WEBVTT 1 00:00:07.745 --> 00:00:11.535 Hello and welcome to this film which is devoted to Reddit, 2 00:00:12.115 --> 00:00:15.335 the recent and successful IPO of Reddit, 3 00:00:15.895 --> 00:00:18.055 a quite well-known social network. 4 00:00:19.395 --> 00:00:24.375 Now, IPO, you know, a MAI will tell you in a few minutes, 5 00:00:25.355 --> 00:00:26.935 the IPO is really a success. 6 00:00:26.995 --> 00:00:30.575 It happened a few weeks ago in March, 2024. 7 00:00:31.275 --> 00:00:33.135 The range which was considered 8 00:00:33.195 --> 00:00:35.615 for the offered price was 31 to 34. 9 00:00:36.035 --> 00:00:38.735 The top of the range was selected 34, 10 00:00:38.795 --> 00:00:40.215 and it was absolutely right 11 00:00:40.215 --> 00:00:43.695 because the opening price was $47 12 00:00:44.155 --> 00:00:49.135 during the same day it went to to a high of 57.8 13 00:00:49.555 --> 00:00:52.055 and then stabilize at about $50. 14 00:00:52.225 --> 00:00:56.015 50 plus as a closing price for the first day of the listing 15 00:00:56.955 --> 00:00:58.095 is definitely a success. 16 00:00:58.095 --> 00:01:03.055 Then it stabilized to 50, went up to 70, 75, went down 17 00:01:03.055 --> 00:01:04.815 to 50 and stabilized again, 18 00:01:04.815 --> 00:01:06.975 and today it's approximately $50. 19 00:01:07.715 --> 00:01:10.815 So if you observe the evolution during these last days, 20 00:01:11.225 --> 00:01:13.815 again 50 a little bit up, 21 00:01:14.025 --> 00:01:18.575 which quite significant volume we'll get back to this point. 22 00:01:19.175 --> 00:01:24.015 Stabilization went down, down and up to 50 at $50 per share. 23 00:01:24.235 --> 00:01:28.255 The market capitalization of the company is $8 billion, 24 00:01:28.825 --> 00:01:30.415 which is quite interesting, 25 00:01:30.715 --> 00:01:34.775 but which has to be compared with their premo valuations 26 00:01:34.795 --> 00:01:39.535 of the VC round because 8 billion is a value. 27 00:01:40.025 --> 00:01:44.295 There was a brief stint at 75 which brought the value up 28 00:01:44.295 --> 00:01:45.375 to 12 billion, 29 00:01:45.995 --> 00:01:48.695 but how does it compare with the pre money valuation 30 00:01:48.695 --> 00:01:51.055 of series A, B, C, et cetera, et cetera. 31 00:01:51.895 --> 00:01:56.555 Thanks to Crunchbase, we have all the details of the years, 32 00:01:57.055 --> 00:02:01.555 the amounts and the primo valuation started as far 33 00:02:01.555 --> 00:02:04.475 as VC is concerned in 2012, 34 00:02:04.815 --> 00:02:07.635 but the first round is absolutely negligible. 35 00:02:07.975 --> 00:02:11.755 $1 million for primo valuation, which is 400,000. 36 00:02:12.375 --> 00:02:17.355 The interesting one takes place in 2014 is series B. 37 00:02:17.745 --> 00:02:21.195 $15 million are raised by the company out 38 00:02:21.195 --> 00:02:24.795 of a premium evaluation, which is 450 million. 39 00:02:25.625 --> 00:02:29.395 Imagine that 10 years ago you bought the shares. 40 00:02:29.655 --> 00:02:32.355 Now the value is almost 20 times as well. 41 00:02:32.385 --> 00:02:34.715 This is a very nice multiple, 42 00:02:35.015 --> 00:02:37.835 but when you start moving from B2C, 43 00:02:38.305 --> 00:02:41.155 then the story looks a little bit less attractive. 44 00:02:41.975 --> 00:02:46.315 In 2017, the primo valuation is 1.6 billion. 45 00:02:47.005 --> 00:02:48.675 Today the value is 8 billion, 46 00:02:48.735 --> 00:02:52.035 so it's five times it's reasonable, but it's not outstanding 47 00:02:52.575 --> 00:02:54.675 and $200 million are raised 48 00:02:55.215 --> 00:02:59.165 20 19, 2 0.7 then so, so, 49 00:02:59.705 --> 00:03:02.165 and if you look at what happened in 2021, 50 00:03:02.355 --> 00:03:06.045 it's absolutely mind blowing in February this year, 51 00:03:06.445 --> 00:03:10.445 companies raising 360 million out of a premium evaluation 52 00:03:10.445 --> 00:03:13.325 of 6 billion a few months later in August. 53 00:03:13.325 --> 00:03:18.285 Premium evaluation is no more 6 billion, but 9.6 billion. 54 00:03:19.195 --> 00:03:22.325 Then when you compare that with the market cap today, 55 00:03:22.825 --> 00:03:24.605 if the market cap is 8 billion 56 00:03:24.785 --> 00:03:26.845 and you have invested at a primo valuation, 57 00:03:26.845 --> 00:03:29.405 which was 6 billion, it's just breakeven. 58 00:03:30.105 --> 00:03:33.725 If you invested at a primo valuation, which is 9.6 billion, 59 00:03:33.915 --> 00:03:35.165 it's value destruction 60 00:03:36.265 --> 00:03:40.525 unless you saw when the market cap was about 12 billion 61 00:03:40.825 --> 00:03:42.285 during a few hours. 62 00:03:43.345 --> 00:03:44.685 That's an interesting point. 63 00:03:45.505 --> 00:03:49.605 Now why are these primo evaluation going up so dramatically? 64 00:03:49.905 --> 00:03:51.805 You? You look at the evolution of firms raised 65 00:03:51.905 --> 00:03:55.325 by the venture capital in the United States, you observed 66 00:03:55.325 --> 00:03:58.325 that there was an increase in the amounts, 67 00:03:58.385 --> 00:04:02.885 but in 2021 it's $250 billion, 68 00:04:03.055 --> 00:04:06.045 which is twice as much as the year 69 00:04:06.065 --> 00:04:09.285 before when it was 120 something. 70 00:04:09.985 --> 00:04:13.045 You understand that there is too much money when too much 71 00:04:13.125 --> 00:04:15.645 money is available, there is an increase in the prices. 72 00:04:16.035 --> 00:04:18.605 It's just a kind of inflation by the way, 73 00:04:19.145 --> 00:04:22.125 and then prices are absolutely not correlated 74 00:04:22.155 --> 00:04:25.085 with the value anymore, which is exactly what happened 75 00:04:25.085 --> 00:04:27.445 to Reddit series E and F 76 00:04:27.625 --> 00:04:29.685 and which what happened to a number 77 00:04:29.705 --> 00:04:31.165 of companies at the same time. 78 00:04:33.005 --> 00:04:35.665 Now, let's go back to the IPO on the amounts. 