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StackOverflow

I am a bit odd. I will rarely if ever answer a question on StackOverflow (SO). If I do its because I didn’t have any other easy way of answering the question. This is entirely by design.

StackOverflow is not a new business model. I was involved at one point with a company with a similar business model. Experts-Exchange.com. Did you know it has the dash because it is also ExpertSexchange.com? I have heard rumours that originally the domain name was that :)

At Experts-Exchange, users are awarded points for answering questions asked by other users or writing articles the general community values as resourceful. This results in a competition for obtaining more points to achieve various experts’ certifications.

Sound familiar? It started in 1996. It went defunct and was basically built up from community around 2000-2001. It was a community site at that point, and it grew rapidly as such. Everything was free and community driven. I won’t go through all the history here, you can read about it here. At one point you were actually paid to answer questions! EE screwed up really bad. Many of us saw it coming a long ways off. Legacy code, alienated community …

I was very active on EE back then. I acquired 2,782,577 points. Yes thats right and at 500/question (with bonuses the max you could get was 2000/question but you rarely got that). I probably answered 3000-5000 questions and most questions were multiple posts trying to help people out. They don’t have them any more but I would not be surprised if I had 10,000 posts. Let’s do some quick math assuming 5 minutes per post thats 50,000 minutes of my time. Or roughly a half year full time weeks of work. I think the time is actually higher than that though.

The idea of the business model is to pay people in imaginary currency and sell what they do for real currency. Best is if you can make your imaginary currency seem like it has some value.

What’s really great is that the Intellectual Property that you pay people imaginary currency for has value not just to the person they are helping but as a searchable help database over time. For the one person that was directly helped often another 100 will get their answer from the answer originally given.

There are some issues with the business model. First I need to get experts (few) to start answering the questions of the askers (many) and I need to build up a reasonably sized database of previous answers. This is not a small task. SO is using the same model that EE used, Community. They are making it “community driven”. This gets people involved. There are no costs for answers everyone is relatively happy. This builds the critical mass.

Generally speaking the growth would follow a pretty stereotypical S-Curve.

Scurve

This is where things start to get fun. In order to move up the S-Curve you have to keep capitalizations to a minimum. It may start with something small let’s say some ads (you know to help support all our infrastructure). Or we are building off this side business (job ads). Nothing too big, if we do too much it will slow the growth thats what needs to be avoided.

The whole point here is to make as much money as possible. If the goal were to build up community you wouldn’t need to set them up as a centralized broker of the information, it would be distributed. But this is a truly community centric viewpoint and there isn’t a good business model here.

As you get to the top of the S-Curve when growth starts slowing this is when you start to apply the pressure. You can be more aggressive at this point as well because your community itself has huge value just because creating a new one would be such a massive undertaking. EE did this. Milked the cash cow. The biggest most controversial change was when they put up the answer block and moved to subscription based models.

Would a VC give SO millions without looking at capitalization strategies down the line? I think not. The only thing they have of value is your brain and the intellectual property you assign them rights to use. They are not innocent nor do they give a flying @#$! about the community. They only care about keeping the community happy enough that they keep giving them intellectual property for imaginary currency so they can sell it for real currency.

Monopoly

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30 Responses to StackOverflow

  1. google ranking says:

    Good day! Do you use Twitter? I’d like to follow you if that would be ok. I’m definitely enjoying your
    blog and look forward to new posts.

  2. John Nilsson says:

    The interesting story here isn’t how EE or SE struggle to monetize what is, or could be, a wonderful service to the world. What’s interesting is _why_ they struggle.

    Most economists would probably characterize it as just another instance of the “free rider problem” but I think that is just defatism. As Yochai Benkler so aptly describes it, current economic theory is not able to model the internet era economy. As a result we still not know how to encourage and fund commons based peer production.

  3. Ubikuity says:

    sorry, typo mistake: “easy” => “free”

  4. Ubikuity says:

    When I started using EE it was no longer easy, so I used this workaround :

    1. I see an expert-exchange answer in Google search results
    2. I click on the link called “Cached” (Google cache)
    3. I see the google cache version of the EE page (but a CSS style hide the answers).
    4. I click on the link called “Text-only version”
    5. I see the complete thread with questions and answers somewhere at the bottom of the page
    6. I use Ctrl+F to find the string “Accepted solution” :-)

    (It worked for me during many years : at least between 2004 and 2009. I don’t know if it still works).
    I wonder why nobody mentioned this trick…

  5. Mr Atwood,

    Still telling the same inaccuracy over and over hoping that eventually, everyone will accept it as the truth? It’s still a straw man, and you know it. You’re better than that, Jeff. You have a site that works for some people; you don’t need to try to use Creative Commons to sell a difference in methods as a distinction in fact.

