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I once answered a question that asked how Stack Overflow makes money, but that was before the time of VC.

Now, Stack Overflow has cash, and they have an ever-growing list of employees, but where's the business model?

The Experts-Exchange team took the time to answer its own Q&A about its site (since it wasn't included in the roundup by Fortune magazine), and just about the only dig in there that halfway has merit is the business model dig:

We switched to a premium model to keep out of the Venture Capital business (been there, done that, got the t-shirt). Companies like StackExchange couldn't do it without the VC cookie jar. Where's the model? Huh, Spolsky? (I’m sorry. Did that slip out?)

It hurt, but I can't help but wonder if they're on to something. How would Stack Overflow Internet Services pay back the VCs? Ad revenue alone? There is only one 'paid' product, Stack Overflow careers, but it doesn't seem like that could sustain a business as large as Stack Overflow (Joel once mentioned on his blog that his jobs board brought in an extra million a year in revenue).

So what does Stack Overflow do when the VC cash runs out? Is this a get-big-and-take-the-company-public maneuver? Is that the only viable business model for Stack Exchange?

Edit: With the size of Stack Overflow's team, it isn't a stretch to say that payroll is at least $2 million a year, probably as much as 4 when you think about benefits (average 120K for a developer in New York City; x2 for benefits/taxes/all-that-other-good-stuff). Office space can't be cheap, so how long does $6 million last before you need another VC infusion?

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  • 38
    YEAH! What am I doing with this fly-by-night no-business-model-having need-a-third-thing-with-hyphens company anyway?!
    – Restore The Data Dumps Again
    Commented Feb 15, 2011 at 21:23
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    For the record, you don't have to "pay back VCs." They have invested in the company in exchange for partial ownership.
    – Joel Spolsky
    Commented Feb 15, 2011 at 23:55
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    @Joel excellent point. I don't know much about Venture Capital; just that I figured they wouldn't be doing it unless they got their money back somehow.
    – George Stocker
    Commented Feb 16, 2011 at 1:59
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    You tell that guy from EE that @Jason
    – Ivo Flipse
    Commented Feb 16, 2011 at 10:43
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    Most Q&A sites (StackExchange included) let the community vote for the best answer, when really the person whose opinion matters most is the one who asked the question. that man is not in the business of answering questions himself much, is he?... Anyway, the number of Stack Exchange references in that article makes me think they are doing something right. First they ignore you, then they laugh at you...
    – Pekka
    Commented Feb 16, 2011 at 13:59
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    then they send clowns! AAAAA NOT THE CLOWNS!!!!
    – Joel Spolsky
    Commented Feb 16, 2011 at 21:16
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    Great question, just posted it up on Hacker News. news.ycombinator.com/item?id=2228621
    – Evolve
    Commented Feb 16, 2011 at 22:32
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    Isn't that semantics? Not to be obtuse, Joel, but what is the difference between 'pay back' and 'return on investment'?
    – Marcus Shockley
    Commented Feb 17, 2011 at 1:10
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    @Marcus you borrow money from me to buy a new car. You paid me back. We have nothing to do with each other. If I were to have partial ownership...
    – syaz
    Commented Feb 17, 2011 at 3:56
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    @Syax Marcus nailed it. An equity investor always expects much higher payback than a debt provider , so while SO may not have to pay back the VC in a strict debt sense, the VC guys are certainly looking to get back much more than they tipped in.
    – brettdj
    Commented Jan 1, 2012 at 10:26
  • £75k for a developer in New York?! Let me guess, trading companies (you don't get to go home)
    – Chris S
    Commented Feb 24, 2012 at 21:29
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    Just for the record, although I see many numbers about PPC and advertising as a form of revenue, I USUALLY DON'T click on these ads. I just get my question answered and move on... Perhaps it's just me :)
    – itsols
    Commented Jun 16, 2012 at 11:51
  • 1
    Jeff Atwood keeps using a time machine and taking money out of his wallet (after that, he'll again use the time machine to bring more money)
    – Ramchandra Apte
    Commented Oct 26, 2013 at 12:01
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    @JoelSpolsky - would be very interesting to see any updates from 2011/12 data. Thanks
    – DVK
    Commented Feb 2, 2014 at 18:07
  • 1
    Update: stackoverflow.blog/2016/11/…
    – m0sa
    Commented Nov 15, 2016 at 15:54

9 Answers 9

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Four ways:

  1. Job listings (e.g. the traditional classified ad model)
    https://careers.stackoverflow.com/employer/about-listings

  2. CV Search (e.g. the new-fangled and IMO vastly superior dating model)
    https://careers.stackoverflow.com/employer/about-search

  3. Traditional, but respectful (e.g. no animation or flash or pop-anything) display advertising on SO, SF, and to a lesser extent SU. https://stackexchange.com/about/contact

  4. Stack Overflow for Teams

It's not difficult to do the math here yourself and estimate how much we are making. Also, remember half the team is remote, and does not live in NYC.