79 00:04:35.665 --> 00:04:38.945 The amounts which were exchanged were 715 million, 80 00:04:39.285 --> 00:04:43.385 20 million shares were offered to the public but not issued. 81 00:04:44.095 --> 00:04:46.905 Only 15.3 million shares were issued. 82 00:04:46.965 --> 00:04:50.145 So new shares, fresh cash for the company, which is going 83 00:04:50.425 --> 00:04:53.625 to collect 500 and something million dollars, 84 00:04:54.285 --> 00:04:57.425 but 6.7 million shares were held by investors 85 00:04:57.965 --> 00:05:00.385 or private, they were sold to the public. 86 00:05:00.855 --> 00:05:02.825 It's about $230 million 87 00:05:03.245 --> 00:05:06.065 but not a penny for the company as it is. 88 00:05:06.435 --> 00:05:07.905 Let's go back to Reddit 89 00:05:07.925 --> 00:05:12.105 and the story of the companies company is created in 2005. 90 00:05:12.965 --> 00:05:15.625 The company at that time is welcome 91 00:05:16.005 --> 00:05:19.505 by a very well known accelerator whose name is Y 92 00:05:19.505 --> 00:05:21.185 Combinator, co-founders. 93 00:05:21.605 --> 00:05:25.145 For them the leaders, the CEO is Steve Huffman 94 00:05:25.715 --> 00:05:27.145 today is the CEO of the company. 95 00:05:27.685 --> 00:05:31.705 But I tell you the story in between and it's a big forum. 96 00:05:32.095 --> 00:05:35.305 Anybody can give opinions about et cetera 97 00:05:35.445 --> 00:05:37.705 and people can have access to the public 98 00:05:37.765 --> 00:05:39.505 and say, ask me any question 99 00:05:39.765 --> 00:05:42.385 and this is the meaning of um, ask me any question, 100 00:05:42.565 --> 00:05:44.225 I'm available and I will give you answers. 101 00:05:45.165 --> 00:05:48.225 In 2012, the most well known 102 00:05:48.525 --> 00:05:51.025 and publicized am uh, in the story 103 00:05:51.025 --> 00:05:54.465 of Reddit is I am Barack Obama, I'm the president 104 00:05:54.465 --> 00:05:57.025 of the United States, and guys, you have 30 minutes 105 00:05:57.105 --> 00:05:58.965 to ask me any question you want. 106 00:05:59.515 --> 00:06:01.565 It's not that true that he gave all the answers, 107 00:06:01.945 --> 00:06:03.485 but basically was available 108 00:06:03.545 --> 00:06:06.925 during 30 minutes on the social network, which is 109 00:06:07.485 --> 00:06:09.685 a moment in the history of the company. 110 00:06:10.345 --> 00:06:13.245 At the very beginning, there was just one unique forum on 111 00:06:13.315 --> 00:06:15.145 community, but 112 00:06:15.395 --> 00:06:19.025 after a few years of operations, the company decided 113 00:06:19.165 --> 00:06:22.905 to offer the possibility to create sub forums, 114 00:06:23.165 --> 00:06:26.025 sub communities, which were named subreddits, 115 00:06:26.725 --> 00:06:29.385 and these subreddits were addressing any kind 116 00:06:29.385 --> 00:06:33.385 of subject you can imagine was about science, about arts, 117 00:06:33.875 --> 00:06:38.345 about capital markets among the most publicized subreddits, 118 00:06:38.435 --> 00:06:41.265 definitely there is Wall Street bets 119 00:06:41.765 --> 00:06:44.145 or slash Wall Street bets 120 00:06:44.175 --> 00:06:46.785 because it's how you name a subreddit. 121 00:06:47.805 --> 00:06:52.745 In 2021, there was a short selling moment on GameStop. 122 00:06:52.905 --> 00:06:56.465 GameStop was absolutely not a star on capital market, 123 00:06:56.965 --> 00:06:59.225 but Cyclone Research tried 124 00:06:59.225 --> 00:07:01.705 to do some short selling on GameStop. 125 00:07:02.095 --> 00:07:03.545 What does it mean short selling? 126 00:07:03.805 --> 00:07:07.665 You borrow the shares, you sell the shares, you send rumors, 127 00:07:07.925 --> 00:07:10.905 the stock price is down, you buy the shares, 128 00:07:10.905 --> 00:07:12.665 you give them back and you make a profit. 129 00:07:13.385 --> 00:07:17.865 Cyron research, you remember there is a video on ju, 130 00:07:18.245 --> 00:07:20.425 the e-commerce site in Africa. 131 00:07:21.145 --> 00:07:24.865 Cyron research did short selling on ju, so this is the job 132 00:07:24.885 --> 00:07:27.665 of this kind of people and sometimes they are 133 00:07:27.715 --> 00:07:29.025 quite irritating. 134 00:07:29.135 --> 00:07:30.665 Some people were irritated 135 00:07:30.725 --> 00:07:33.665 and then decided to counter attack 136 00:07:33.855 --> 00:07:35.625 against this short selling. 137 00:07:36.715 --> 00:07:39.115 Interestingly, the transaction volume on 138 00:07:39.115 --> 00:07:40.755 GameStop is not that big. 139 00:07:41.495 --> 00:07:43.395 So the day you want to increase the price, 140 00:07:43.415 --> 00:07:48.395 you do some massive buy and then the price is skyrocketing. 141 00:07:48.455 --> 00:07:51.355 And for the short seller it's absolutely dramatic. 142 00:07:52.025 --> 00:07:55.795 This is exactly what the community did on GameStop 143 00:07:55.975 --> 00:07:57.275 and Cyclone Research. 144 00:07:57.665 --> 00:08:00.155 Lost a lot of money with the help of 145 00:08:01.295 --> 00:08:02.635 on this slide, what do you see? 146 00:08:02.635 --> 00:08:06.915 You see the better of our slash Wall Street beds. 147 00:08:07.055 --> 00:08:10.975 You see, Sam had men, we understand why you see the bear, 148 00:08:10.975 --> 00:08:13.455 you see the bull, you see the federal reserves and so on 149 00:08:13.455 --> 00:08:16.255 and so forth, and you see the headlines of CNBC. 150 00:08:16.735 --> 00:08:18.255 GameStop jumps out their house 151 00:08:18.715 --> 00:08:22.935 as Elon Musk tweets out Reddi board, that's Highing stock 152 00:08:23.645 --> 00:08:25.945 and throughout the end of the day, El Musk said, oh yes, 153 00:08:26.165 --> 00:08:28.145 I'm going to buy stocks and so on and so forth. 154 00:08:28.565 --> 00:08:29.945 The price skyrocketed 155 00:08:29.945 --> 00:08:32.305 and Citron research lost a lot of money. 156 00:08:33.345 --> 00:08:36.675 That the kind of job you can do with uh, subreddit 157 00:08:36.675 --> 00:08:37.795 with the communities. 