion. This is on the heels of a previous fundraising round of $410 million back in February, 2021, with all the puzzle pieces being put in order for an IPO.
Which is interesting, considering Reddit has long been treated as the outcast social platform—while its classmates (Facebook, Twitter, Snapchat, Instagram, and Pinterest) all achieved high-flying valuations more than a decade ago and, with the exception of Instagram (acquired by Facebook), successfully went public. Current Reddit CEO, Steve Huffman, even told the New York Times, “We’ve grown up in the shadow of Facebook and Google, and pretty much every dollar we make we’ve had to fight for.”
If anything, Reddit was the social platform many questioned would survive in the wake of Facebook’s algorithmic ad platform business model, Twitter’s dominance over short-form updates and public conversations, and Instagram/Snapchat’s sibling rivalry over photo and video-based features. In 2006, Condé Naste acquired Reddit for just $10 million, and Reddit Co-founder, Alexis Ohanian didn’t return to the company until almost a decade later, taking on the position of Executive Chairman. That year (2014), the company raised $50 million at a $500 million valuation on the vision of incorporating cryptocurrencies into the platform and giving the Reddit community participation in 10% of the round’s equity.
So, how did Reddit go from being sold for $10 million to now being valued at $10 billion with a clear path to an IPO?
The company started telling a story of a DIFFERENT future. One where memes drive trading activity, niche communities buy and sell NFTs (non-fungible tokens), and cryptocurrencies are at the heart of anonymous communications and incentives.
When Reddit calls itself “a social forum,” it’s valued in the context of Facebook, Twitter, etc. (aka: it is undervalued).
But when Reddit changes its category design, and starts telling a DIFFERENT story of what the future of social networking and media will look like in an anonymous, cryptographic digital economy, it gets valued at $10 billion. (Tomato, tomahto.)
This is the power of Category Design + Languaging—and why the words you use when you write your S-1 (legal documents you file with the U.S. government before you can IPO) will exponentially change the value of your company.