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What is Quora's business model?
Hello! Thanks for your question about Quora's business model.
The short version is that Quora's business model was previously reliant on funding, but has since evolved to monetize mainly through advertising.
Below you will find a deep dive of my findings.
QUORA BUSINESS MODEL
According to Venture Beat, Quora's business model is built on advertising much like Google's search ads. The question-and-answer site displays user ads relevant to their search queries. In March 2016, Quora reported that it had reached 100 million unique monthly visitors.
VentureBeat notes that it has taken Quora 6 years to monetize its website since the company was founded by Adam D’Angelo and Charlie Cheever in June 2009. During those years the company has survived on its hefty $160+ million in venture capital. Pando quoted D'Angelo in 2014 following a funding round with Tiger Global as saying: "These new funds would be enough to get us to break even if we wanted them to, but we may raise more in the future if we want to invest in development more heavily. For now, we are fortunate to be able to put 100% of our resources toward sharing and growing the world’s knowledge."
In 2014 Quora joined the Y Combinator startup accelerator batch where it raised a total of $141 million in 3 funding rounds from 11 investors including Peter Thiel, Tiger Global Management, and Benchmark. The website also acquired the political discussion platform Parlio in the same year.
As for liquidity, Quora outlined several options for providing shareholders with liquidity. These include acquisition or going public through an Initial Public Offering (IPO).
GAINING TRACTION
Speeli neatly spells out how Quora gained traction since the year it was founded. Below is the outline of Quora's story as told by Speeli:
1) The founders populated the site with Questions
2) Early Employees filled the site with Questions
3) Adam D'Angelo had good connections (the article notes that D'Angelo was the former CTO of Facebook and therefore used his connections to raise funds, get media attention, and hire great people)
4) Adam D'Angelo had good money (the article notes that D'Angelo invested $20 million of his own money in a single round)
5) Adam : We invited our friends (this is the key point where the website gained traction, as friends of friends snowballed into a community that Quora nurtured)
6) A Tech community was built (Quora's early focus on tech questions attracted smart tech geeks)
7) Beta invitations targeted the right people
8) Quora got big traffic from Google (Quora focused on difficult-to-find topics such as information on startups)
9) Focusing on one topic brought more Google traffic
10) Paid traffic (Speeli notes that many believe the founders spent funds to get initial traffic)
CHALLENGES
In this section we will focus on 3 challenges to Quora's business model: Competitors, User base, and Ad Revenue.
Crunchbase currently lists 11 competitors for Quora. These are Aardvark, Answers Corporation, ChaCha, Formspring, imploid.com, Mahalo, reddit, SodaHead, Tawkers, Wikipedia, and yoomoot. (A short description of each can be found here).
Quora acknowledges that it has a relatively small number of subscribers. However, the company relies on its high quality, highly ranked answers to continue attracting more than 80 million unique monthly visitors, with most of them not part of its subscriber base. According to Quora, it is the #140 most visited website in the world. Quora also made efforts to directly compete with other Q&A sites, such as when it hosted "Writing Sessions" as an alternative to Reddit's "Ask Me Anything".
The company revealed that it plans to sell contextual advertising, targeted primarily to non-subscribers.
In 2016 the company also announced that it is initially allowing 4 companies to advertise on its platform. These are Lever, Uber, Wealthfront and Sunrun. Quora further explained in a blog post announcement,
"Today we are announcing an experimental pilot of third-party ads on Quora. At this stage we will 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."
ADDITIONAL RESOURCES
Here are additional materials for further reading:
Adam D'Angelo on Knowledge, Experimentation, and Quora by EconTalk | Library of Economics and Liberty
CONCLUSION
To wrap it up, Quora was previously reliant on its hefty funding for its first 6-7 years. However, the company has taken steps to monetize its business model through advertising. It also plans to offers its shareholders liquidity options through acquisition or Initial Public Offering (IPO). Quora's competitors include Aardvark and Reddit among others. Though it has a relatively small user base, Quora relies on its high quality and highly-ranked answers to continue attracting 80-100 million unique monthly visitors. In 2016 the company also announced that it is initially allowing 4 companies to advertise on its platform: Lever, Uber, Wealthfront and Sunrun.
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