158 00:08:38.185 --> 00:08:42.075 Sometimes you see curious things on this uh, communities. 159 00:08:42.985 --> 00:08:45.635 Here there is a comment made by somebody, 160 00:08:45.635 --> 00:08:46.755 it was deleted later, 161 00:08:46.975 --> 00:08:51.595 but oh, I bought 27,000 shares at Seven 162 00:08:51.855 --> 00:08:55.285 Boy et cetera, so which is about $200,000 163 00:08:55.785 --> 00:09:00.045 and now the market value of my holding is 5.9 million. 164 00:09:00.585 --> 00:09:03.965 So I made a 5.7 million capital gain, 165 00:09:04.175 --> 00:09:05.765 which is absolutely great. 166 00:09:05.835 --> 00:09:09.245 This is my, whilst this is my money, okay, 167 00:09:09.705 --> 00:09:13.165 but when you divide $5.7 million 168 00:09:13.425 --> 00:09:18.165 by 27,000 shares, you get 200 something dollars per share 169 00:09:18.625 --> 00:09:22.445 and the highest price for GameStop was about 87. 170 00:09:23.025 --> 00:09:26.725 So this is just bluff, this is fake news, this is b******t. 171 00:09:26.795 --> 00:09:29.885 This is what you can find sometimes on social networks. 172 00:09:30.815 --> 00:09:33.205 Let's go back a minute on Wall Street Bet 173 00:09:33.425 --> 00:09:35.485 who created Wall Street bets. 174 00:09:35.565 --> 00:09:36.645 A gentleman whose name is Mr. 175 00:09:37.165 --> 00:09:41.165 Ro Kozinski and he said, I created, I'm the owner read. 176 00:09:41.165 --> 00:09:42.525 He said, no, you are not the owner. 177 00:09:42.745 --> 00:09:45.645 He said, I'm the owner because I created as I created, 178 00:09:45.925 --> 00:09:48.005 I want to get the intellectual property out of that. 179 00:09:48.475 --> 00:09:51.565 Then they started fighting Rozin KY 180 00:09:51.635 --> 00:09:52.965 brought Reddi to the court. 181 00:09:53.015 --> 00:09:55.085 Reddi brought Rosinski to the court. 182 00:09:55.085 --> 00:09:57.845 It was about one year ago and we'll see what's moving on. 183 00:09:58.385 --> 00:10:01.285 But that's quite interesting to observe this kind 184 00:10:01.285 --> 00:10:02.965 of behavior on social networks. 185 00:10:03.345 --> 00:10:05.085 The company is created in 2005 186 00:10:05.385 --> 00:10:08.525 and it's going to be acquired by the New House family 187 00:10:09.315 --> 00:10:12.805 Advance Magazine publishers in 2006. 188 00:10:13.745 --> 00:10:16.405 The New House family holds a number 189 00:10:16.625 --> 00:10:18.325 of quite interesting companies 190 00:10:18.325 --> 00:10:20.885 and sub holdings including Conde Nast, 191 00:10:21.025 --> 00:10:22.645 the company which was created by Mr. 192 00:10:22.935 --> 00:10:27.205 Conde Nast, in which you have plenty of fantastic titles. 193 00:10:27.885 --> 00:10:32.645 Vogue and our Win tour is uh, artistic director of Vogue 194 00:10:32.785 --> 00:10:34.005 and of Conde Nast 195 00:10:34.025 --> 00:10:36.685 and if you remember a very well known film, 196 00:10:36.825 --> 00:10:39.125 you understand the relationship with Prada. 197 00:10:39.585 --> 00:10:40.805 How much did they pay for? 198 00:10:40.805 --> 00:10:42.285 Already about $10 million, 199 00:10:42.905 --> 00:10:46.645 but in 2011 they decided to spin off 200 00:10:47.145 --> 00:10:50.765 to allow the company to move to be a little bit more free 201 00:10:51.305 --> 00:10:55.135 and to develop, but they kept the number of shares 202 00:10:55.355 --> 00:10:59.735 and the company the family stayed owes 30% of the shares, 203 00:10:59.735 --> 00:11:01.615 30% multiplied by 8 billion. 204 00:11:01.965 --> 00:11:05.855 It's about $2.4 billion out of an investment 205 00:11:06.075 --> 00:11:07.415 of $10 million. 206 00:11:07.485 --> 00:11:09.935 It's a very decent return investment. 207 00:11:10.345 --> 00:11:14.375 Maybe you remember that Steve Jobs bought a 51% 208 00:11:14.835 --> 00:11:18.255 of the shares held by George Lucas in a promising company, 209 00:11:18.255 --> 00:11:22.095 which was renamed Pixar at Pixar, was sold to Disney 210 00:11:22.315 --> 00:11:26.095 for 4.5, 4.6 uh billion dollars 211 00:11:26.475 --> 00:11:29.335 and Steve Jobs still had 51% of the share. 212 00:11:29.525 --> 00:11:31.695 It's about the same kind of return investment, 213 00:11:31.785 --> 00:11:33.095 which is quite okay. 214 00:11:33.945 --> 00:11:36.855 Let's move on with the story. Now we are no more in 2006. 215 00:11:36.855 --> 00:11:38.335 We are in 2014 216 00:11:38.475 --> 00:11:42.735 and then there is a very interesting series B fundraising. 217 00:11:43.305 --> 00:11:45.295 $50 million are going to be raised. 218 00:11:45.515 --> 00:11:49.655 The premium evaluation is 450 million. 219 00:11:50.755 --> 00:11:55.045 There are a few institutions which are going to participate, 220 00:11:55.345 --> 00:11:56.845 but they're also private people 221 00:11:57.105 --> 00:12:00.325 and the lean investor is a gentleman you all know his name 222 00:12:00.325 --> 00:12:03.805 is Sam Altman at that time he is the president of 223 00:12:04.405 --> 00:12:08.005 Y Combinator and he's going to be a member of the board 224 00:12:08.005 --> 00:12:12.805 of directors of Reddit from 2015 to 2022. 225 00:12:13.305 --> 00:12:14.685 So very recently, 226 00:12:14.785 --> 00:12:18.565 and remember the 2022, it's just so important Now 227 00:12:18.625 --> 00:12:19.885 how many shares are held 228 00:12:20.105 --> 00:12:24.365 by Sam Altman about 800,000 A shares. 229 00:12:24.755 --> 00:12:26.925 I'll discuss A versus B in a few minutes 230 00:12:27.225 --> 00:12:29.765 and 11 million of B shares. 231 00:12:30.185 --> 00:12:34.285 You multiply that by $50 and you get about $600 million. 232 00:12:34.905 --> 00:12:38.405 So it's quite an interesting return investment also for Mr. 233 00:12:38.985 --> 00:12:42.805 Lerner. Now if you want to discuss the relevance of an IPO 234 00:12:42.805 --> 00:12:45.525 of the listing of a company, you have to relate that 235 00:12:45.525 --> 00:12:47.205 with the financial metrics of the company. 