The Quora Business Model – How Does Quora Make Money?

Executive Summary:

Quora is an online platform that enables users to ask as well as answer questions about thousands of topics.

Quora makes money via text and image advertising as well as from monthly or yearly subscription fees.

Founded in 2009, Quora has grown to become the world’s leading QA platform. The company has raised $226 million since its inception.

How Quora Works

Quora is an online community that allows users to ask and answer questions on a variety of relevant topics.

The platform is divided into so-called spaces, which are sections dedicated to a particular topic. Examples include finance, mobile technology, outdoors, and thousands more.

Each space (as well as Quora’s homepage) displays the asked questions in a feed format. The content is displayed based on a user’s preference, followed spaces, as well as search history.

Using Quora is as simple as it gets. First, you sign up using your email address or social profiles (such as Facebook). Quora asks its users what they’re interested in during the sign-up process and automatically assigns them to the spaces that match their interest.

Afterward, users can either answer existing questions or post a question to have it answered by others.

Answers on Quora can be commented on or upvoted. The answer with the most upvotes normally is shown on top of the page.

If you like the answers any particular user gives, you will also have the option to follow him or her. Quora will automatically send notifications whenever that user makes a new post.

Users can access Quora by visiting its website as well as downloading its mobile or tablet application (available for Android and iOS devices).

Quora Company History

Quora, headquartered in Mountain View, California, was founded in 2009 by Adam D’Angelo (CEO) and Charlie Cheever.

Prior to founding Quora, both D’Angelo and Cheever held senior executive roles at Facebook. After graduating from Harvard in 2003, Cheever joined Amazon as a software engineer.

He would later be recruited by Facebook where he started his work as an engineering manager in 2006.

At Facebook is where Cheever ended up meeting D’Angelo who first joined the social media giant as its first VP of Engineering in 2004. In 2006, D’Angelo was promoted to become Facebook’s CTO.

In fact, D’Angelo and Facebook CEO Zuckerberg weren’t foreign to each other. The two became instant friends during their high school days at Phillips Exeter Academy (both of them were late arrivals who only joined the school in 11th grade).

They particularly bonded over their mutual love of software. Together, they developed a music suggestion called Synapse Media Player which recommended new music titles based on a user’s preferences.

Both Microsoft and AOL approached them to purchase the software but they ultimately turned it down – and released it for free. After graduating high school, D’Angelo went on to study computer science at Caltech. During his university days, he was even awarded a silver medal in the International Olympiad in Informatics in 2002.

He already began helping Zuckerberg to build Facebook during his university days. After graduating from Caltech, he immediately joined the company in which he grew to become a CTO.

Eventually, D’Angelo grew bored of the platform that was getting bigger and bigger by the day and wanted to return to startup life. He eventually settled on the topic of knowledge sharing as a problem worth solving.

At the time, platforms like Aardvark or Yahoo Answers were already attracting millions of visitors every month. Yet, many of those answers were of low quality and oftentimes spammy (since Yahoo did not bother to verify users).

D’Angelo recruited Cheever, whom he worked closely together with, to solve the problem of creating a knowledge base that surfaces high-quality answers from reputable sources. The duo began working on Quora in April 2009 after departing from Facebook.

In January 2010, the team announced that Quora was made available to a selected group of users for initial testing. Given D’Angelo’s and Cheever’s reputation, many Silicon Valley powerhouses joined the platform to provide in-depth and high-quality answers.

Those early adopters as well as the founder’s track record created a lot of media buzz. News outlets like GigaOM, TechCrunch, or VentureBeat were releasing dozens of stories, detailing anything that is to be known about Quora.

Just three months after the beta release, Benchmark led Quora’s first-ever funding round, investing $11 million at a $86 million valuation. Soon after, reports started to emerge that Facebook, the founder’s former employer, began working on a copycat product. Quora, in response, blocked access to anyone who tried accessing the site with a Facebook IP.

In June 2010, Quora was finally released to the wider public (in the private beta, existing users could invite up to 10 people to join Quora). One of the more interesting growth hacks the company employed in its early days was to algorithmically create Twitter accounts based on Quora groups. These accounts would then tweet out highlights of the respective groups they were representing.

In those early days, Quora was releasing a new feature almost every week. This was made possible by over a dozen of engineers it hired – mostly coming from Facebook. Features included embedded videos, user credits, threaded-comments, or personal-themed bookmarking boards.

As a result, Quora was able to add on millions of users as well as another round of funding. In May 2012, it raised $50 million at a valuation of $400 million – less than two years after launching to the public. What was particularly surprising about the funding round was the fact that D’Angelo contributed $20 million of his own money.

Nevertheless, all those new features also led to some valuable learning experiences. Right after the funding round, Quora released a feature (called Views) that displayed information about the exact posts that other users of the site had looked at in its user feeds. Those users felt that their privacy was severely compromised, which led to Quora removing the feature.

