Opinion: Why Reddit Deserves A “Platform” Valuation Premium Over BuzzFeed

Jamarlin Martin
Written by Jamarlin Martin

Too many digital executives are chasing the flavor of the month. The new one is to try and become a “tasty” — a social-only publisher that publishes only across social media without a strong loyal following on its own platform.

Companies that focus on platform-building, like the New York Times and content-sharing platform Reddit, have locked-in user profiles and risk profiles that give me confidence they will have sustainable businesses in five-to-10 years, regardless of what happens with social media.

Reddit is in the process of raising $150 million at a valuation of $1.7 billion, Bloomberg reported recently.

If the platform closes at this valuation, it will be higher than media company BuzzFeed’s reported $1.5 billion valuation in late 2016.

BuzzFeed didn’t have a down round — that’s what happens in private financing when investors buy stock from a company at a lower valuation than the preceding round — but the valuation ended up being flat versus its prior funding round.

Reddit is an independent platform. BuzzFeed is increasingly a social-only publisher that is largely dependent on other platforms such as Facebook to survive.

Reddit has a strong argument with investors for being valued at a premium to BuzzFeed because it can’t be “Zynga’d” or “Panda’d”.

With the industry changing so fast, investors may have short-term memories or may miss how to price platform risk with digital media companies.

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About Jamarlin Martin
Jamarlin Martin is the founder and CEO of Nubai Ventures. A pioneer and thought leader in digital media, he grew Moguldom Media Group into a multiple-brand digital media and entertainment platform, selling three brands to Urban One NASDAQ: UONEK. Ozy described Jamarlin as an "Emperor of Digital Media." He won an EY Entrepreneur of The Year Award in 2015.

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