236 00:12:48.105 --> 00:12:50.885 Top line revenues, turnover, okay, 237 00:12:51.265 --> 00:12:54.965 but revenues by geographical zone North America 238 00:12:54.965 --> 00:12:56.285 versus as the rest of the world. 239 00:12:56.745 --> 00:12:59.085 You transform revenues into operating profit, 240 00:12:59.355 --> 00:13:01.125 deducting the operational cost. 241 00:13:01.675 --> 00:13:04.685 Then you can discuss cash, operating costs, cash, 242 00:13:04.685 --> 00:13:06.605 operating revenues, ebitda, 243 00:13:07.105 --> 00:13:10.445 and when you deduct capital expenditures you get the free 244 00:13:10.515 --> 00:13:13.525 cash flow, which is supposedly the value of the company. 245 00:13:14.275 --> 00:13:15.485 What about the top line? 246 00:13:16.135 --> 00:13:19.445 There are 100,000 plus active 247 00:13:20.095 --> 00:13:21.685 subreddits communities. 248 00:13:22.225 --> 00:13:26.285 How many people are visiting the communities on the average 249 00:13:26.865 --> 00:13:30.245 on a regular basis it's about 73 million people. 250 00:13:30.345 --> 00:13:35.005 So it's quite the number of communities sharing questions 251 00:13:35.025 --> 00:13:36.965 and answers and souls 252 00:13:37.345 --> 00:13:39.365 and people visiting so 253 00:13:39.365 --> 00:13:42.285 that you can have data on how they behave. 254 00:13:43.165 --> 00:13:47.445 Interestingly, the number of active users is equally shared 255 00:13:47.755 --> 00:13:49.885 between North America and the rest of the world. 256 00:13:50.185 --> 00:13:52.925 It was a case about three years ago. It's a case today. 257 00:13:53.505 --> 00:13:55.285 In the meantime, uh, rest 258 00:13:55.285 --> 00:13:58.285 of the world was a bit more than United States and Canada 259 00:13:58.345 --> 00:14:00.045 and North America, but interestingly, 260 00:14:00.045 --> 00:14:03.605 if you look at the last quarter, there is a very significant 261 00:14:04.205 --> 00:14:07.085 increase in the number of users in North America, 262 00:14:07.335 --> 00:14:09.965 which has a huge impact on the top line 263 00:14:10.805 --> 00:14:13.615 because a number of users is going to be multiplied 264 00:14:13.635 --> 00:14:15.415 by the average revenue per user 265 00:14:16.195 --> 00:14:19.215 and if you observe what happens in United States 266 00:14:19.275 --> 00:14:21.775 and Canada as opposed to the rest of the world, 267 00:14:22.005 --> 00:14:23.495 then there's a very big difference. 268 00:14:23.715 --> 00:14:26.015 You remember Facebook, there are plenty 269 00:14:26.035 --> 00:14:27.695 of users everywhere in the world, 270 00:14:27.795 --> 00:14:31.255 but the RPU is at its maximum in North America. 271 00:14:31.725 --> 00:14:33.775 It's exactly the same case for Reddit 272 00:14:34.195 --> 00:14:36.495 and also the same cases that you have a seasonality. 273 00:14:36.795 --> 00:14:41.375 Why? Because you sell to advertising agendas 274 00:14:41.635 --> 00:14:46.335 and then Q4 is stronger than Q1, Q2 and Q3. 275 00:14:46.675 --> 00:14:50.415 You can observe this seasonality in almost all these 276 00:14:50.735 --> 00:14:52.885 companies dealing with the same activity. 277 00:14:53.305 --> 00:14:57.165 But what is quite interesting is that Q1 and two 278 00:14:57.185 --> 00:15:00.005 and three are up, but what about Q4? 279 00:15:00.755 --> 00:15:04.845 It's the same, almost the same the last three years it's 280 00:15:04.845 --> 00:15:08.725 quite stable, even a little bit declining in North America a 281 00:15:08.725 --> 00:15:11.965 little bit up in the rest of the world there's a kind 282 00:15:11.965 --> 00:15:16.045 of stability which you can observe not during the year 283 00:15:16.345 --> 00:15:18.765 but at the end of the year during the last quarter. 284 00:15:19.585 --> 00:15:21.885 And interestingly, if you look at the communication 285 00:15:21.885 --> 00:15:24.125 of the company in the IPO prospectus, 286 00:15:24.595 --> 00:15:27.525 this growth comes from the IPO prospectus. 287 00:15:27.675 --> 00:15:28.725 What do you observe? 288 00:15:29.105 --> 00:15:33.845 Global average revenue per user an increase three years ago, 289 00:15:34.265 --> 00:15:37.925 but if you look at Q4, it's quite the same Again, 290 00:15:37.995 --> 00:15:42.405 what is increasing is not Q4, it's Q1 to Q3. 291 00:15:43.355 --> 00:15:46.375 The company is disclosing the gross rate. 292 00:15:46.955 --> 00:15:50.935 Of course it's 9% Q4 23 as opposed 293 00:15:50.955 --> 00:15:52.495 to Q3 23, 294 00:15:52.835 --> 00:15:56.815 but what is relevant is not Q4 against Q3, 295 00:15:56.885 --> 00:15:59.335 it's Q4 this year against Q4. 296 00:15:59.475 --> 00:16:01.655 The year before is minus 2%. 297 00:16:02.555 --> 00:16:06.375 So where does revenue come? Where does growth is coming? 298 00:16:06.885 --> 00:16:10.135 Well, a little bit from the fact that Q1 to Q3 is up, 299 00:16:10.315 --> 00:16:12.255 but definitely is a number of users 300 00:16:12.885 --> 00:16:15.495 including especially in North America. 301 00:16:16.035 --> 00:16:17.855 If you look at the revenues per geographies, 302 00:16:17.855 --> 00:16:20.135 there is a nice increase about three years ago, 303 00:16:21.515 --> 00:16:23.735 two years ago stabilization 304 00:16:24.075 --> 00:16:26.535 and last year it's up but up. 305 00:16:26.795 --> 00:16:30.015 Why? Because of North America and North America, not 306 00:16:30.015 --> 00:16:32.775 because of the average revenue per user, but North America 307 00:16:32.775 --> 00:16:34.415 because of the number of users. 308 00:16:34.915 --> 00:16:36.895 So it's interesting to understand 309 00:16:36.895 --> 00:16:39.455 that the company is attracting more users in 310 00:16:39.455 --> 00:16:40.855 this geographical area. 311 00:16:41.715 --> 00:16:45.175 Growth is driven by the number of users 312 00:16:45.735 --> 00:16:47.095 NZO period. 