At first, I was confused about the news of Quora joining YC and YC investing in Quora, but now I get it…I think…it seems like a smart deal for both sides. I don’t use Quora nearly as much as I used to (for a variety of reasons), and I’ve written about why that is here on my blog, so I won’t revisit that here — I do wish Quora would make some changes that would encourage me to use the site more again, and maybe they will one day — who knows. Regardless of my own use, briefly, here’s how I think this is a good arrangement for both sides given today’s circumstances, with the caveat that I do not know how either organization operates, so this is just pure speculation:
From YC’s perspective…:
- they get equity in Quora, which could have big, long-term upside;
- they get the association with Quora, the bump all of the attention and PR brings, and some little added attention;
- they get to experiment with new deals and structures as a relatively small, nimble fund, as this break conventions and it’s entirely possible YC continues to invest outside the incubator and even at different stages;
- (I’d guess that) a small part of YC’s pitch to founders is an extra-cushy landing in the event of M&A, so now Quora (with $100m+ cash in bank) adds to Dropbox, Airbnb, etc. as potential acquirers within the YC family; and
- Quora is filled with many talented people, and maybe they can collaborate with current/former YC students in some ways.
From Quora’s perspective…:
- they get back into the tech news and Twitter chattering classes, if even for a flash;
- they’re a bit isolated (physically, in Mountain View, and in the tech/startup ecosystem, which isn’t a bad thing) and with this arrangement, they will now get back into the flow for at least the short-term, maybe even longer-term in terms of new network connections.
- it’s likely fair to say that Quora has lost its way with product from its early Beta days four years ago, so maybe (hopefully) this new environmental exposure will create an opportunity for them to face product and company decisions without the veil of protection they’ve enjoyed.
- With over $100m+ cash in the bank, a little YC dilution won’t leave any marks on the Quora cap table while affording them to opportunity to use their cash leverage to scoop up teams who make it through YC interviews but don’t make it through YC Demo Day, or who don’t reach follow-on funding.