Disney owned ESPN chooses a new sports betting partner. So, who wins and who loses? The Tesla shareholder results are out. Elon is getting his trillion dollar pay package. We hit the highlights. And women's sports, Reddit's data deal with OpenAI, resurrecting Digg, powering nostalgia with tech. We break it all down with Alexis Ohanian. For Friday, November 7th, it's Brew Markets Daily and I'm Anne Barry.
More market details to come, but first, whether resigning from the board of Reddit, which he co-founded, or commercializing women's sports, Alexis Ohanian has been pushing on what it means to take actions that are based both on principle and on making money. While the social media platform now has a $35 billion market cap, and after investing at a $3 million valuation, Ohanian has seen women's soccer club Angel City hit $280 million in its latest fund raise. But across these journeys, he has faced serious doubters along the way, as well as decision points that with hindsight look momentous. Early in Reddit's life, when Sam Altman asked if a nonprofit called OpenAI could scrape its data, what did Ohanian say? Could an arch rival CEO, a quote nemesis, be a plausible business partner in resuscitating a human-first social platform? How did one tweet lead to the launch of what Ohanian calls the Formula 1 league of track and field? Well, we sat down with Alexis Ohanian to break down his successes, the lessons learned, and the challenges still to come in tech, in live events, in consumer trends, and more. And he did not hold back, packing a punch in our conversation with blunt insights into accusations of virtue signaling, where the money proves success, and where he's investing next with his venture firm 776. That conversation coming up. But first, Brew Markets Daily is sponsored by Public. Let's throw it over to our producer, John. Are you excited? It's Friday.
Friday? You mean 401k day? Heck yeah. I used to think of it simply as payday, but now that I'm older, I send some of that money straight into my retirement account. Well, for a limited time, Public users can earn an uncapped 1% match on all IRA transfers and rollovers on top of a 1% match on your annual IRA contributions. A 1% match. Plus, with a self-directed IRA on Public, users can access thousands of stocks, ETFs, and bonds to align their investing style with their retirement goals. Users can even trade options in their IRA, a feature many brokerages don't offer. Get started at public.com/brewmarkets. That's public.com/brewmarkets. Paid for by Public Investing. Full disclosures in podcast description.
And now my conversation with Alexis Ohanian here in studio in New York. All right, Alexis Ohanian. You're known as many things, tech founder, venture capitalist. But let's start with what has been perhaps the most visible part of all the things you do, which is as an investor in women's sports. And what started as a rage tweet almost in 2019, which was 'look at this, look at this burgeoning industry no one's paying attention,' has blossomed into something else. And most recently you had Athlos here in New York. Tell us about that. Tell us about that evolution.
Yeah, so March of 2019 my tweet goes viral and I basically noticed that a team in the NWSL, the American Women's Soccer League, had just sold for like $3.5 million. And this was the year of the Women's World Cup. This was not a sport that I followed, but I knew who Megan Rapinoe was, knew who Alex Morgan was, I knew who the stars of the sport were. So, they had already transcended the sport. That's a great sign. And in Megan's case, she played for that team in Seattle. And the math didn't math because I knew she alone should be worth at least $3 million in brand deals a year. And so, the fact that her whole team was worth that much was a sign to me that there was an opportunity to just run an operation way more efficiently and effectively. And so I resolved at the end of this tweet storm, I basically laid out the vision to say look this is a multi-billion dollar industry laying in plain sight and I'm going to either start or buy an NWSL team and you know who can help. And you know, the tweet goes viral, most of the people responding were actually dunking on me making the case that no one watches women's sports, you're an idiot, you're going to lose all your money, yada yada yada. But there were some really hardcore women's soccer fans which was great to see. I look for that heat, right? Building Reddit you learn to have a spidey sense for things that are culturally powerful in that there's a community of people who hate only because there's something they are intimidated by or something that is significant enough to garner their attention and their hate. So even those signs of irrational hate were actually giving me confidence that there was something really interesting and compelling there. And so Alex Morgan famously responded to that tweet and I reached out to her and we spent time together probably a month later and I just took notes and resolved to buy a team or start a team. I started talking to some