313 00:16:48.355 --> 00:16:52.295 Now interestingly, the company is disclosing its model, 314 00:16:52.875 --> 00:16:54.255 its growth model. 315 00:16:54.995 --> 00:16:57.935 Of course the bottom line is advertising. 316 00:16:58.485 --> 00:17:01.135 Current model is about advertising. 317 00:17:01.235 --> 00:17:03.895 We know plenty of people. You can address these communities, 318 00:17:03.915 --> 00:17:06.175 you can sell them good services or whatsoever. 319 00:17:06.235 --> 00:17:09.935 That's interesting. The top line is about user economies. 320 00:17:09.935 --> 00:17:12.815 As for the future, what is interesting is the one in between 321 00:17:13.365 --> 00:17:14.815 data licensing 322 00:17:14.845 --> 00:17:16.935 because we have access to plenty of data 323 00:17:17.125 --> 00:17:19.015 with all these people, not only 324 00:17:19.555 --> 00:17:22.575 to target the advertising campaign, so on and so forth, 325 00:17:22.635 --> 00:17:24.295 but to understand their behavior. 326 00:17:25.315 --> 00:17:29.895 And when you are in the business of developing ai, 327 00:17:30.555 --> 00:17:33.615 you can train your AI model on 328 00:17:33.685 --> 00:17:37.775 what you read in the platforms and that's very interesting 329 00:17:37.775 --> 00:17:39.375 because there are many platforms. 330 00:17:39.375 --> 00:17:42.895 So if you want to train your chat GPT, what do you do? 331 00:17:43.195 --> 00:17:46.015 You use the subreddits of the company 332 00:17:46.315 --> 00:17:47.855 and then you can train your model 333 00:17:48.235 --> 00:17:49.685 and you improve the efficiencies. 334 00:17:49.685 --> 00:17:50.805 That's a source of value. 335 00:17:50.865 --> 00:17:52.965 And of course Reddit has to make money Now 336 00:17:53.075 --> 00:17:56.205 that when you observe the cost, the operational expenses, 337 00:17:57.065 --> 00:17:58.445 you have three periods. 338 00:17:58.705 --> 00:18:01.165 The first period is traditional economies are scale, 339 00:18:01.465 --> 00:18:04.885 the company is growing, the expenses are growing, 340 00:18:05.025 --> 00:18:07.205 but not at the same rate at the revenue. 341 00:18:07.995 --> 00:18:09.725 This is economies of scale and it works. 342 00:18:09.825 --> 00:18:13.485 So as a percentage to revenues, the cost of sales, r 343 00:18:13.485 --> 00:18:15.085 and d, s and m, sales 344 00:18:15.105 --> 00:18:17.725 and marketing, general admin, they all go down. 345 00:18:18.475 --> 00:18:20.005 Then there is a period when you have 346 00:18:20.005 --> 00:18:21.125 to increase your expenses 347 00:18:21.515 --> 00:18:23.645 because you want to offer more services 348 00:18:23.645 --> 00:18:27.565 because you want to improve the quality of et cetera. 349 00:18:27.745 --> 00:18:30.885 And then, then not only revenues are increasing, 350 00:18:30.985 --> 00:18:34.125 but the costs are increasing as a percentage to revenue. 351 00:18:34.875 --> 00:18:37.085 There's a dramatic impact on the EBITDA 352 00:18:37.085 --> 00:18:38.365 as we are going to observe it. 353 00:18:38.665 --> 00:18:41.125 And if you look at the last year, the last year, 354 00:18:41.425 --> 00:18:42.485 you control the cost. 355 00:18:42.505 --> 00:18:45.485 So you'll go back to the economy, scale 356 00:18:45.705 --> 00:18:49.285 and cost as a percentage to revenues are down. 357 00:18:50.525 --> 00:18:52.405 I calculate the quarterly cost 358 00:18:52.995 --> 00:18:56.765 excluding stock base compensation because in my opinion, 359 00:18:57.105 --> 00:19:00.125 and I comment that several times on the platform, 360 00:19:00.735 --> 00:19:02.085 stock base compensation, 361 00:19:02.085 --> 00:19:04.605 which is about restricted stock units, stock options 362 00:19:04.665 --> 00:19:06.925 and so on and so forth, it's not a cost, 363 00:19:07.195 --> 00:19:08.605 it's an investment made 364 00:19:08.665 --> 00:19:11.525 by people in the companies in which they work 365 00:19:11.745 --> 00:19:13.525 and in which they have some trust. 366 00:19:14.185 --> 00:19:17.085 So of course you attract good people saying you are going 367 00:19:17.085 --> 00:19:18.725 to receive stock options R issues 368 00:19:18.725 --> 00:19:20.005 and you are going to be a rich person. 369 00:19:20.585 --> 00:19:23.005 But basically these people are for part 370 00:19:23.005 --> 00:19:24.165 of the week employees 371 00:19:24.165 --> 00:19:26.165 and for the rest of the week they are investors. 372 00:19:26.675 --> 00:19:28.365 It's not a cost, it's an investment. 373 00:19:28.715 --> 00:19:30.685 Current sequence of that if you can 374 00:19:30.705 --> 00:19:31.925 to the quarterly expenses 375 00:19:32.145 --> 00:19:34.485 and you get the stock-based compensations 376 00:19:34.705 --> 00:19:35.805 out, what do you get? 377 00:19:36.325 --> 00:19:38.605 A cost, a real operating cost 378 00:19:39.425 --> 00:19:43.205 and in the last quarter it still represents 92%. 379 00:19:43.745 --> 00:19:47.365 So excluding stock based compensation, if you make a dollar 380 00:19:47.365 --> 00:19:52.005 of revenue, you spend 92 cents, you understand 381 00:19:52.005 --> 00:19:54.045 that it's going to be quite difficult 382 00:19:54.065 --> 00:19:57.125 to be really profitable with this cost structure. 383 00:19:57.705 --> 00:20:00.165 Now of course, if you take stock-based compensation, 384 00:20:00.625 --> 00:20:03.285 it goes up to more than 100% 385 00:20:04.145 --> 00:20:06.805 In the last quarter the stock-based compensation was 386 00:20:07.085 --> 00:20:09.605 representing 27% of the cost. 387 00:20:09.605 --> 00:20:12.285 So you understand that the a b is dramatically negative 388 00:20:12.585 --> 00:20:15.805 who receive stock-based compensations, more or less r 389 00:20:15.805 --> 00:20:17.485 and d, earned general and admin. 