
What is Stack Overflow's business model? - evolve2k
http://meta.stackoverflow.com/questions/79435/what-is-stack-overflows-business-model
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hapless
Experts-exchange faces the same problem in StackOverflow that the proprietary
UNIX vendors confronted in Red Hat and Cygnus.

The open source vendors were perfectly happy to turn a hundred billion dollar
industry into a one billion dollar industry, as long as they sat on top of the
smaller stack.

StackOverflow is clearly happy with a large piece of a smaller pie, and the
"evil hyphen guys" are never going to be able to compete with that.

~~~
jsankey
I'm not so sure SO will lead to a smaller pie. The walled nature of EE limited
its appeal to the largest part of the audience (the people looking for
answers). So although their business model was more direct, they were basing
it on a smaller corpus, with fewer viewers. An indirect (advertising-based)
model over a much larger number of eyeballs could well make for a larger pie.

The challenge for SO is to see if they can maintain a high quality corpus as
they scale, so people will keep producing and consuming their answers.

~~~
true_religion
In my opinion, SO's main competition is technical forums and _not_ EE. So
while SO takes away from other Q&A sites, they're also taking forum traffic
and monetizing it better.

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silverbax88
Reading through the comments on Meta StackOverflow to the question, two things
become really obvious to me.

1\. I'm so used to the hyper-insightful Hacker News business users that the
many of the SO responses seem very idealistic. In other words, I get the
impression that a lot of them are coders who think the world 'should work a
certain way' but have no real business experience.

2\. SO isn't making much money and isn't too keen on telling what their
business model, if there is one, actually is.

~~~
michaelbuckbee
As to your point number 2, the top upvoted answer to that question is by one
of the founders who clearly states the three ways that they are making money.

~~~
silverbax88
Yes, he says, 'here's how we bring in revenue, and you should be able to do
the math'.

I'd say he avoided the actual question rather deftly, which is how SO is going
to scale from a traffic and ad site to a site that brings in the kind of money
that VC's want.

~~~
michaelbuckbee
I think there is a real mistake in all of this discussion in conflating
StackOverflow and StackExchange.

What StackOverflow did to Experts-exchange, StackExchange is trying to do to
Demand Media/eHow, and they seem to be trying to do it the same way by
building a better product and providing better answers.

~~~
patio11
_StackExchange is trying to do to Demand Media/eHow_

Not quite. They're pretty big on focusing only on topics where meaningful
questions have right answers, as opposed to (I swear this is an actual eHow
page) How To Pour Water Into A Glass.

~~~
Poiesis
You know, just last night I just looked up "how to flip an egg" and ended up
reading a Wikihow article. I can flip pancakes great sans spatula, you see,
but doing a decent egg over easy continues to elude me.

I could see someone trying to look up tricks to pouring water without spilling
it, maybe. Never thought I'd say that, though.

~~~
hvs
There's almost always a Youtube video for things like that. It's actually
pretty impressive how many useful "how-to" videos there are on there.

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ig1
Developer recruitment is a $2bn/year market in the US alone.

SO's currently making about $150k/month from job listings on a tiny fraction
of the market.

~~~
sireat
Do you have a source for that $2bn/year ?

Best I could do was this: [http://www.linkedin.com/answers/hiring-human-
resources/staff...](http://www.linkedin.com/answers/hiring-human-
resources/staffing-recruiting/HRH_SFF/496369-46631227)

$2bn just for finding developers (that must include non-programmers) sounds
plausible, didn't realize recruitment is such a large industry.

~~~
ig1
My own models based upon several sets of data (I run a startup in this space).

But roughly it comes down to 320k developers changing jobs every year * an
average spend of $9000 on recruitment costs.

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EvanMiller
I do wonder whether Stack Overflow will become a victim of their own success.
By providing a place to get answers from experts to technical questions,
actually _employing_ an expert is worth much less than before. In other words,
Stack Overflow is turning knowledge into a commodity. This makes experts less
valuable in the marketplace. It therefore makes running a job-listings page
(or "elite CV service") less profitable.

Furthermore, since SO profiles are public, other job-listing companies in the
market can easily leach off the reputation mechanism just by adding a "Stack
Overflow profile" field.

Stack Overflow is a wonderful site, but I think their free services are a
long-term threat to the profitability of their premium services. When
knowledge is free, there's no reason to employ an expert.

~~~
InclinedPlane
Take 10 master wood workers and put them in a room, give a low-skill wood
worker all the tools they need and the ability to ask any of the masters any
question they like at any time and get the answer.

Do you think this will result in the same quality of work as if a master wood
worker had done it?

Why would you imagine software to be so different?

Being able to get past any particular technical speed bump is a tiny part of
what makes a more experienced developer valuable.

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buddydvd
They also seem to be making money from inserting amazon affiliate tags to
links pointing to amazon.

Example: [http://stackoverflow.com/questions/90924/what-is-the-best-
ph...](http://stackoverflow.com/questions/90924/what-is-the-best-php-
programming-book/1729361#1729361)

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InclinedPlane
They have lots of traffic, they serve ads, they charge for job listings. It
shouldn't take a rocket scientist to do the math on that and figure out how
they make money.

~~~
robg
Why not just limit your response to the first sentence? Moreover, I work with
a rocket scientist and I'm not sure he could figure it out.

~~~
InclinedPlane
It's not necessarily trivial to monetize lots of traffic (see 4chan, for
example).

~~~
michaelbuckbee
This is an excellent point and SO has previously stated (Pre VC) that they've
had issues with doing so in part because of the community.

I can specifically recall them describing how their attempts to do Amazon
Affiliate sales of books on the site were being undermined by people removing
the affiliate codes from the links.

~~~
glenjamin
Unless the links are being provided by a source that the user dislikes, why
would anyone choose to strip out the affiliate part of the URL?

It doesn't increase the cost of the item (afaik), and provides the source with
some revenue.

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yequalsx
I think their business model is to be a trusted source of information. My
problems with Google and Bing are that for some topics the top results are
mostly spam. I get eHow sites or other spam sites. What I want are trusted
sources of information. Their business model is vertical search.

~~~
semanticist
That's not a business model. A business model would be monetizing being a
trusted source of information. How do you do that? Google use adverts, Experts
Exchange charge admittance, are there other options?

~~~
yequalsx
I didn't look up the technical definition of "business model" but it's pretty
clear to me that their goal is to dominate vertical search and be a trusted
source of information.

They are following the same path Google did. When Google started the didn't
know how exactly they'd make their money. Their goal was to be the best (and
least intrusive) search and monetize later. Being the primary, trusted source
of information in a bunch of vertical search areas has obvious value.

One potential avenue is to become a sort of university. They know the areas
that people are asking lots of questions about and could setup a course to
cover the topic. They don't actually have to be the ones to setup the course.
They have the information to sell to someone who would setup the course.

The preceding is just an example of how being the leader, that is having the
information, is the business model (or goal if you will). Trusted information
has value.

~~~
true_religion
Having something of value isn't business model in and of itself.

If SO doesn't monetize their traffic _somehow_ , they'll go bankrupt despite
providing value to their users.

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fredwilson
every one of our great investments elicited this question early on. i'm
pleased to see that Stack is generating the same kind of questions

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guelo
Does anyone know if they make money off branded tags? (see their android,
flash, visualstudio tags)

~~~
jessedhillon
Read this: [http://meta.stackoverflow.com/questions/23955/adobe-
sponsore...](http://meta.stackoverflow.com/questions/23955/adobe-sponsored-
tags)

