There’s been a lot of armchair valuation punditry across the Valley this week. As the Facebook IPO looms, our intricately entwined ecosystem of startups and investors seeks to benefit from the domino effect of a population feeling flush with cash. This is the picture that the WSJ painted in its Quora funding announcement yesterday, headline: “Former Facebook Hands Capitalize on Buzz.” Okay, sure, smart people will always adapt to a favorable environment — but the WSJ missed a deeper and more long-term dynamic at play.
“We intend to use some of this funding as a cushion in case of macroeconomic changes,” wrote Quora co-founder Adam D’Angelo in an answer to a question about what the company would do with the financing. Sure, in layman’s terms this could read, “We’re getting while the getting’s good,” but a startup stocking up for a potential winter does not necessarily mean overvaluation. Especially when you consider that a “large portion of this money” will go to Amazon Web Services for EC2 and other bills… at least until something less expensive and more robust gets invented.
“We wanted to extend our runway,” D’Angelo wrote, about raising as optimally as possible. “[We wanted to] focus on long-term growth and quality, and this lets us avoid making short term tradeoffs like many other companies.”
Earlier today I spoke to proto-Facebook investor and Quora board observer, Peter Thiel, extensively about his personal investment in the startup. He reinforced the fact that Quora has a 20-year, 50-year, 100-year future if it manages to scale in a way that could maintain the quality of site discussion. Thiel admitted that the site had not yet reached the apex of its founders’ vision, but maintained that this kind of careful “slow growth” is a good thing in terms of keeping out irrelevant and spammy content.
“There’s a good chance that some day a majority of questions asked will be on the [Quora] platform,” Thiel said, explaining that its success fit his vision of a world where an emerging technology didn’t have to beat or destroy something else to be successful. Rather, it could just be. Imagine a layer of Quora’s intelligent discourse across all communication, where the knowledge contained on the site went beyond Q&A and attempted to solve grander problems than being a threaded platform for Silicon Valley squabbles.
In response to media criticism of the site’s valuation, Thiel referred to the technological prowess of Quora, and the breadth of talent retained by its 30-person team as its core appeal. Thiel — who told PandoDaily’s Sarah Lacy that “we’d be better off if people focused on doing unique things” — implied that the startup was indeed this sort of “unique thing” — independent of, and not competitive with, Wikipedia, Facebook and Google. More importantly, he implied that it wasn’t trying to be.
Aside from the team, Thiel — who uses Quora himself to keep up on Silicon Valley news — was impressed by the complicated technology behind the site, and held the fact that it was not easily replicable as being one of its primary drivers of value.
“The Samwers are never going to clone Quora,” Thiel said, resting his case.