March 27, 2010
I found an insightful discussion about SO/SE (StackOverflow/StackExchange) business model and going for VC money on 37signals. It looks like everything has been said, and the outcome is just remained to be seen. Some key points well noted there were:
- A developer Q&A site cannot scale, since it’s a niche site.
- The clones of a Q&A site are too easy to build, expect a lot of competition.
- A Q&A platform cannot scale, because it’s just too easy to build. What happened to forums (phpBB and vBulletin), will happen to social Q&A platforms. Expect a race to the bottoms.
- There is already a good competitor: www.qhub.com, wait for more to come.
February 16, 2010
A while ago I was writing about StackExchange, which is a platform to create simple web 2.0 questions-answers community sites. StackOverflow was the first community site created by Joel Spolsky using StackExchange. I sometimes browse through another StackExchange offspring – OnStartup Answers, which is themed around startup industry. Ironically, one of the questions asked on the OnStartup Answers was the following: Do owners of sites like OnStartups.com and Startups.com have any revenue off of these websites? I was skeptical about it and got slammed by fellow OnStartup lovers. Meanwhile, Jason Cohen, a co-owner of the OnStartups himself wrote that the site “is like blogging. It’s almost impossible to make money off ads and blogging, even with thousands of readers (you need many 10s of thousands). But blogs can be a fantastic way to drive traffic to other things that do make money, like a startup or like consulting time.”
So guess what happened. Joel started looking for VC money to fund his StackOverflow project. Funny enough, he also wrote in that post that it is a sign that you should NOT be looking for VC money “if there is any other way to raise the kind of money you need, for example, by selling actual products to customers“. In other words, he doesn’t think that he can make good money by selling actual products (ads or whatever) off StackOverflow and decided to go to VCs. This is exactly the answer the OnStartup lovers didn’t like.
It is not necessarily a bad business model for Joel and StackOverflow. This is the way to do things in Silicon Valley – you get a site off the ground, get funding, grab the audience, do IPO or sell to a strategic investor, and then you walk away smiling. Webvan, anyone? ;-)
November 7, 2009
Here is the site. The idea is simple: it’s a questions-answers service creator, much like Ning is a social network creator.
The questions-answers sites have been around forever. Even Yahoo! has one. However, the platform for these sites seems to be a new thing. Is it a good idea? While there are many unsuccessful social network, the biggest social network platform – Ning seems to be a success. Is it a success?
They have had over $119M in funding. Are they profitable? No. Do they have any revenue? Yes! How much? Likely to be $1M. Crap! A company burning through a hundred of millions and having annual revenue of a couple millions at most. That’s a typical Web 2.0 success indeed.
So it looks like StackExchange will be rapidly followed by competitors, and eventually even an open-source free version of it. It doesn’t look that StackExchange will be a huge success, but it well may be profitable. The key to StackExchange profitability would be very simple. The guys developed a nice platform, and they put it out there. If they stop all development and their maintenance and support costs are minimal, they will be out of red soon. There will be competitors, but the “first mover advantage” will let StackExchange to enjoy their nice monthly fees for a long time. If they continue to improve the product, sinking more dollars, it will be another money black hole.