390 00:20:18.025 --> 00:20:19.605 Why r and d? Because it's difficult 391 00:20:19.605 --> 00:20:22.405 to attract good software developers, engineers, 392 00:20:22.605 --> 00:20:23.645 researchers or whatsoever. 393 00:20:24.105 --> 00:20:27.805 And so you have to give them the ability to become rich that 394 00:20:27.805 --> 00:20:30.045 that the company is listed and general and admin. 395 00:20:30.075 --> 00:20:32.285 Well, basically it's the CEO and the CEO. 396 00:20:32.285 --> 00:20:33.925 It's a general management company 397 00:20:34.425 --> 00:20:36.525 and this is why it's uh, during the last quarter 398 00:20:36.525 --> 00:20:39.525 because this is about stock-based, compensation related 399 00:20:39.665 --> 00:20:41.005 to the IPO. 400 00:20:41.225 --> 00:20:42.685 Now, if you combine revenues 401 00:20:42.685 --> 00:20:43.725 and operating expenses, 402 00:20:44.025 --> 00:20:47.125 you exclude from the operating expenses de precision 403 00:20:47.165 --> 00:20:50.885 motorization because a non-cash item, you exclude SBC 404 00:20:50.885 --> 00:20:52.205 because it's a non-cash item. 405 00:20:52.305 --> 00:20:56.205 And because it's not an expense, you get the adjusted ebitda 406 00:20:56.465 --> 00:20:59.525 and then you can compare the adjusted EBITDA evolution 407 00:20:59.525 --> 00:21:04.125 with the revenue evolution revenues left hand scale in blue, 408 00:21:04.825 --> 00:21:08.845 80 million per quarter Q1 three years ago 409 00:21:09.385 --> 00:21:12.285 and 250 million last quarter, 410 00:21:12.885 --> 00:21:14.565 Q4 2023. 411 00:21:14.795 --> 00:21:18.045 What about the be that was about breakevens three years ago? 412 00:21:18.435 --> 00:21:20.325 Then it went dramatically down. Why? 413 00:21:20.325 --> 00:21:21.565 Because the costs went up. 414 00:21:22.615 --> 00:21:24.645 These economies of scale I may say. 415 00:21:24.985 --> 00:21:26.605 And at the end of the day, what happened? 416 00:21:26.605 --> 00:21:28.285 Economies of scale, again, this is what 417 00:21:28.285 --> 00:21:31.325 during the last quarter, it went up and up and up 418 00:21:32.025 --> 00:21:36.725 and in Q4 2023, the adjusted EBITDA is positive 419 00:21:36.905 --> 00:21:41.325 by 20 million, $20 million out of $250 million, 420 00:21:41.595 --> 00:21:43.045 it's about nine, 421 00:21:43.115 --> 00:21:46.965 nine point something percent EBITDA to revenues. 422 00:21:47.145 --> 00:21:50.645 So now for the first time over some years, 423 00:21:51.065 --> 00:21:54.005 the company is showing a positive adjusted 424 00:21:54.585 --> 00:21:56.485 EBITDA time to go public. 425 00:21:58.545 --> 00:22:00.285 Now EBITDA is potential. 426 00:22:00.475 --> 00:22:01.925 Cash is not real cash 427 00:22:01.925 --> 00:22:04.405 because you have to exclude the evolution 428 00:22:04.405 --> 00:22:06.045 of the working capital requirement, 429 00:22:06.045 --> 00:22:08.285 which is a bit negligible, but you have to exclude 430 00:22:08.465 --> 00:22:10.125 and deduct capital expenditures. 431 00:22:10.745 --> 00:22:14.805 If you take the full year, 2023, EBITDA was negative by 70, 432 00:22:15.645 --> 00:22:16.685 adjusted to SBC of course, 433 00:22:17.185 --> 00:22:20.485 and capital expenditures accounts at four 10 million each 434 00:22:20.675 --> 00:22:25.605 peanuts but minus 70 minus, instead its minus $80 million. 435 00:22:25.705 --> 00:22:28.365 The company consumed $80 million of cash, 436 00:22:29.065 --> 00:22:30.205 but that ends the year. 437 00:22:30.585 --> 00:22:33.925 The company still has $1.2 billion, 438 00:22:34.665 --> 00:22:36.325 $1.2 billion of cash. 439 00:22:36.545 --> 00:22:40.205 It is 15 years of cash consumption. 440 00:22:40.305 --> 00:22:41.765 Of cash burden, right? 441 00:22:42.265 --> 00:22:45.325 Though if you believe that the EBITDA is going 442 00:22:45.325 --> 00:22:48.205 to remain at 9% plus, if you consider 443 00:22:48.235 --> 00:22:52.045 that the average CapEx will remain at about 1%, 444 00:22:52.105 --> 00:22:55.765 the free cash flow is going to be 8% of revenues. 445 00:22:56.315 --> 00:22:58.325 Then the question is why do you go public? 446 00:22:58.395 --> 00:23:00.125 Because you have plenty of cash. 447 00:23:00.465 --> 00:23:04.405 1.2 billion, you're starting generating positive cash flow, 448 00:23:04.765 --> 00:23:05.845 positive free cash flows. 449 00:23:06.385 --> 00:23:10.005 So why do you raise an additional half billion selling 450 00:23:10.245 --> 00:23:11.285 a shares to the public? 451 00:23:12.255 --> 00:23:15.885 Maybe it's because the BD is absolutely not guaranteed 452 00:23:15.885 --> 00:23:17.965 for the future and you want to make some investment, 453 00:23:18.385 --> 00:23:20.365 but maybe also because you have to pay taxes. 454 00:23:20.505 --> 00:23:21.605 You remember that one 455 00:23:21.605 --> 00:23:23.805 of the reasons why Facebook went public is 456 00:23:23.805 --> 00:23:25.845 that Mark Zuckerberg had to pay taxes. 457 00:23:26.265 --> 00:23:29.805 You want to offer the possibility for investors to get out 458 00:23:29.825 --> 00:23:32.925 of if they want, and for those who want to stay, they have 459 00:23:32.925 --> 00:23:35.685 to calculate their old internal rate of return, 460 00:23:35.775 --> 00:23:38.165 which they have to communicate to their own investors, 461 00:23:38.465 --> 00:23:40.485 though that's quite fair to go public. 462 00:23:40.705 --> 00:23:43.845 But there are two questions which are still on the table. 463 00:23:44.555 --> 00:23:46.405 What about governance and control 464 00:23:47.145 --> 00:23:48.885 and what about the moderation 465 00:23:49.025 --> 00:23:50.965 of the content of the platform? 466 00:23:51.295 --> 00:23:52.805 Let's start with the first question. 467 00:23:53.585 --> 00:23:56.405 You remember I told you there are A shares and B shares. 468 00:23:56.815 --> 00:23:59.525 There are 37 million A shares 469 00:23:59.745 --> 00:24:03.725 and 120 million B shares. 