existing team owners who then ultimately decided to start with an expansion and that obviously led me to Angel City where I was founding control owner. And there were a number of mistakes I made and lessons learned but a big one was I should have just bought the NWSL in 2019. I could have bought it for $10 million, fired everyone, reset the entire culture, built it like a technology company, right? Build software, I'm a product builder at the end of the day, to run all the internal operations 100 times more efficiently, effectively. And in the last few years, especially as AI has really commoditized software, I've just been thinking, God, that was the opportunity. And so when the Olympics were coming up, I simply looked and I said, okay, where are the athletes that transcend the sport? What are the most popular sports during the Olympics that also disappear in between the four years, just like women's soccer in between the World Cup? And lo and behold, track and field was right there. Checked every box. And in addition to that, there is an existing league, but it's really like the accounting of the sport because if you think this is such a global sport and it all funnels up to the Olympics, you have to get every discus thrower in the world properly registered and graded and it's just a very different process. And what we saw with Athlos was an opportunity to really build this very dynamic, very high energy with the very best. Still sanctioned. It's a World Athletics sanctioned meet. It was last year. It was also again this year. So it's legit. It's for points. It's for your ranking that helps you with the Olympics. But we also set a record prize when we doubled the top prize. Back then it was $30,000. This was last year. We doubled it to $60,000 and instantly became the most important race outside the Olympics. And we've been building on that since and now are launching this Formula 1 league. So if you love, you know, Mercedes versus Ferrari, you can imagine what Team Nike versus Team Adidas might look like. And so we're really excited to build towards that. Have multiple meets next year. We're not ready to announce those locations, but instead of just one in New York, add a couple more. And I can't wait for folks to see it and really elevate the sport that is an amazing sport that is I guess a top Olympic sport and then just disappears. No reason why it should and build it with software first which again I should have done if I could have gone back in time in 2019 with the NWSL.
So let me ask you a question about the Athlos building in particular, Alexis. Is that specific to women's sports or do you think that is just a sport which has been underfocused on, underinvested in, and the gender element actually wouldn't matter? You could just as easily do it with the guys.
We will at some point add men. The reason why we started with women, and this is a great sport in that the men and women routinely compete together, you know, there are events like mixed relays that are really exciting and really compelling. The reason we started with the women was a business decision, you know, in part because of all the success I've had as a founding owner of now a handful of women's teams not just Angel City but also I just recently bought the LA franchise in League One, so women's volleyball, I bought a 10% stake in the Chelsea women's football club. The CMOs all want to know what I'm doing next in women's sports. It's funny when I bought the first team in Tiger's team golf league, TGL, the LA Golf Club, these CMOs were like, 'Oh, that's cool, but actually like are you going to have women cuz that's really what we want to invest in.' So, and it's coming. I can't say when, but so for sure there's an appetite today. And look, five years ago, six years ago, we had to bring people on board and really stoke those flames of interest. Today the interest is there and so starting women first with Athlos made sense from a business standpoint because that's how we could, you know, we announced it in April last year, we did our first meet five months later. Really fast, yeah, that whole thing's come together so quickly. You know, that's but with a women-led meet that's how you can get Toyota, Tiffany and Co, I mean tier one brands and a handful of others within five months. And then we ran it back last month so about a year later and we brought those brands back but we also added Instacart and Cash App, Essential Water, like more and more to come. They're hungry for women's sports. This is an opportunity. And then it's also a business decision because if you look at follower counts, the women of track and field, the top athletes, have a much bigger social presence than the men. And it's just simple math. Noah Lyles, we love Noah. He was there at the event having a great time. But, you know, there aren't enough stars on the men's side in terms of their following to justify the early costs. And so again, we wanted to make this as effective a business as possible and in the sport of track and field, it actually makes more sense to start with the women.