    Mr Cutts,

    Evil isn’t changing the rules to benefit friends or hurt friends’ competitors, nor is it even boosting search results for one’s own products over others; I don’t care one bit if Google plays favorites, because it’s Google’s business, and how Mr Page operates it is entirely up to him (and the board of directors, of course). What I do care about is that Google is neither fair, transparent or responsive to those it has managed to make somewhat dependent on it.

    What gives you the right to decide who has a valid business model in the guise of quality? More importantly, what gives you the right to accept at face value the opinions of a business’ competitors in evaluating that business model? That is evil — and illegal.

    … we could’ve easily manipulated search results to force more sites to advertise by cutting their traffic via updates…

    Curious, then, that when you issued Panda and Mayday, your sales team then chose to immediately contact Experts Exchange with a presentation for $75,000 per month worth of advertising. “Grub first, then ethics”?

    Experts Exchange didn’t “invade” Google’s results, if only because EE predates Google by several years. Google offered up EE’s pages in response to searches because EE has been around since 1996, and because people kept using those results to solve their problems. EE dropped off the Google charts when it changed the URLs to its solutions (which meant that the URLs Google had in its index were no longer valid), but let’s not give Google credit for doing anything there, because that was EE’s decision — not Google’s.

    When EE took measures to regain its prominence in the Google SERPs — most of which were vociferously opposed by EE’s members and even by some of EE’s staff — it was vilified as “gaming” Google, but nothing it did violated Google’s rules. Then Mr Spolsky and Mr Atwood started their site as the “Anti-EE” — their words, not mine — and you were apparently more than willing to listen to their opinions, and we all got Panda and Mayday.

    You won’t get any argument from me that EE made some terrible mistakes; unlike virtually everyone here (including my esteemed colleague, Mr Young), I have lived through them. But one should never attribute to malice that which can adequately be explained by misguided ignorance. Having a business model that requires either participation or payment as a condition of use is commonplace; most people pay for their broadband connection or their electricity or their bus ride to work.

    Not all that long ago, Google was justifiably unhappy about Microsoft using its position as a provider of operating systems to promote both its own browser and its own search engine. But how, sir, is that any different from Google using its position to affect the business of any number of websites, with no apparent recourse, no appeal, no transparency, and no methodology posted for redemption? Wasn’t Google’s entire argument before the EU that Microsoft was acting unethically?

    Perhaps it is possible to make money without doing evil — but it’s obviously a lot easier, and at some point, the distinction between doing evil and being evil is at most academic.

    ep

  6. Alan McBee says:

    Greg, in view of the responses from Jeff and Phil, et al, any chance you may offer up a less embittered analysis of SO? I think it’s fine if you don’t want to play, but you have some clout. I don’t think the future of EE predicts the future of SO, and it would be a shame if others were reluctant to contribute to the value of SO merely because you basically implied that they were fools for being repaid with “imaginary money.”

  7. Stack Overflow is a different animal from experts exchange. I have been an avid user for over 2 years getting my questions answered and looking for solutions, however over the last month, I have started answering questions more regularly.

    First of all it is a Wikipedia of sorts for programming questions, however what I have learnt is:

    a) You need to earn your privileges by working for them

    b) The system has inbuilt checks and balances which means that if you do not meet the required levels of responses then you will be voted down, and the lower you go well you start losing your privileges.

    c) Participation not only builds your credibility but it is a “virtual” classroom with master-apprentice aura with practitioners.

    d) Having the content in creative commons means its free to the world, but the moderators work to ensure that it is high quality

    e) There are even rewards for working on “Cold cases” which have remained unanswered for months, so dead wood is brought to life

    f) It is social and available APIs allow you to build on top for your own specific needs, so its a platform

  8. JohnMcG says:

    Some interesting points.

    I don’t think the SE founders were mustachioed-twirling villains, but I never bought all the happy talk about how it was all just a product of the awesome community, etc.