470 00:24:04.105 --> 00:24:06.205 The difference is the number of voting rights. 471 00:24:06.505 --> 00:24:11.405 One A share one voting right one B share 10 voting rights. 472 00:24:11.405 --> 00:24:14.005 So you understand that the control is in the hands 473 00:24:14.025 --> 00:24:15.285 of the B shareholders. 474 00:24:16.025 --> 00:24:18.845 The 22 million shares which are going to be offered 475 00:24:18.845 --> 00:24:21.525 to the public are a shares. 476 00:24:22.145 --> 00:24:25.045 So we will offer to the public is the ability 477 00:24:25.145 --> 00:24:26.605 to share the value of the firm, 478 00:24:26.745 --> 00:24:30.405 but not the power, not the decisions, not the influence. 479 00:24:31.235 --> 00:24:32.565 What about Steve Hoffman? 480 00:24:32.575 --> 00:24:36.605 Steve Hoffman holds 2.3% of a shares. 481 00:24:37.155 --> 00:24:38.885 It's going to sell plenty of them by the way, 482 00:24:39.305 --> 00:24:44.125 and then 3.4% of the B shares at the end of the deck. 483 00:24:44.585 --> 00:24:48.365 He has in his hands 3.3% of the voting rights. 484 00:24:48.505 --> 00:24:52.365 But in the prospectus there is a very interesting section 485 00:24:52.375 --> 00:24:56.565 which is VOing agreement between Steve Hoffman Advance 486 00:24:57.145 --> 00:25:01.805 on 10 said, and altogether they represent 46.3% 487 00:25:01.865 --> 00:25:04.205 of the voting rights and they vote together. 488 00:25:04.385 --> 00:25:07.885 So you understand that the influence of Steve Huffman is 489 00:25:08.405 --> 00:25:09.525 absolutely fundamental 490 00:25:10.105 --> 00:25:12.725 and in the meantime he has 3% of the shares 491 00:25:13.545 --> 00:25:15.085 and it's very classic staff. 492 00:25:15.305 --> 00:25:19.325 You know in this kind of companies you have some shares 493 00:25:19.545 --> 00:25:20.725 and you have the power, 494 00:25:21.375 --> 00:25:23.245 which is a little bit curious sometimes. 495 00:25:23.945 --> 00:25:26.405 Now the second question is, in my opinion, 496 00:25:26.435 --> 00:25:28.725 much more important, it's about moderation. 497 00:25:29.675 --> 00:25:31.925 It's always a question for social networks, 498 00:25:31.925 --> 00:25:34.805 whether companies create to thousand 499 00:25:34.805 --> 00:25:37.365 and five, what is the main principle? 500 00:25:37.365 --> 00:25:38.765 Freedom of speech. 501 00:25:38.795 --> 00:25:41.725 This is the first amendment of the American constitution, 502 00:25:41.725 --> 00:25:45.365 so you have to right to express your opinion quite freely. 503 00:25:46.065 --> 00:25:47.125 Now, at the very beginning, 504 00:25:47.535 --> 00:25:51.405 there were some subreddits which were created by the company 505 00:25:51.665 --> 00:25:54.085 and no freedom to create this subreddit. 506 00:25:54.225 --> 00:25:56.285 It starts in 2008. 507 00:25:56.755 --> 00:26:00.405 Then people can start creating communities on any subject 508 00:26:00.545 --> 00:26:02.045 and they can put any content. 509 00:26:02.865 --> 00:26:04.205 Now what about moderation? 510 00:26:04.555 --> 00:26:07.765 It's self moderation, not imposed by the company. 511 00:26:08.585 --> 00:26:11.285 And moderation is realized by volunteers, 512 00:26:12.555 --> 00:26:14.295 un paid volunteers on side. 513 00:26:14.315 --> 00:26:16.895 We do that because which was et cetera, et cetera. 514 00:26:17.075 --> 00:26:19.735 So you understand that they are going to moderate 515 00:26:20.005 --> 00:26:21.215 what they want to moderate 516 00:26:22.035 --> 00:26:24.495 and then there will be a huge problem 517 00:26:25.275 --> 00:26:28.615 in family is rich in 2011 518 00:26:29.205 --> 00:26:32.255 with a sub ready whose name is jail bait, which is 519 00:26:32.765 --> 00:26:34.895 very much about pedal pornography. 520 00:26:35.675 --> 00:26:37.735 Of course the company is going to start 521 00:26:38.935 --> 00:26:42.935 reacting against this infamy, but not that much. 522 00:26:44.105 --> 00:26:47.925 In 2015 there will be the introduction of quarantine. 523 00:26:48.665 --> 00:26:52.325 So you give less access to some subreddits, 524 00:26:52.535 --> 00:26:54.565 which you believe are not that friendly. 525 00:26:55.065 --> 00:26:57.685 At the end of the day, the reputation of Reddit is 526 00:26:57.685 --> 00:27:02.405 that it's about misinformation, disinformation, incitement 527 00:27:02.465 --> 00:27:06.565 to violence, racism, drug use including 528 00:27:07.115 --> 00:27:11.805 opioids, inc, excitement to suicide harassment, disclosure 529 00:27:11.865 --> 00:27:15.845 of private information, which is absolutely a disaster 530 00:27:16.665 --> 00:27:19.765 for ethics and for the value of the company. 531 00:27:20.265 --> 00:27:21.765 Now, what will be the action 532 00:27:21.765 --> 00:27:24.205 of the CEOs in terms of moderation? 533 00:27:24.975 --> 00:27:28.725 Ishan Wong, 20 12, 20 14, nothing. 534 00:27:29.745 --> 00:27:33.885 The law is the only limit. If it's legal, it can be there. 535 00:27:34.145 --> 00:27:35.885 And you understand that the law is very much 536 00:27:35.885 --> 00:27:37.205 about the first amendment. 537 00:27:37.785 --> 00:27:39.085 So at the end of the day, 538 00:27:39.085 --> 00:27:42.285 if it's really about promoting violence, et cetera, I, 539 00:27:42.415 --> 00:27:44.125 we'll stop it, but you understand 540 00:27:44.125 --> 00:27:48.645 that the limits are quite limited, very well known person. 541 00:27:48.655 --> 00:27:51.285 Ellen Powell is going to become CEO. 542 00:27:51.335 --> 00:27:53.645 She's going to be CEO During short period of time, 543 00:27:53.645 --> 00:27:55.685 20 14, 20 15. 544 00:27:56.225 --> 00:27:59.805 At the beginning, this very well known lawyer had been hired 545 00:27:59.945 --> 00:28:03.845 for monetization, but she's going to become CEO 546 00:28:03.945 --> 00:28:07.685 and in charge of cleansing, there will be plenty 547 00:28:07.905 --> 00:28:10.005 of fight against her. 548 00:28:10.625 --> 00:28:13.365 And as a consequence of a minor incident, she's going 549 00:28:13.365 --> 00:28:15.245 to be forced to resign. 