Reddit’s Growth Problem, Netflix’s Next Big Move, and the EU’s AI Power Play

TL;DR

1. EU’s AI Funding Big on Ambition, Light on Cash 

2. Private School Tuition Nears Record $50K

3. Reddit Crushed Earnings — So Why Did Shares Plunge 15%?

4. Netflix Rumored to Be Exploring Video Podcasts

EU’s €200B AI Investment: Can Cash Compete With America’s Head Start?

The EU is pledging €50 billion to boost artificial intelligence, with EU Commission President Ursula von der Leyen calling for European AI to be “supercharged.” The initiative will supplement a €150 billion private sector pledge announced at the AI Action Summit in Paris.

A key piece of the plan is a €20 billion fund to build four AI gigafactories, each housing 100,000 high-end AI chips — four times more than current AI factories. But there’s a problem: Only €10 billion has been committed so far.

Remember when Elon Musk joked that Stargate funding didn’t actually exist? If he were talking about the EU’s AI push, he’d be right. The ambition is there, and Europe desperately needs to catch up — but can it execute?

In the U.S., risk-taking is woven into our DNA, while European culture is more risk averse. I believe this stems from historical differences: America was built by pioneers and immigrants willing to gamble everything, while Europe’s population stayed put. Even the most innovative parts of the U.S., like California, were built by pioneers who risked going west. Funding won’t close the gap unless Europe fosters a culture that embraces risk.

Private K-12 Schools Are the New Luxury Brands

Private school tuition in the U.S. has surged to nearly $50,000 annually, a 7% jump from last year and the biggest increase in over a decade. 

• Average boarding school tuition is now $73,000 annually. For context, median household income is about $80,000. 

• In New York, tuition at private and religious elementary schools now averages $22,000 per year.

Yet demand isn’t slowing — 60% of private schools reported enrollment growth in fall 2024.

Higher education has long operated like a luxury brand, restricting supply with low acceptance rates while hiking prices. Now, the same trend is creeping into primary and secondary schools. The difference? Unlike elite universities, private K-12 schools offer little financial aid. Rising private tuition isn’t just a headline — it’s a stark reminder of how wealth shapes education access.

Private schools should be taxed higher to fund public education. Voucher programs drain money from traditional public schools. This creates larger class sizes and diminished quality, particularly in low-income areas. They also benefit affluent families already able to afford tuition. Redirecting funds through taxation could help level the playing field and ensure broader access to quality education.

Reddit’s Growth Stumbles as Google Algorithm Shifts Again

Reddit delivered a 71% YoY revenue surge in Q4 — the fastest growth since 2022 — and nearly quadrupled net income to $71 million. It also posted its second-ever quarterly profit. But Wall Street fixated on one issue: User growth missed estimates, and shares tumbled 15%.

The real concern? Reddit’s reliance on Google search. In 2023, a Google algorithm update favoring “helpful and human” content — like discussion forums — boosted Reddit’s visibility.

• This change catapulted Reddit from the 68th  most visible site in Google’s organic U.S. search results, to the 5th most visible.

But what Google gives, it can take away. Another recent algorithm tweak appears to have negatively impacted Reddit’s user growth. CEO Steve Huffman called it “volatility,” but investors heard “dependency risk.”

Compared with other social media firms, Reddit is particularly vulnerable to Google’s algorithm changes.

Still, Reddit’s fundamentals impress: 93% gross margins (higher than Meta’s 82%) and a 28% jump in average revenue per user point to operational efficiency and improving monetization. The stock is up nearly sixfold since its March IPO — but if it can’t grow users organically, that meteoric rise may hit turbulence.

BTW, check out our subreddit.

Reddit’s cultural influence far outweighs its market valuation — but how do you measure that? We created a mindshare score, a weighted average of website visits, TV mentions, Wikipedia page views, job search volume, analyst coverage, and more. The data confirms: Reddit is significantly undervalued relative to its cultural footprint. 

• Reddit’s mindshare is only four times smaller than Meta’s, but its market cap is 50 times smaller. 

But when you compare its valuation to its actual revenue generation, it looks expensive. Whether through better ad targeting or new revenue streams, Reddit needs to turn its influence into income.

Reddit is a company with huge potential. So why is it tethering itself to profitability, instead of investing in growth? It’s now posted back-to-back profitable quarters, yet at this stage, it should be scaling — acquiring users, expanding reach, and refining monetization. Shouldn’t it be burning money?

Podcast and Chill?

Netflix is exploring a move into video podcasting, according to a Business Insider story. The streamer has reportedly had conversations with several high-profile podcasters, including Alex Cooper of Call Her Daddy. 

• It’s early going, but Netflix appears to be considering two possible strategies: securing exclusive content from top podcasters or providing access to existing shows without ads.

• With nearly half of U.S. adults (136 million people) tuning in to at least one podcast monthly, the medium is too big to ignore. Podcasts are also increasingly shifting to include video, with 84% of Gen Z listeners saying they listened to or watched a video element of a podcast. 

Given Netflix’s focus on audience retention, investing in podcasting could offer a cost-effective way to deepen engagement, test new IP, and build multimedia franchises with minimal up-front risk.

Netflix isn’t going after the podcasting medium; they’re going after podcast talent. That’ll be incredible for people like Alex Cooper, Joe Rogan, and Theo Von. These people are the new Hollywood superstars. They’re the Jennifer Anistons and the Ben Stillers of our time.

By 2026, Reddit will be the fastest-growing platform for podcast distribution. With its active discussions, engaged audiences, and built-in virality, it’s a natural fit. If Reddit finds a way to distribute clips, full episodes, and live shows, it could become the YouTube of podcasting.

The digital age has a dark side: addiction. In this week’s Prof G Pod, Scott speaks with Dr. Alok Kanojia (Dr. K), a psychiatrist and co-founder of the mental health coaching company Healthy Gamer, about how tech addiction affects our mental health, the science of relationships, and the challenges men face today. Listen here. 

Bonus: Read Scott’s recent No Mercy / No Malice post — Addiction Economy.