There's a stack for that

Stack Exchange gets $40M to build a storehouse of human knowledge

Until not that long ago, the venture firm Andreessen Horowitz — run in part by Netscape founder and serial tweeter Marc Andreessen — had virtually no investments in the media industry, apart from a token amount given to a couple of sites like Pando Daily. Now, the firm is one of the most active funders of alternative media companies, as it showed recently by leading a recent $50M round for BuzzFeed, as well as investments in Genius and the Imgur service. The latest to get some cash from the booming VC fund is Stack Exchange, a network of tech forums and communities that many non-nerds have likely never heard of before.

Stack Exchange’s best-known site, called Stack Overflow, was started by developers Joel Spolsky and Jeff Atwood in 2008 as a kind of alternative to technical sites that charged for answers, and gradually built a following with geeks in much the same way that sites like Hacker News have. But Stack Overflow also became the hub of a growing network of sites, all built on the same platform, around topics as diverse as gardening and photography. As Andreessen Horowitz partner Chris Dixon put it in a post:

“Most likely, you’ve used Stack Exchange without even knowing it — the network had over 300M unique visitors last year. Many users come in through Google, get their answer, and then leave, usually a little bit smarter.”

The answer market

Even if there’s some overlap between the sites, pulling in 300 million unique visitors is nothing to sneeze at, and that number is growing according to Spolsky, who says in a blog post that Stack is now in the top 50 websites in the U.S. ranked by unique visitors, with traffic still growing at 25 percent per year. And the theoretical market for such a community or network of communities is large, Dixon believes — in effect, it’s the same market that knowledge-based sites like Wikipedia or Quora are targeting.

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All of these services are trying to become the answer to Dixon’s question, which he calls one of the major startup opportunities of the information age: namely, now that more than two billion people have internet-connected devices, how do we create systems to efficiently share and store their collective knowledge? Many startups have tried to solve this problem, and many have failed, either because they get overtaken by spam or they just don’t provide enough value, or both.

“As far as I know, only two organizations have succeeded at scale: Stack Exchange and Wikipedia. Stack isn’t as large as Wikipedia on the readership side?—?the topics are more specialized—but, on the contributor side, is closely comparable to Wikipedia. Last year, Stack had… 3.8 million total registered users who contributed over 3.1M questions, 4.5M answers, 2.7M edits, and 17M comments.”

Quora and Wikipedia

It’s interesting that Dixon doesn’t mention Quora or Reddit, both of whom would probably like to think that they are also solving a similar problem of organizing the world’s information — although Spolsky has said that he doesn’t really see Quora as a competitor because it answers all kinds of questions, and Stack sites only accept questions that have a factual answer.

Stack also has a fairly robust business model, which is a career-related site attached to Stack Overflow — the theory being that if programmers and developers are talking about issues related to work, they are also likely to be looking for work. Over 6,000 companies have created brand pages on the career platform, where they can advertise openings to a motivated user base, and that generates two-thirds of the company’s revenue.

The network’s focus on answers that work for users also seems to have paid off in terms of Google ranking: if the question has a technical answer, it’s highly likely that a Stack site will be among the top results. And Dixon says the growth of the service has “reached escape velocity,” and it will continue to add new topics “until the network covers every topic that is amenable to objective Q&A.” Wikipedia and Quora may think that this is their department, but Andreessen seems to believe it belongs to Stack Exchange.

In addition to Andreessen Horowitz, other venture-capital firms involved in the financing round included existing investors Union Square Ventures, Spark Capital, Bezos Expeditions, and Index Ventures. The company has now raised a total of $70 million in four rounds.

One Response to “Stack Exchange gets $40M to build a storehouse of human knowledge”

  1. Angelbacker

    Answer markets are great long term investments because they are another form of information storage. One of the goals of Angelbacker is to allow for community ownership to drive these answer markets.