Note: Before we dive into Quora’s Business Model, we will have a brief look into Quora’s history to establish a better context.
Before Adam Angelo started quora, he had a job that most engineers would consider to be a dream position: he was the Chief Technology Officer at Facebook.
In a 2010 interview with Business Insider, almost a year after he had started working on quora in June 2009, Adam shared what made him take the decision to leave Facebook and start on his own, “I could make a bigger impact on the world by starting something new rather than just continuing to optimize Facebook.”
But it wasn’t like there weren’t any Q/A answer sites when he started Quora in 2009. There was Reddit, Yahoo Answers, Ask me Helpdesk, Answers.Com, Experts Exchange and many others.
Was there a need for another Q/A platform then? There was. Or at least Adam and his co-founder Charlie Cheever thought there was.
“There’s a lot of information that has been in peoples’ heads and hasn’t gotten onto the Internet. Even as the Web has gotten really big, there’s just been this gap. So we made Quora as a general place for people to share knowledge of all kinds,” Adam told Business Insider in Sep 2010.
Explaining his decision to launch a Q/A site despite the existence of so many of them at the time, Adam told Wired, “Before Google, there were all these search engines, and even though they were just OK, there were still a lot of people using them, and it showed that there was demand. We hope that we can be that for the knowledge-sharing space. There are all these people sharing knowledge on the internet, but it’s kind of a mess.”
Thanks to the two founders previously established credibility in the tech industry and Silicon Valley connections, Quora was able to raise $11 million from Benchmark Capital in March 2010, even when it was still in Beta.
When Quora did launch in June 2010, the user base largely consisted of Adam & Cheever’s college and high-school friends. Using Quora’s invite feature, their friends from Facebook also started inviting people from other startups, and these Silicon Valley folks played a huge role in getting quora its initial traction.
Some famous examples of tech biggies writing answers on Quora in its first year include Netflix CEO Reed Hastings. Facebook co-founder Dustin Moskovitz, Medium founder Evan Williams etc.
In May 2012, Techcrunch reported that Quora had raised $50 Million at a $400 million pre-money valuation from Peter Theil, of which Quora co-founder Adam D’Angelo invested $20 Million of his own money.
By April 2014, Quora has raised another $80 Million at a valuation of $900 Million from Tiger Global. Quora wasn’t even seeking money at the time, but when Tiger Global Management approached Quora, Adam D’Angelo said their visions aligned.
“They’ve invested in a lot of similar companies. They understood all our metrics really well. They’re also very long-term-oriented. We won’t have near-term pressure to sell or make money. Tiger said they were willing to hold on to our stock for 10 years, which is a perfect alignment with our strategy.”
How Quora Makes Money
It wasn’t until six years after the launch of Quora, a long time considering Quora always knew that they would make money through digital advertising, that the company started to monetize the 100 million monthly eyeballs it had aggregated back then.
When Quora first started testing ads on the platform, product manager Ryan Browne wrote,
“At this stage we’ll only be showing ads from a handful of advertisers, and our main aim is to learn what kind of advertising works best for readers, writers, and advertisers. We know that, when done carelessly, ads can often be negative for user experience.
Nobody likes banner ads, ads from shady companies, or ads that are irrelevant to their needs. However, we are optimistic that we will be able to introduce ads on Quora in a way that will fit in well and ideally make the product better.”
Even after the announcement that Quora would show ads on its platform, Quora was slow in terms of increasing the number of advertisers on the platform. Quora ads only existed in a closed beta for a little more than a year, with access being granted only to select pre-approved advertisers.
In April 2017, a year after Quora first launched ads, the company raised an $85 million Series D round co-led by Collaborative Fund and Y Combinator’s Continuity Fund, turning the company into a Unicorn valued at $1.8 billion, while it was still in the nascent stages of monetizing the product.
A month after raising money, Quora launched its self-serve ad platform, which would enable advertisers to buy ads on their own, eliminating the manual process of media buying facilitated by an ad sales representative. Using Quora self-serve ad platform, any advertiser — big or small would be able to buy ads on the platform.
Quora Vs Reddit
On the other hand, Reddit had more than 330 Million Monthly active users according to a Reddit press release page which was last updated on November 2017.
Stickiness to the platform:
Quora Site Metrics:
Reddit Site Metrics:
As you can see, Reddit fares better than Quora both in terms of daily page views per visitor and daily time on site. Reddit also has a lower bounce rate, which represents the number of visitors that visit only a single page on a website and leave without bothering to check other website pages.
But it is also important to note that Reddit by nature is more like a Forum where many users take part in the discussion, unlike Quora which is more about Q/A and less about discussing them by the nature of its design.
Valuation: The $20 Million revenue Quora raked in 2018 makes even the $1.8 billion valuation, at which it raised money in 2017, an enormous 90x multiple of even its 2018 revenue.
In Feb 2019, Reddit raised $300 million at a post-money valuation of $3 billion, meaning investors valued Reddit at 38.96x multiple of its 2018 revenue.
While Quora immediate competitors are platforms operating in the Q/A space, the online advertising business model it is pursuing makes all online channels including the digital advertising behemoths like Google, Facebook & Amazon its competitors, the three of whom combined make for more than 70% percent of digital ad spending.
The silver lining for Quora in a competitive digital ads space is the fact that traditional offline media spends like print, direct mail, television and radio are shifting to digital media buying. But even then, Quora’s success largely depends on its ability to attract advertisers and ensure advertisers get a high ROI through Quora ads, given that digital advertisers have way too many platforms trying to capture the digital media spends brands entrust them with.
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