    If I had any thoughts along those lines, they were dashed by the announcement of Careers 1.0, with its prices ending in 9! (an insulting practice being rightly lampooned in Ellen DeGeneres’s current JCPenney ads).

    I’ve also noticed a trend of treating us like children if we’re not providing the type of content they want, and I am skeptical about whether this is the “demands of the community.”

  9. Patrick Smacchia says:

    EE as always been a source of frustration for me. What? Someone answered my problem and I am not able to see it freely on the web? I simply never registered there.

    I see StackOverflow as a good friend. When I see that my question is answered there from my Google search, I know I am one click away from the definitive answer.

    The day EE will collapse hopefully because of SO, dare I say, it’ll make me happy :)

  10. It’s a shame that you are so attached to EE. While and SO and EE provide much of the same service I came to dislike EE with a passion. (a) because EE invaded Google search. Anytime I was looking for an answer there was an EE question that looked like mine. But I could not see the answer without being a member … I do not remember if it required a paid subscription or just a login. (b) there was so much advertising on the page that sometimes it was hard to find the question.

    There are reasons why SO is winning. They might be VC or ECO or SOC. Goodbye EE; long live SO.

  11. Fred Wilfred says:

    I think most VCs are pretty dumb/desperate to catch and ride the wave of the next big thing (“TwitterFacespace”). Somehow they were convinced that the Stack Exchange sites were going to attract a non-programmer/sysadmin related crowd and see the same level of success that Stack/ServerOverflow have seen. I doubt there was much thought put into monetization, beyond maybe: “we could throw some banner ads on it!”. That seems to be how VC and web 2.0 “social networking” sites seem to function. How long did Twitter go without a concrete monetization plan? Some might argue they’re still testing the waters with that. Facebook seems to be making money through advertising, and I don’t know the exact figures, but it’s enough to generate a wild IPO valuation in the multiples of billions. Oh well, what other “investment” options do RWG with millions of dollars have these days?

    I think Server/StackOverflow serves a purpose for a certain kind of programmer or sysadmin. While it would be ideal in my opinion to have a site where in-depth and meaningful discussions could take place and ideas could be shared, what I’ve mostly seen are questions asked by beginners who would serve themselves better in the long run by RTFM.

    I would imagine you were so active on EE because, like most non-sociopaths, you got some positive pleasure out of the knowledge that you were helping others. I did that too for years on newsgroups. That sort of all goes out the window when you know that someone else is sitting in Aeron chairs off of your good intentions.

    Oh well, it’s times like this when I ask myself WWJSD? He’d probably answer another question on SO and then order another pair of women’s shoes off of ebay. Sure Jon, they’re for your wife…. :-)

  12. Haacked says:

    Well there’s one very key point you neglected. StackOverflow gives *all* that IP, your questions and answers, back to the community under a Creative Commons license. So there is a community benefit. A very different approach than EE and much more community focused.

  13. Rex M says:

    Very concise, clear summary. I’m not clear on how the first paragraph ties in, though. Do you not answer questions because you don’t approve of the monetization of your effort, or…?

  14. Matt Cutts says:

    As a Googler I share your concerns. You can make money without doing evil but the question is whether SO has their Larry Page or Matt Cutts. If they don’t, it’s very hard to keep temptations in check.

    If not for our ethics, for example, we could’ve easily manipulated search results to force more sites to advertise by cutting their traffic via updates (Panda or Mayday.) But trust is more important than money for us. Really.

  15. Mark says:

    So, basically you are not answering questions because you know/feel that SO will go the same route as EE in that they will put it behind a pay-wall just as EE did?

  16. codeulike says:

    But all StackOverflow content is licensed as Creative Commons-Attribution/ShareAlike, so the VCs wont be able to monetise it like that.
    http://creativecommons.org/licenses/by-sa/3.0/

  17. Joe says:

    Grey Young,

    Please enlighten us tomorrow by writing another brilliant article about how McDonald’s is doomed to failure because they have the same business model as Burger King.

    Also, if feel that SO is getting lazy and think you can do a better job, you can start your own site out with ALL their data:

    http://blog.stackoverflow.com/2009/06/stack-overflow-creative-commons-data-dump/

    Like you said, “EE screwed up really bad.”

  18. Jeff Atwood says:

    That’s why, unlike e-e, every contribution on Stack Exchange is licensed to the world (and you!) as Creative Commons, forever, in perpetuity. We also provide quarterly data dumps of all posts in the network on clearbits.net via torrent.

