OpenAI CEO Sam Altman stands to net millions as Reddit goes public
- OpenAI's Sam Altman has invested at least $60 million in Reddit shares and controls 9.2% of voting power at the online messaging board company.
- Altman said in 2014 that he had been a daily user of the site for nine years.
- He sat on the company's board in 2021 but no longer does. Now Reddit sees OpenAI's ChatGPT as competition.
OpenAI CEO Sam Altman will be in a position to make millions after Reddit goes public, thanks to a series of bets on the online discussion board company that go back to 2014. Altman holds 9.2% of voting power ahead of Reddit's initial public offering, according to information in the company's prospectus.
Altman, who is now reportedly keen to raise trillions for chip development that could help meet Microsoft-backed OpenAI's artificial intelligence computing demand, has invested in dozens of startups over the years. That includes Asana, which hit the New York Stock Exchange in 2020, and Instacart, which debuted on the Nasdaq in September. Before OpenAI launched in 2015, Altman was president of Silicon Valley accelerator Y Combinator, giving him exposure to many small companies.
In 2014 Altman led Reddit's $50 million Series B funding round, after using the service every day for nine years, he wrote in a blog post.
"reddit is an example of something that started out looking like a silly toy for wasting time and has become something very interesting," he wrote. "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."
In the first half of 2021, Reddit was raising a Series E round, and Altman invested $50 million.
Then, in the second half of the year, Altman sunk another $10 million into Reddit, as the company raised some $512 million in funding. By that point, Altman's $50 million investment from earlier in the year was up 45% in value.
The shares of Reddit's Class A and Class B stock are spread across five different entities, and they will give Altman more shares than even CEO Steve Huffman, according to Thursday's filing. Reddit has not yet told investors how many Class A shares it plans to sell in the IPO.
Altman sat on Reddit's board as recently as 2021, according to the filing. Reddit said in January 2022 that he had recently stepped down.
"Sam was an incredible board member and provided invaluable support and counsel to Reddit and myself over the years," Huffman was quoted as saying at the time. "We're deeply grateful for the impact he made on the company."
Now Altman is trying to increase adoption of OpenAI's services, including the popular ChatGPT chatbot. Reddit said in its filing that it sees competition from large language models that can produce human-like text in response to a few words of written input. Among the LLMs listed are Google's Gemini, startup Anthropic and ChatGPT.
As part of the IPO, Reddit will offer shares to some of its users and moderators, known colloquially as Redditors. For Altman, that's likely to be a positive.
"It's always bothered me that users create so much of the value of sites like reddit but don't own any of it," he wrote in his 2014 blog post.
He went on to say that investors in the Series B round would give 10% of shares to Reddit users.
"I hope we increase community ownership over time," he wrote.
WATCH: Reddit is a litmus test for investor appetite for non-AI things, says FirstMark's Heitzmann
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