Is Quora Worth $86 Million? Or $100 Million?

Last week, I reported that Quora, a Palo Alto, Calif.-based company started by former Facebook employees such as Adam D’Angelo and Charlie Cheever, was looking to raise money that would eventually give it a valuation of around $100 million. Today there are reports that the company raised about $11 million at a valuation of $86 million.

Quora, a massive user-created question-and-answer site that may one day compete with Yahoo Answers and Wikipedia, itself confirmed the funding in an ambiguous-sounding press release but never got around to giving details. The new funding has come from Benchmark Capital with former Facebook employee Matt Cohler joining the board. So why is the company getting this super valuation?

The Magic Wands

As I explained last week in my post, Hot Deals, Big Money: What’s Up With Silicon Valley?, Silicon Valley is in the meh phase and there are only a handful of companies which qualify as exciting. That’s one of the reasons why VCs are willing to bet big dollars on them.

Secondly, there is a premium these days on startups created by former Facebook stars. Much as early Googlers were viewed as wizards with special magic wands, a similar belief is sweeping across Sandhill Road. Benchmark Capital seems to have cornered the market on ex-Facebook guys — first Asana and now Quora — even if it has to indulge in high valuations.

Now don’t get me wrong — Quora is full of smart engineers and great product guys. If there’s anyone who can leverage Facebook Connect and Facebook’s social graph to build a company, it’s Charlie Cheever, formerly the leader of the Facebook Platform and the Facebook Connect platform.

Is Quora Really Worth the Money?

The big question is, of course: Is Quora worth this excessive valuation? And the answer is simple: no.

I think there is more noise around this startup because many venture capitalists, entrepreneurs and other Silicon Valley insiders are talking amongst each other on topics that concern them. Considering that the service is still in closed beta, it makes sense that right now there is a lot of “fidelity” in the conversations about Quora.

The company talks in abstract terms about its plans for the future, including opening up the gates to everyone. It is not clear how these high-quality conversations are going to avoid sinking into a cacophony as Quora starts to chase growth and attract more customers. But it has to do to that — after all, with VC funding comes the VCs’ desire for a return on their investments.

The big challenge facing Quora is the one that was faced by another, similar company: Aardvark. That startup had similar buzz, a pretty well known (and respected) founding team and market attention, yet could barely grow to some 90,000 users before Google decided to buy it for a reported $53 million.

Matt Cohler, who invested in Quora, argues that the concept of fidelity is very relative and means different things to different people, especially to people outside of Silicon Valley.

“One of the big changes I have seen happen on the social web is that different users of these social web services all take whatever they want from the service and use it in a very personal way,” he said. “The Quora teams understands that and that is why they are special.” Cohler said that there are pockets of non-Silicon Valley activity on the service and it was important for him to see that before investing in Quora.

Sure, much like Liz, I love using Quora, but the question I always ask myself is: Would I miss this service if tomorrow it disappeared from the face of the earth? Maybe for a few seconds. After all, we’re on the Internet, and soon something new will come along to make us forget the past and move on.

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