  19. something_or_rather says:

    Well said.

  20. devrim says:

    “They are not innocent nor do they give a flying @#$! about the community. ”

    you are missing a few crucial points,

    1) that they provide amazing value to developers. by answering i’m paying back for the questions i asked
    2) by answering, my future employees will see validated history about topics i know, so they don’t need to fail at validating my cv with my references.

    how they turn this into business, how vc’s pay, or how much money they make, is their problem. SO is not different than twitter (followers, retweets), facebook (likes) etc. If those companies are valuable to VC’s so is SO.

  21. Greg,

    Good to see you’re still alive and well, old friend. You kind of dropped off the radar for a while there. I’m just posting there to correct a few factual errors; I’ll let your conclusions stand on their own.

    1. Experts Exchange, at one time, owned the domain name expertsexchange.com, if only to keep it out of circulation (it has since let it lapse), but it never used it.

    2. EE went under in the last couple of years of the last century because it had a terrible business model: it took venture capital money, hired someone with a “rep” in the industry who in turn hired a huge marketing staff and spent a lot of money developing “partnerships” with companies, with an eye toward building traffic that would enable it to sell advertising. Wrong, wrong, wrong, wrong, wrong and wrong — small wonder it went broke. When that happened, yes, the community did its job to keep it alive, but that doesn’t mean there weren’t people “in the office” watching the site; the advertising revenue provided enough money to keep the servers on while the site was sold out of bankruptcy in 2001. The new owners (who included one former EE employee and the person who is now the sole proprietor) also tried looking at the advertising model in earnest — and found it lacking, at which point it went to the fairly high paywall that existed until about a month ago when a less restrictive “Freemium” model was introduced. The Wikipedia article is a pretty good example of why Wikipedia isn’t a reliable source of information; we’ve just never mustered the energy to want to fight off all the people who will edit any changes to fit their own agendas, and Wikipedia prefers allegations from second sources more than facts from first sources.

    3. Experts Exchange has never paid Experts. It doesn’t even pay Page Editors, Topic Advisors, Moderators or Administrators, unless you consider the Premium Services at no charge — which you still have, by the way — and a few shirts as compensation.

    4. I’m not sure where the “alienated community” comes from; had you said “alienated Administrators”, that would quite possibly have been true during the two years from 2008 through 2009, but there’s no question that EE-The-Company spends more resources, energy and money on communicating with and involving its membership in the ongoing development of the service — not site, service — than any company of which I am aware — and that’s especially true of a company with a viable, demonstrably successful business model. Even at its worst, when Google was reading Anti-EE’s posts and almost immediately developing algorithm changes to punish EE, EE managed to stay profitable. No sucking at the VC teat, no posting expenses to other companies, no execs going without paychecks because they had other incomes… EE rebuilt itself from the ground up using current revenues — and was in virtually constant communication with the membership at every step.

    5. For the record: http://www.experts-exchange.com/M_2886341.html
    3,382 Questions Participated
    8,936 Comments Posted
    2,345 Questions Answered
    2,782,577 Expert Points (currently 175th all time)
    1,422,807 C# Programming Languagen (Genius, currently fifth all time)

    6. Experts Exchange claims no ownership of intellectual property; its members agree to grant EE an irrevocable license, but there’s no shared ownership with one exception: EE pays one member (as opposed to an employee) to produce the newsletter, and because of that, EE could argue that his posts in the newsletter are exclusively their property. I doubt he would even consider trying to argue the point.

    I do hope you’ll take the time to come have a look around the new site, too. We could have used your input the last couple of years.

    Best regards,

    Eric

  22. Robert Levy says:

    Everything contributed to SE is under a Creative Commons license and available for download. Also, ads only show for users with < 200 rep points. Monetization comes from spin-off projects like the SE Careers site. EE screwed up big time but the internet is full of companies that manage to remain benevolent while providing valuable services for free.

  23. Ian Rae says:

    > If the goal were to build up community you wouldn’t need to set them up as a centralized broker of the information, it would be distributed.

    Not sure that is always true. In some sense StackOverflow is already distributed, with a bunch of competitors screen-scraping SO content onto their own sites.

    A web community is a URL; a place where people go. Read Chris Anderson’s book “Free”. There are many forms of profit-making that don’t break the community. Flickr for example uses a freemium model where 5% of users pay so that 95% can use it for free.

