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Summary:

The $50-million funding round that Quora recently closed has raised some eyebrows. Is this just another example of a bubble-style atmosphere in Silicon Valley’s venture capital community, or is the crowdsourced question-and-answer site really onto something that could be a multibillion-dollar idea?

Quora-screenshot

The “crowdsourced” question-and-answer site Quora raised more than a few eyebrows on Monday when it closed a new $50-million round of financing that values the fledgling company at $400 million, despite a conspicuous lack of scale when it comes to users. Is this just another example of the bubble-style funding rounds that have made Instagram and Pinterest the talk of the VC business, or a sign of how much power the “Facebook mafia” has in Silicon Valley? Or is Quora really onto something that could potentially turn into a multibillion-dollar idea?

Quora has more or less admitted that it doesn’t really need the $50 million it just finished raising, at least not yet. Co-founder Adam D’Angelo said (on Quora, of course) that more than half of the Series A funding round of $11 million the startup raised in 2010 is still sitting in the bank, unused. So why raise that much money at all? As Om has noted, one reason Quora did so is simply that it could — there was apparently plenty of interest, and the company wound up with financing from original Facebook investor Peter Thiel, among others.

Raising money is easy for Quora, so why not do it?

This is the startup version of the old adage “make hay while the sun shines,” and when two of your co-founders are Facebook alumni — Adam D’Angelo was the chief technology officer of the social network, and Charlie Cheever oversaw the development of Facebook’s “open graph” platform — there is plenty of hay to be made, especially since both founders are likely to become extremely wealthy when Facebook goes public (more than a third of the $50 million that Quora raised reportedly came from D’Angelo himself). More than anything, VCs love to give money to people who don’t need it.

D’Angelo has said that one of the reasons Quora raised the funding is so that it would have more “runway,” or room to prove itself and its concept before it has to start making money. And it’s clear, based on interviews with the founders, that the company sees what it is building as a potentially world-changing idea. Both seem devoted to it not because they believe it will be easy to flip or sell for billions of dollars (which they don’t really need), but because they think there is an interesting problem worth solving. As Cheever told me in 2010:

We’re not really focused on making money right now. I think if we can solve the problem we are trying to solve, we will find a way to make money.

In a nutshell, that problem is how to aggregate or crowdsource expertise on a wide variety of topics efficiently, and it’s one that any number of startups and services have tried to tackle, all the way from Yahoo Answers and Ask.com to Formspring, Reddit and Stack Exchange. And most have failed: Yahoo Answers and others have degenerated into cesspools of uselessness and spam, while companies like Aardvark disappeared inside Google and other acquirers, never to be seen again. Facebook launched its own Questions service in 2010, but there’s no sign that many people are using it much.

Among those who have tried to attack the problem from a different angle are sites like Demand Media’s eHow, which pays writers to come up with articles that contain some kind of expertise about a topic. Interestingly enough, eHow was built by Josh Hannah — who bought it in 2004 and built it into a major player before selling it to Demand Media, and is also an investor in an open-source spinoff called WikiHow. Hannah, now a partner with the venture-capital fund Matrix Partners, is an investor in Quora’s latest financing round.

Wikipedia is the model, but can Quora mimic its success?

Despite all the failures, there is one obvious example of a successful crowdsourced knowledge base, used by hundreds of millions of web surfers daily: Wikipedia. More than a decade after it was originally launched, the site is one of the top 10 most-visited web destinations on the Internet with 15 billion pageviews per month. And even more unlikely, Wikipedia has accomplished this feat without raising any venture-capital funding whatsoever, relying solely on donations and charitable funding.

The two sites have somewhat different approaches: Wikipedia asks users to contribute links and verified facts to articles that are designed to be a one-stop source of information about a topic — contributors are explicitly not allowed to state opinions based on their personal knowledge. Quora, however, tries to get those with knowledge to answer questions about specific topics, and then the community gets to vote on which answer they like best. Both sites have strict rules about what kinds of content can be posted, to avoid the Yahoo Answers problem. As a user of the site, I’ve found the quality of the answers to be consistently pretty high.

One of the main things that has helped Wikipedia grow as quickly as it has is the fact that it ranks extremely highly in Google search results, since it is seen by the search giant as an unbiased source of factual information. Given that kind of traffic, Wikipedia could easily generate hundreds of millions of dollars in advertising revenues if it added some innocuous banner advertisements to its pages (something it refuses to consider). And some Quora supporters believe that results from the site could benefit from the same phenomenon, especially as Google looks for more social signals about information.

So the ingredients of a compelling story are there: founders who have their eye on a big vision, who aren’t motivated solely by a quick flip for cash, and who are trying to build a Wikipedia-style global knowledge database powered by individual input from experts. The fact that Quora’s usage numbers seem a little lackluster is the only fly in the ointment for believers — but then, there was a time when Wikipedia wasn’t really a household name either.

Post and thumbnail images courtesy of Flickr user Mark Strozier

  1. what a bunch of gobbledygook and hogwash. the data is the data. people don’t like the site

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  2. gregorylent Tuesday, May 15, 2012

    quora censors out of the box replies or answers, can’t see much hope for them unless mainstream is their goal

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  3. Yahoo Answers and others have degenerated into cesspools of uselessness and spam,
    ——

    Quora is joining them.

    The entire site is rotting from the inside out. It’s been hijacked by a bunch of Aspergers victims and militants who have formed voting cabals to bury any answers they disapprove of.