Unfortunately, that wasn’t the worst that happened to the company that year. In September, co-founder Cheever announced that he would be stepping back from day-to-day operations and move to an advisory role (which he held for another three years).

Over the coming years, the company continued to add features and users. In March 2014, it added its verified user feature – with former president Barrack Obama becoming its first verified user (and even answering some questions along the way).

A month later, Quora announced another funding round of $80 million at a $900 million valuation (more than doubling its value over the course of two years). Despite investor convictions, questions soon started to emerge about how long the company could go without monetizing its user base.

That question was answered in April 2016 when it introduced advertising on the platform (more on that later). That same year, in August, the company began its long touted international expansion. It launched a Spanish version of Quora, which was separate from its English entity.  

In April 2017, Quora finally reached unicorn status when it raised $85 million during its Series D round, valuing the business at $1.8 billion.

A year later, in December, Quora became the victim of a hacking attack that comprised the data of its 100 million users. The hackers stole information like names, emails, encrypted passwords, questions, answers, and many more.

In the last few years, Quora continued to expand internationally, refine its product, and since June 2020 become a fully remote company (as a result of the coronavirus pandemic).

Today, Quora boasts over 300 million users while employing more than 300 people that are scattered across the globe.

How Does Quora Make Money?

Quora makes money from displaying ads (in image and text form) as well as via premium subscriptions.

Let’s take a closer look at each of the firm’s two revenue streams in the section below.

Advertising

The bulk of the revenue that Quora generates comes from displaying ads on its platform. Established brands like Toptal, Honey, Crunchbase, Zenefits, or Shopify are some of the advertisers on its platform.

Adverts on Quora may appear in either text or image format. The company contemplated integrated video ads but has yet to introduce them.

quora advertising
quora.com

Quora generates revenue on a cost-per-click (CPC), cost-per-thousand impressions (CPM), and conversion basis.

With CPC, advertisers pay Quora whenever somebody clicks on the advert. CPM is based on so-called impressions, meaning whenever at least 1,000 users see an ad on the screen, advertisers will pay. Lastly, advertisers can also pay Quora whenever a user convert after seeing the ad (i.e. he or she sees it and ends up buying the product advertised).

The cost for these is determined based on an auctioning system. All interested advertisers bit on a particular user category or keyword and the highest bid gets to advertise for that rate it used during the bidding process.

Advertisers normally set a monthly budget for their campaigns. Once the budget is reached, no more ads are displayed to users.

Quora’s advertising platform offers a variety of optimization tools for advertisers, including retargeting, geo-targeting, and advanced reporting.

Subscriptions

In August 2021, Quora introduced a premium subscription offering, named Quora+, which allows creators on the platform to earn money.

Subscribers can either pay a $5 monthly or $50 yearly fee to access any content that a creator puts behind a paywall.

Quora then takes a portion of that revenue as their own cut. The rest will be distributed “in proportion to the amount each subscriber is consuming their content, with more of a subscriber’s contribution going to writers and spaces the subscriber follows.”

The model is inspired by other creator-friendly business such as Medium (which charges similar rates), Substack, or Patreon.

In essence, this helps to incentivize creators to publish even better content, which in turn attracts users (who then, again, get more creators on the platform).

On top of that, greater content quality also makes it easier for Quora to attract advertisers to its platform.

Quora Funding, Revenue & Valuation

According to Crunchbase, Quora has raised a total of $226 million across four rounds of venture capital funding.

Notable investors include Y Combinator, Tiger Global Management, Founders Fund, Matrix Partners, SV Angel, Benchmark, and many more.

The last time Quora’s valuation was publicly disclosed was during its Series D round (announced in April 2017) in which the business was valued at $1.8 billion.

According to Recode, Quora has generated $20 million in annual revenue for 2018. Newer revenue figures have not been shared ever since.

Who Owns Quora?

As a private enterprise, Quora is not obligated to disclose its ownership structure to the public. Presumably, co-founder D’Angelo would still hold a substantial amount of equity in the company.

The founders were only diluted by a maximum of 15 percent within each funding round. Furthermore, D’Angelo invested $20 million of his own cash during the firm’s Series B round (= $50 million).

On the other hand, Charlie Cheever most likely does not own much or any stake at all in the business. Given that he essentially departed from Quora already in 2012, he most likely sold (at the very least) portions of his equity in successive funding rounds.

From an institutional perspective, both Benchmark and Tiger Global Management would likely be the biggest shareholders. Both funds participated in two different funding rounds, of which they led one each.

Hi folks, my name is Viktor! By day, I lead a tech team of 10 for an e-commerce startup. At night, I work on expressing my weird thoughts through this blog. And if there's time, I cuddle my cat..