Is Quora Worth $1.8 Billion?

Is Quora Worth $1.8 Billion?

By Assaf Gilad and Katie Gerber

This article based on a Zirra Premium Insights Report on Quora. Use our search engine to get free data on startup companies and order a report. 

Q&A is not a new thing. In fact, it belongs to the “web 2.0” era of the last decade. It was the decade of user-generated content, in which giant tech companies believed in their ability to commercialize other people’s content. YouTube’s acquisition by Google so early and for so much ($1.65B in 2006) was a good sign that web 2.0 is, indeed, a profitable reality.

Yahoo Answers was launched in 2005. AOL acquired Q&A startup Yedda. A few years after, in times that marked the end of Q&A gold rush, Answers.com was sold to AFCV for $127 million and became an e-commerce site. That is why it was surprising to hear that Adam D’Angelo, former CTO of Facebook, left the social network at its heyday of 2009 to found a Q&A system.

But slowly and steadily, Quora became one of the most pleasant places on the web to read and share written content with a significant value, attracting a curious and knowledgeable user base. D’angelo, which saw how Facebook challenged MySpace and Friendster with a neat and convenient user experience, presented the world with the most viable Q&A platform in recent years.

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In Wikipedia’s Playground

According to SimilarWeb, Quora experienced an increase of 13.3% in monthly visits in the last six months. Between October 2016 and Mars 2017, the website generated an average of 343 million visits per month. The great year has some consequences in the competitive landscape: for the first time, Quora surpassed Yahoo Answers in popularity this April.

Visits over time. Source: SimilarWeb

Media sites suggested that this positive trend will allow Quora to challenge bigger players such as Wikipedia and Reddit. D’Angelo rejected this thesis in an interview with VentureBeat. He sees Quora as a primary source of information, while Wikipedia is a secondary source. Moreover, Wikipedia is a non-profit organization that presents encyclopedic information, the closest possible to objective truth, while Quora is an encyclopedia of people’s subjective opinions that represents their views only. But let’s admit – Wikipedia, Reddit, and Quora are all competing for our attention when we google for information.

Speaking of Google, it is not Quora, but Yahoo Answers that gains the most traffic by search engines. It followed by Wikipedia and Quora. Reddit does a better job in engaging a loyal community and users in social networks: it leads in generating direct traffic and in referrals. Here too, Quora is not doing well enough.

Source: SimilarWeb

Going Public

The big news, apart from raising funds at a $1.8 billion valuation (that said, our algorithms value Quora at about $1.6-$1.7 billion), is Quora’s decision to launch sponsored content as a primary business model. This will enable it to reach an IPO down the road. Yes, D’angelo not only went to school with Mark Zuckerberg and worked for him, but he’s also following his steps: Take your time to build a great product, then launch an ad platform that will create high revenue at once, then go public. Snap has used the same model recently.

Quora’s recent hires could hint at a future IPO. Soon after its head of business and community, Marc Bodnick, left the company in 2016, Quora hired a considerable number of employees, including Kelly Battles, Wikimedia Foundation Trustee, who will be Quora’s first CFO, Helen Min, Quora’s first head of marketing, and Karen Kramer, the company’s first general counsel.

Quora also hired Tami Rosen, who will be joining from Apple to the role of VP People this month. That means Quora has plans to grow further, after it had already grown in the workforce at about 26% last year, according to LinkedIn.

Total employee count. Source: LinkedIn

 

But going public will demand Quora to become a global service. Until very recently, Quora served English speakers only, that is why it is popular mainly in English speaking countries. According to SimilarWeb, the top three countries regarding traffic to the site are the United States (32.1% of visits), India (20.3%) and the United Kingdom (6.1%).

In August 2016, the company launched a Spanish version, and early in 2017, it added a French version. Quora said it would soon start a German and Italian version. For new users of Quora, the platform considers several factors, including their IP address, to guess which language they prefer. That means that Quora will launch in four more languages in 1.5 years. The company, however, doesn’t have plans to launch a Chinese version or operate in China at all.

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Social Network Advertising is on the Rise, But How Much Will be left for Quora?

Global ad spending on social networks is on the rise, which explains Facebook’s good numbers and Snap’s decision to go public. According to eMarketer, by 2017, social network ad spending is estimated to reach $35.98 billion, representing 16.0% of all digital ad spending globally. Advertising agency Zenith Optimedia, owned by France’s Publicis, estimates global advertising spend on social media will equate to 20% of all internet advertising in 2019, reaching $50 billion and coming in just 1% smaller than newspaper ads. It expects social media to overtake newspapers comfortably by 2020, making the market for their business model promising. The big question, though, is how much of it will be left for other players besides Facebook, Instagram, Google, and Snap.

Source: Zirra.com 

Taking all of the above, valuing Quora is like a shot in the dark, considering the company has only now started to make money. According to our research, Quora could be worth $1.6-$1.7 billion, a little short of the valuation estimated by VentureBeat or TechCrunch, stating a $1.8 billion valuation. Zirra’s algorithms predict that Quora could go public (or be acquired) in about 3-4 years. In case the company would be negotiating an acquisition, it could ask for up to $2.5 billion.

Quora’s ratings according to  Zirra’s research report. Source: Zirra.com

[graphiq id=”lTDod1f6aJT” title=”Quora Inc.’s Funding Rounds” width=”715″ height=”602″ url=”https://sw.graphiq.com/w/lTDod1f6aJT” frozen=”true”]

 

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