    Then there is the war on humor. It’s another huge problem that drives off the more intelligent members.

    The final death blow to Quora is the new Be Nice at All costs policy which rewards mediocrity.

    The more traffic they attract the lower the quality will sink.

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  4. Quoting: Yahoo Answers and others have degenerated into cesspools of uselessness and spam,
    ——

    Quora is joining them.

    The entire site is rotting from the inside out. It’s been hijacked by a bunch of Aspergers victims and militants who have formed voting cabals to bury any answers they disapprove of.

    Then there is the war on humor. It’s another huge problem that drives off the more intelligent members.

    The final death blow to Quora is the new Be Nice at All costs policy which rewards mediocrity.

    The more traffic they attract the lower the quality will sink.

    Share
    1. The purpose of Quora is to provide answers to questions, not to incite flame wars from trolls and retards (such as you) who think that is what their visitors want.

      If they want to get into an argument, then there are countless other places on the ‘net to go.

      You don’t see people flaming each other constantly on Wikipedia – why should Quora allow it?

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    2. Tim, it looks like you don’t understand either Quora or Wikipedia based on your comments.

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      1. Quite the contrary. It’s you who don’t understand what they are for. If you want to get into arguments with people, go do it in real life. Don’t hide behind a keyboard with one-liners. Seriously.

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    3. Thank you for confirming my suspicions about you, Tim. I am beginning to suspect that the troll here is you.

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      1. Colin, I have already come to the conclusion that you are a troll. You come in here and start attacking people on Quora as either having Aspergers or militants. Something tells me that you must be either one of those, maybe even both — I have no idea.

        Cut the hysterics with the so-called “war on humor” – are you one of those fools who thinks that people who disagree with you are fighting some war on something?

        This is my last comment on this thread — I admit, I took your troll bait and I should not have done that. Stupid me.

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    4. Timster,

      Come back after you have gotten up to speed on how Wiki works and how it differs from Quora. Okay?

      You might also benefit from learning what a “straw man attack” is and how you are using it here unknowingly. No one here, myself included, is saying that any site should allow flame wars. No one.

      I have said that being nice to dummies and bores and prima donas appears to have taken precedence over worthwhile discourse.

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      1. Dan Peterson Friday, May 18, 2012

        Colin, I don’t know why you are copping such an attitude. Tim is 100% correct on how both sites. What you are doing is not a “straw man argument” – it’s being a nasty jerk and then resorting to ad hominem attacks when people disagree with you.

        You may think that what you wrote is that being nice to dummies, bores and prima donnas has taken precedence to worthwhile discourse but it seems like you aren’t providing anything to the equation yourself.

        I actually contribute to Wikipedia on a regular basis and also am a member of Quora and enjoy the dialog that’s on there. If you don’t like either place and where they are heading, that’s totally fine — make your own site where people follow you and worship what you say. Oh yeah those sites exist – they are called Twitter, Facebook, LinkedIn and Pinterest.

        Grow up!

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      2. Dan Peterson Friday, May 18, 2012

        Correction to what I said below – Tim is not using a straw man argument. He’s expressing his displeasure with the fact that you feel that the site does not meet your “intellectual” benchmarks.

        I agree with him. What exactly are you looking for in terms of content from these sites?

        You want witty dialog with a site that is meant to be a public domain encyclopedia? Sorry – wrong place.

        You want intelligent discourse when people pose questions they want answers — for as far as the people who post and answer them, they usually think they are doing that too.

        Cut the pedantics, you sound like Sheldon on the Big Bang Theory and while he’s an entertaining straight man, many people don’t like it when it happens to them in real life.

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        1. Dan, you and Tim are precisely the types of posters I object to on Quora and elsewhere. You are both highly repetitive and incapable of moving the discussion forward.

          Thank you for demonstrating what I object to.

          I am out of here.

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    5. Dan,

      Honestly, if you have nothing to contribute than have the smarts to remain quiet.

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      1. Steven Lefkowitz Friday, May 18, 2012

        Speaking of honesty, where exactly did you provide value to this discussion? All you did was quote Sasha without providing your own opinion. Maybe Tim was a bit harsh for making an assertion about you, but you definitely proved him right by your barrage of insults after the fact. It probably would have been better for you to shut up at that point and let Tim look foolish. Instead, you look like the idiot.

        All I see from you are ad hominem attacks telling contributors to see how the sites work. They did and they are reporting back. If you want to disagree, fine — prove them wrong. You failed in that regard BIG TIME.

        Last time I checked, you don’t own this site, nor are you the forum moderator so what gives you the right to attack others? Oh yes, you don’t have that right either.

        For that, I simply salute you and say “don’t hit the door on the ass on your way out”.

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  5. Quora is plagued by the same problems as most of these e-answer type sites (eHow, Yahoo answers, etc)…
    1) a user simply has no assurances that the answers are correct , or that they are not designed to promote some product or agenda. Free advice is often fairly priced.
    2) If responses are not motivated by some sort of ulterior motive, then what motivates participants to generate content for the site (free of charge). This seems like a shakey foundation upon which to build a business model.
    3) It is still unclear what- if any- liability an e-answer site should bear, if a user suffers damages as a result of advice obtained on the site. When the advice is free, then it seems like most people agree it’s “reader beware”, but if somebody is paying for advice.. and it’s my understanding this is what Quora would like to do eventually (charge for use of the site), then that is different. Even if they write disclaimers into the user agreement, does that completely shields them from liability? This concern alone would keep me from investing in such a site.

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