Back in November, Crunchbase released a list of 257 potential IPO candidates in 2024. I thought it’d be a fun challenge to analyze a few startups on the list, including their recent performance, projected future performance, and implications of an IPO.
1. Reddit
Reddit went public last week on March 21, and its share price popped after listing (from $34 to ~$55). This almost reminds me of the 2021-22 era of tech IPOs, with companies like Rivian ($RIVN) and Gitlab ($GTLB) jumping 55% and 35% on their listing debuts. But we’ll see if this becomes a legitimate trend for tech IPOs in 2024.
There’s a lot of great existing commentary on the Reddit IPO. Some interesting ideas to consider:
Reddit’s positioning as a “community-based, non-commercial space” will likely be challenged by the IPO (Financial Times)
This could be due to heightened public scrutiny, pressure to restrict certain speech/content, and their attempts to become more profitable
This is a very hype-driven IPO, and Reddit’s market cap could be unsustainable and volatile
“AI” was mentioned in Reddit’s 2021 prospectus just once, while their 2024 prospectus mentions AI >60 times (lol)
Up to 8% of Reddit’s total offering is going to Reddit employees, Reddit users, board members, and “friends-and-family,” none of whom are bound by a lock-up agreement. This means they can sell as soon as they want with minimal penalty, setting Reddit up for extreme volatility (great explanation by AP here)
And here are some of my anecdotal opinions on Reddit:
I think Reddit is in moderate danger of competitors taking market share. The danger is only moderate because they’re already so established in their niche of community-driven, 99% anonymous content. Reddit functions as both a general knowledge base and a constantly updating newsfeed, so it’s hard to see Reddit losing users that almost NEED to access its content (indeed, they had 850M monthly active users in 2023, more than a 10x leap from their 70M in 2013).
However, I think Reddit should be worried about some social media newcomers. Most notable is the startup Fizz, which raised a $25M Series B in August. Fizz (previously known as “Buzz,” if you know you know) functions like a college-specific subreddit. It’s anonymous and lets users post about anything they want, providing the main thing missing from a post-COVID and high-screentime society: a sense of belonging.
In theory, Reddit should have been able to capture this, but Fizz did a couple things better. First, they verify users so that only students can join their college’s Fizz group (this already solidifies the “community” feeling). Fizz also has an exceptional UI, letting users categorize their posts as PSAs, Shoutouts, Confessions, and more, while organizing the app by Hot posts and New posts (in my opinion, it strikes a perfect balance between clean/modern and colorful/stimulating).
Even though Fizz likely hasn’t had a dramatic impact on Reddit usage (in fact, the Fizz/Reddit user overlap may not be that solid), the success of Fizz exposes a dearth of something (hyper-specificity? good app design? young generation appeal?) in Reddit.
Reddit also needs to figure out the future of their UI. When they decimated the existence of third-party apps like Apollo, it was probably a sound business decision, but Reddit is a MUCH worse user experience (slower and uglier) than Apollo. Anecdotally, Reddit usage on my phone was cut by ~90% when Apollo had to shut down—Reddit’s app is simply that much worse.
Overall, it’s clear that Reddit isn’t going away anytime soon, and it’ll be an amazing case study for how going public affects a social media company. But I hope that competition from social media startups places some pressure on Reddit to improve their product.
2. Airtable
In my experience, Airtable is the spreadsheet/database combo of choice for many startups. They also do a good job marketing themselves as a “no code” solution that has features you won’t find in Excel and Google Sheets.
But it’s also kind of funny to think about a spreadsheet company going public at Airtable’s Series F $12B valuation. I guess if a company like DocuSign can be a $12B company with a P/E ratio of 162, then Airtable deserves a chance too.
Airtable’s ARR and ARR growth are really impressive (see below), but their growth is obviously expected to decline and/or stabilize in the coming years.
The difficult thing for Airtable is that as they start targeting bigger contracts and bigger clients, they’re going to feel the rigidity of human behavior. A lot of large companies are just not going to use Airtable when they could combine Excel + Teams + ChatGPT for a similar-ish result. And convincing bureaucratic teams to make such a dramatic switch seems near impossible to me, especially if those teams need to build financial models. But Airtable can definitely prove me wrong!
3. Discord
I’m happy that Discord is so successful, and I use it almost everyday. Discord is also a popular way for startups to build a community now (e.g., Kalshi with ~2000 members and the now-acquired Fig.io with ~13,000 members), so it’s handily moved past its gamers-only niche.
With that said, I’m worried that Discord’s growth and product could be downhill from here:
Highly successful, non-gaming use cases are NOT actual revenue drivers for Discord (hence the Discord CEO saying they want to re-focus on their gaming roots). This means a lot of the time spent on Discord is virtually impossible to monetize.
Discord’s recent feature additions haven’t been a resounding success:
They shut down their games store in 2019
Their creator subscription program will likely never reach mainstream success like the Patreon, OnlyFans, etc. products before them
The new Discord Quests feature seems promising, but it will probably go under-the-radar (unless they reach Prime Gaming levels of giving away free stuff)
In terms of how these factors will affect Discord’s share price in an IPO, it’s unclear, but I’m personally going to be mildly bearish on Discord long-term (10+ year).
Conclusion
I might do a part 2 of this article, just as an excuse to explore more companies I’m less familiar with. Let me know what you thought about this article and any points that you agreed/disagreed with.