550 00:28:15.615 --> 00:28:18.245 She's going to be replaced by Steve Hoffman 551 00:28:18.995 --> 00:28:20.965 from 2015 to today. 552 00:28:21.545 --> 00:28:24.965 He was the first CEO of a company in 2005. 553 00:28:25.625 --> 00:28:28.005 Now, 10 years later, he is back to CEO 554 00:28:28.225 --> 00:28:30.645 and up to today, this is quite an interesting story 555 00:28:30.645 --> 00:28:33.285 and he's going to continue the work in terms of moderation. 556 00:28:33.745 --> 00:28:37.765 In 2020 2000 subreddits are going to be banned 557 00:28:38.145 --> 00:28:42.405 and some of them are quite famous about very famous people 558 00:28:42.585 --> 00:28:43.845 in the United States, 559 00:28:44.465 --> 00:28:48.885 but you understand that 2000 subreddits out of 100,000, 560 00:28:49.275 --> 00:28:52.485 it's negligible and with about the rest of the community, 561 00:28:52.675 --> 00:28:53.845 they're doing good job. 562 00:28:54.235 --> 00:28:56.365 They are sharing sorts questions. 563 00:28:56.795 --> 00:29:00.805 It's about sentences, it's about questions, about replies, 564 00:29:00.945 --> 00:29:05.645 and that's a fantastic source of data, source of value. 565 00:29:06.715 --> 00:29:09.645 This considerable source of value is going to be used by 566 00:29:10.585 --> 00:29:13.645 AI developers, large language models 567 00:29:13.875 --> 00:29:17.725 because it's a fantastic field for the training of the app. 568 00:29:18.675 --> 00:29:21.045 Open ai, Sam Alman. 569 00:29:21.465 --> 00:29:24.405 Sam Alman is member of the board up to 2022. 570 00:29:24.915 --> 00:29:25.925 Open AI is going 571 00:29:25.925 --> 00:29:29.845 to massively train Chad d PT using Reddit 572 00:29:30.065 --> 00:29:31.085 sub communities. 573 00:29:31.825 --> 00:29:35.205 So you understand that here you have a fantastic source 574 00:29:35.345 --> 00:29:38.325 of value and this is what they are going to do. 575 00:29:38.795 --> 00:29:42.125 They say we have to monetize the access to the platform, 576 00:29:42.225 --> 00:29:44.565 to the community and to the sub communities. 577 00:29:45.145 --> 00:29:47.325 In June, 2023, the company says, 578 00:29:47.505 --> 00:29:50.205 now the API ready API, 579 00:29:50.305 --> 00:29:52.925 the application programming interface, it's going 580 00:29:52.925 --> 00:29:54.765 to be paid now by users. 581 00:29:55.295 --> 00:29:57.645 Beforehand it was absolutely negligible. 582 00:29:57.745 --> 00:29:58.965 Now you have to pay 583 00:29:59.865 --> 00:30:02.605 and as you have to pay, some people are going to go okay 584 00:30:02.635 --> 00:30:04.445 that and there will be a strike. 585 00:30:05.055 --> 00:30:06.085 There will be a strike. 586 00:30:06.085 --> 00:30:09.805 Because of this monetization consequence 587 00:30:09.945 --> 00:30:13.125 of the moderation of the company, now you have 588 00:30:13.125 --> 00:30:18.045 to pay something like point $24 per month for 1000 requests. 589 00:30:18.505 --> 00:30:20.125 1000 request looks big. 590 00:30:20.475 --> 00:30:23.685 It's negligible because if you really want to do some job, 591 00:30:23.755 --> 00:30:26.205 it's about tens of millions of requests 592 00:30:26.585 --> 00:30:29.725 and that is going to cost you millions of dollars a year 593 00:30:30.425 --> 00:30:32.885 before it was free or almost free. 594 00:30:33.915 --> 00:30:36.685 Consequence of the strike, nothing. 595 00:30:36.905 --> 00:30:40.005 So strike stop, but consequence of the monetization. 596 00:30:40.145 --> 00:30:44.565 Google signed in February, 2024, a few weeks 597 00:30:44.625 --> 00:30:47.485 before the IPO, an agreement with Reddit. 598 00:30:47.665 --> 00:30:50.445 Google wants to have access to the sub communities 599 00:30:50.625 --> 00:30:52.405 to train Gemini. 600 00:30:52.625 --> 00:30:54.725 Gemini is a competitor of Chad GPT, 601 00:30:55.105 --> 00:30:57.765 and the cab is ready to pay $80 million. 602 00:30:57.865 --> 00:31:00.205 If you compare that with a cash amount for Google, 603 00:31:00.715 --> 00:31:03.445 it's peanuts, but for Reddit, it's not peanuts 604 00:31:03.445 --> 00:31:07.245 because $80 million, it's four times the EBDA generated 605 00:31:07.305 --> 00:31:09.645 by the CABER in Q4 2023, 606 00:31:09.825 --> 00:31:13.525 the first time it became positive in the past. 607 00:31:14.065 --> 00:31:16.965 So you understand that there is a lot of value behind that 608 00:31:17.145 --> 00:31:19.085 and that's the equity story. 609 00:31:19.905 --> 00:31:22.085 Now, we have completed the moderation. 610 00:31:22.665 --> 00:31:25.765 We have monetization, we have monetization 611 00:31:25.765 --> 00:31:27.285 because we have some gross options. 612 00:31:27.285 --> 00:31:30.285 We are going to be able to exercise, then you can go public. 613 00:31:30.585 --> 00:31:34.925 So the reason why the company made a successful IPO, 614 00:31:35.515 --> 00:31:40.445 it's because of moderation and monetization, more 615 00:31:40.445 --> 00:31:42.725 or less as a consequence of this moderation, 616 00:31:43.495 --> 00:31:44.925 which is quite interesting 617 00:31:44.925 --> 00:31:47.325 because moderation is about ethics 618 00:31:48.235 --> 00:31:51.095 and monetization is about value. 619 00:31:52.035 --> 00:31:55.575 And here you have an interesting interaction between ethics 620 00:31:56.115 --> 00:31:57.295 and value creation. 621 00:31:58.005 --> 00:32:01.055 This interaction is of course in the middle of plenty 622 00:32:01.115 --> 00:32:04.255 of debates and it's still a very open debate, 623 00:32:04.915 --> 00:32:08.215 but our ethical values creating 624 00:32:08.725 --> 00:32:11.815 financial values, this is a quite interesting 625 00:32:12.155 --> 00:32:13.495 and open question. 626 00:32:14.365 --> 00:32:15.195 Thank you very much.