You know, it's interesting to hear you focus on the investment side of it, Alexis, because one thing that when I think about your journey through women's sports, at the beginning, you did get some heat for virtue signaling. You did have people saying, is this because, you know, you're married to the most amazing woman athlete, right, ever? You're a girl dad. You're a proud girl dad. And it's interesting now it feels as though you've moved beyond people saying that to 'no, no, the business model's proven' but does it irritate you? Do you feel as though you're still having folks looking at you saying 'well, what is this? Is this sort of philanthropy repackaged as business?'
It's interesting at this point it's really just people who haven't been paying attention who think it's philanthropy. It's actually really funny. The most common type of person I hear that from are actually tech folks. Oh interesting. Because I think they're just a little slow on this sort of stuff, these bigger cultural shifts. Interesting. And so I'm happy to correct them. But yeah, I got plenty of tweets. I saved them all. You know, things like 'go woke, go broke,' 'you're an idiot,' 'no one cares about women's sports.' And I do think especially given, and you got to remember I resigned in protest from Reddit in the summer of 2020. And I did so very intentionally to push for change. And you know, this has been well reported on that I couldn't get in the boardroom, whether it was around subreddits like Watch People Die or some of these really racist, hateful communities. And by resigning the way I did, that shined a spotlight and sure enough got the change that I couldn't get in the boardroom.
And clarify, Alexis, you specifically wanted someone of color to replace you?
Oh, yes. And to be replaced by, yeah. So in saying all these things, I said, 'And look, like I'm out. I'm going to spend the rest of my life building in a way that will be wildly successful and also align with my values.' And you know, I haven't had any luck convincing this board. So replace me with a director of color, replace me with a black director and I hope y'all can make better decisions going forward because I know they will be better for the business, they will be better for society and all that. And so I think it's really poetic actually that literally one of the first things I did after that was Angel City and you know being the founding controller of that team and doing it so publicly and the outsized success not just of that, you know, it's the most valuable women's soccer team in America now but what that sparked, right? That sparked a wave of investment in women's sports. And so I just feel so blessed. It is rare to have been at the forefront of one big movement, you know, social media, co-founding Reddit, but then immediately after to have been so fortunate to have then been at the forefront of another feels really good and certainly, you know, given how much I took online, never offline. It's weird. No one has the smoke in person when they meet me. But online, it is so deeply satisfying to have done so well now at the forefront of something that like I said 5 years ago I was going to do and do so in a way that aligns to my values. And you'll recall too, I mean I think there aren't too many folks left who get this twisted as philanthropy anymore cuz ball don't lie. Like the revenue numbers don't lie, sellout crowds don't lie, viewership growth doesn't lie. Like it is, you basically just look like an idiot if you still think women's sports are not a real business. Cuz at this point, you know, the thing I love about capitalism is that when you can unequivocally create value like this and capture attention like this, that's your mic drop. It no longer needs to be about, 'oh well, this is good for inspiring young girls' or 'this is important for a healthy society' or all this other stuff that I, look, I do care about, but at the end of the day, if you see this kind of real revenue growth and real attendance growth and real viewership growth and still think it's woke to support, you're just dumb or crazy. I don't, I mean, it's one or the other. You can pick, but you've now really, the level of sellout at this point, it speaks for itself and yeah, it does feel good to win. It does feel good to win on these issues that I obviously care really deeply about too. So, it's been a good five years.
It's been a good five years and I'm thinking Palmer Luckey at the moment is doing the rounds, right? This is the founder of Anduril, rightly so, previously of Oculus and he said, you know, I'm on an 'I told you so' tour. I feel Alexis, there's a version of 'I told you so' for you.
Not as far along, not as far along as Palmer but we're certainly tracking in that direction and I think once we have a couple of billion dollar teams in the portfolio then you'll hear me, I'll be unbout it, I'll be relentless.
You'll be back here saying 'I told you so.' I'll be right back here. So yeah, still early days.