  24. StackOverflow was founded, though, as a way to make the internet a better place. You believe Jeff and Joel and the group will turn that founding principal on its head and just to make a money grab?

    Doesn’t sound like them. I think Spolsky has better ethics. Personal wealth is important, but not more important than the web, and I think the owners of SO/SE understand that. It would not at all surprise me that if the SE business model failed, they’d sooner shut down the sites than turn it into an Experts Exchange gone bad.

  25. Mike says:

    Good article. This kind of thing bugs me about internet startups. I once asked a more experienced programmer what “Web 2.0″ was, and he had a great answer: (From the point of view of the company) “We build the website, you supply the content, we make the money”. Exactly what you’re describing here.

    Sounds to me like Experts Exchange made the same mistake just about every internet company ever has made, using this flawed business model:

    1. Make something awesome that people want and give it away for free.
    2. Get lots of people to visit/use/sign-up for your service.
    3. Once you reach a critical mass of a “large” community, monetize the fuck out of it.
    4. PROFIT!
    5. Because of #3, piss off all your users and lose them to a different but similar service that’s only at step 1 or 2.

    Nothing is free, and there’s a whole generation (myself included) growing up with the understanding that “Awesome Free Online Stuff == Advertising” is a normal and inevitable truth. The problem is that these companies aren’t being honest with their customers, and maybe not even honest with themselves.

    If a company plans on ever charging for it’s goods/services, and I assume most would, then they should be upfront about it and charge a fair price from day one. This is one of many ways to avoid #5 above, because you’re not tricking your users with free content then charging for it later. You need a sustainable business model.

    I think the most important sentence in this post is “The whole point here is to make as much money as possible”. If you’re business model is unsustainable, you lose, eventually. Groupon is a prime example of this. They’ve tried using tricky bookkeeping to make it look as though they make money, but they don’t.

  26. pete w says:

    Wow you bring up some great points and I totally agree with you.
    BUT I have a question or you:
    Why did you spend 50,000+ minutes in experts exchange answering other people’s questions? I can only assume that your expert knowledge is better invested in consulting, so why did you do it?

    If I was supporting my OSS project through StackOverflow, then investing time answering questions is definitely worthwhile. But I cant fathom how EE or SO could ever pay you a fair share of money for your expertise and time, they would be broke in a week no? :)

    Stack overflow is great because its like a wikipedia for technical gotchas that I run into every day, and it is a merciful alternative to the bullshit involved with reading people’s blogs when you have a specific question. Personally, I NEVER visit StackOverflow with the intent of answering other people’s questions, I dont have the time nor interest however if I submit a question I ALWAYS document solutions I find for others.

  27. Blake P says:

    An interesting post. While StackExchange’s investors do expect a return on their investment some day, I don’t think you’ve provided any real evidence that they don’t “give a flying @#$! about the community”.

    Having spoken with and interviewed for a job there, I truly got the sense that they do care about the community and that they do care about making the web better for all. This is my one tiny data point FWIW.

  28. Rush says:

    Seeing as how the community made the site worth something, they should give some of that funding back to the community, right? A share per question, 3 shares per accepted answer? I wish. They probably started out with good intentions but people get greedy once they see money.

  29. Mike says:

    what about the value given to the students and professionals alike who benefit from reading the answers on SO ? You’re obviously against that. But you know what, the only other way to get that info is from the textbook cartels, you know , the ones who “milk the cash cow” by releasing new versions of the same material every 2 years. That is no different than the ridiculous paywall that EE put up. I think you’re being extremely selfish. SO as it is today is one of the most useful sites online, and I see no problem with them profiting from it, especially without the inefficiencies of information flow that come from a paywall.

  30. Harry M says:

    From the outset, SO have been talking in public about deliberately setting out not to do to their community what EE did, and have taken many positive steps in this direction (e.g. all questions are Creative Commons licenced so you can fork SO if you want to).

    Even if one day the VCs take control (maybe it’s happening – maybe Jeff was pushed) and ditch the CC licence, it’s been a fantastic resource up until that day, and created a free dataset for any number of other Q&A sites to start up, doing the ‘right thing’ again.

    Are you aware of SO’s very public stance on this? If so, the post above sounds to me somewhat paranoid, (or maybe just ‘once bitten, twice shy’). If not, I suggest you give them a chance.

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