Well, talk a little bit about what you've learned from the evolution of Reddit because you are investing again in social platforms. You're an investor in Digg. We'll come back to that. But if you look at the Reddit that you sort of left behind, right, the Reddit that's a public company, what are your thoughts on things like the licensing agreements with the large language models? What do you think about the community that you were so key to building having their data now being sold to try and train the likes of Anthropic and OpenAI?
Yeah, it's interesting. Someone's going to do the HBS case study on, you know, the early days of Reddit. I remember having these debates with my co-founder about, you know, this nonprofit that Sam was building called OpenAI. Remember this is like, so I came back as chairman in 2014. Sam had just helped us raise a round of funding. It was about $50 million and take us independent from Condé Nast which was the company that bought us. And so you know on the surface I was like great. You know I got a bunch of, come back, we got Sam on board. He knows his way around Silicon Valley. He's helped us fundraise. And again remember it's like 2014. This was November of '14. So by you know 2015 maybe '16 we were having this conversation where I was debating with my co-founder. I was like, gosh, you know, Sam has this nonprofit that he's been asking us to basically aggressively scrape Reddit for. And I remember saying like, dude, I like Sam is a very smart guy, incredibly cunning. We've known him since the start of YC. Doesn't seem like the most philanthropically minded guy, but he has this nonprofit that he's really passionate about. He says it's such a long shot and he needs our data. And I really felt in my bones, this is again, this is a great lesson for me. And founders really need to learn to trust their instinct on this stuff. I was like, I don't think we should be giving this away to him. So, and I'm just like, I know in my bones we shouldn't be giving this thing away. But you got to realize in 2015, most folks in Silicon Valley thought OpenAI was a long shot. It just, it was doing some cool novel stuff, but it wasn't serious. And it may have still been a part of YC Research, Y Combinator Research at that point. I can't remember. But by I don't know, so by the end of the year, by the end of '15 or maybe early '16, we're really starting to have this discussion where it felt crazy to me that we were just giving away all this data. And you know again I lost that debate. And again bravo bravo Sam. But it was one of these things where you know this has been, I think there's a, this has been a long time going on in one form or another. And it is fascinating to me. I think Sam realized before anyone else including us including the founders just how valuable that data was on Reddit. Right? Because it was so well structured. It was, you know, voted on, categorized back then. It was all human and so it's incredibly valuable. I think the big challenge now is going to be, and I've tweeted about this. I mean, I didn't invent dead internet theory, but it definitely feels as though most of the social media we consume now is fake, right? It's either bots or AI generated or AI assisted or in some way just fake. And I think this is going to be the big challenge for all these platforms, not just Reddit, but to figure out how do you have provably human content. And obviously, this gets even harder when you have a platform built in anonymity because you're not going to ask the average Redditor to upload a driver's license or put in a credit card or any personally identifiable information just cuz culturally it was so taboo and it's synonymous. And so as I've started to meet with more and more founders, really the kind of cracked founders of the bleeding edge, I'm starting to learn about all the tactics they're using, the sort of new age SEO to like literally buy the accounts of moderators enough to just take over a subreddit and then start slowly dripping in content that's supportive of their business.
Yeah. And that flows directly into the LLMs which then flows directly into your results when you ask, you know, ChatGPT what's the best smoker that I should buy for brisket.
Yeah. And so now that you know the very bleeding edge founders are realizing this, exploiting this, at some point, something's going to have to give where the average consumer is now no longer trusting this data because it's not human, right? It's been gamed, it's been manipulated. And so I'm already anticipating that next wave that figures out proof of humanity in a way that doesn't need, you know, a retina, in a way that feels like that's got a great user experience that's giving people what I know they want. In an age of even more AI content everywhere, the fundamentally human stuff is going to do even better. Also why I'm even more bullish about sports. Because Hollywood and the music industry are going to get dramatically upended by this technology, but we're never going to take our kids to go see robots play football. Like there will be some robot sports like combat, like 101, BattleBots to the death type stuff, but traditional sports is just going to be made more compelling, more interesting because of this technology. It's not going to replace it because you need it to be human.