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  • Not to mention that three of the SE2.0 sites are already generating more than 10k visits/day each. Eventually several of those sites should be quite profitable in their own right.
    – C. Ross
    Commented Feb 16, 2011 at 13:07
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    @C. Ross I don't remember the source, but I seem to recall someone saying that there wouldn't be advertising on the SE sites.
    – George Stocker
    Commented Feb 16, 2011 at 13:19
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    @George Jeff has said not now, probably not soon, but sometime. What would be the point otherwise?
    – C. Ross
    Commented Feb 16, 2011 at 13:23
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    10k * $6 CPM (very high but that's what HuffPo claims). is only $60 a day. That's $1800 per month per site in raw revenue. This isn't adding in job listings, but that's not even enough to support one programmer.
    – Marcus Shockley
    Commented Feb 17, 2011 at 0:03
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    @Marcus: You don't need a dedicated programmer for each additional site - the marginal cost of running an additional site is extremely low. If the "big three" pull in enough to run all the servers and pay the staff, any revenue from the SE2.0 sites is straight-up profits.
    – Anon.
    Commented Feb 17, 2011 at 0:44
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    @Marcus, you're conflating impressions (M) with visitors. The average pageviews per visit might be 10 or even 25+. And a unique visitor might return more than once per day, maybe 1.5 times. So the 10,000 visitors per day could easily be 375,000 pageviews per day. At your $6 CPM, that would be $67,500 in monthly advertising revenue per site. (However, the CPMs are likely closer to $1. $6 CPMs are only for homepage traffic. Still, that's $10k/mo/site.)
    – Portman
    Commented Feb 17, 2011 at 6:17
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    I pay a lot of attention to ads on Stack because they are really relevant to the things I'm interested in. If you're looking to target a developer of X, Y, or Z this is an ideal place to go. Further your conversion rate will be a lot higher. I bed the ads here do pretty well.
    – Alex C
    Commented Feb 17, 2011 at 14:48
  • @Portman that is valid but it could also be 10,000 page views. According to QuantCast, the average page view per user of SO is about 3. That means 10,000 visits = 30k views, or $180 a day. SO is getting 3.3 million PV a month, which is significant, but only about $20k per month in revenue. That's not VC level return. These are not hard numbers, even the $6 per CPM claimed by HuffPo has been questioned by critics. I'm just using it as a recent example.
    – Marcus Shockley
    Commented Feb 17, 2011 at 15:55
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    @marcus are you unfamiliar with stackexchange.com/sites ? Look at the visits/day column
    – Jeff Atwood
    Commented Feb 17, 2011 at 23:00
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    @Marcus: Forgetting house ads for a moment, You're missing a factor of 3 because we show 3 ads per page to the vast majority of our users.
    – Restore The Data Dumps Again
    Commented Feb 18, 2011 at 0:11
  • Maybe I'm being blind or silly, but I can't see ads on SO, SF or SU. I suppose they've been removed since 2011. But then that leads me to wonder what SE's main source of income is now.
    – Lou
    Commented Jun 15, 2014 at 14:48
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    @LeoKing ads are removed or toned down for users with >200 rep, but they're still there. Or perhaps you have an adblocker running. If you visit any of the trilogy sites while not logged in you will see ads. But most of their money comes from Careers I presume.
    – nhinkle
    Commented Sep 23, 2014 at 18:26
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    FWIW, I am a capitalist sympathizer and I don't object to seeing ads in exchange for my eyetracks across your page, especially since I get a LOT out of SE. Ads give me the feeling that I am contributing to the system besides asking and answering questions. I like that! With my rep on SO and most of the others I participate in, I don't see many ads, but believe it or not I would like to see more. This is because these ads target my interests.
    – Cyberherbalist
    Commented Jan 22, 2015 at 19:29
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+50

Why not sell a private, hosted version to individual companies?

I can imagine the organization that I work for benefitting from SO functionality with data secured and visible only to its employees.

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    I am surprised, this question didn't get a single comment. I would think it's a good business idea, at least from a layman's perspective, I too wonder what would be the major demerits of doing so.
    – Whirl Mind
    Commented Oct 18, 2015 at 15:58
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    @WhirlMind They did. It failed spectacularly. Essentially, the communities stole each other's users so no site was big enough to work well.
    – Tim
    Commented Nov 18, 2015 at 17:01
  • @Tim can How were users stolen?
    – Hellreaver
    Commented Jan 24, 2016 at 7:35
  • @Hellreaver i.e. multiple people set up a "Ubuntu" site.
    – Tim
    Commented Jan 24, 2016 at 15:56
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    @Tim Oh, that sounds terrible. I was thinking of selling a medium/large business their own stackexchange, where users can convey ideas and lay down rules for conduct/etc
    – Hellreaver
    Commented Jan 24, 2016 at 15:58
  • @Tim: Fork of stackoverflow (nullptr.com) based on OSQA maybe? Regularly mirroring SO Q/A but not reputation.
    – Erkin Alp Güney
    Commented Feb 15, 2017 at 10:08
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    They do: stackoverflowbusiness.com/enterprise
    – Rob
    Commented Apr 30, 2018 at 8:42
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There are currently two products that SOIS, Inc. sells:

Having hired an ad ops campaign manager, I'd presume that SOIS, Inc., being one of the #200 sites in the world, can command quite high advertising rates. I'm sure that as other SE sites grow, advertising slots will also open up on those.

In addition, I think that at this point, SOIS, Inc. is still in the early stage and is probably still examining various other revenue models. For example, I think that SE Chat, if needed for revenue purposes, could be licensed. And I'm sure they have more ideas up their sleeve that could build on the wide user base they're currently establishing.

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  • 2
    "being one of the #200 sites in the world" and addressed to people who buy damn expensive stuff! (and even on the internetz sometimes)
    – Trufa
    Commented Feb 15, 2011 at 22:12
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    If SO can make a respectable amount from advertising, and then you spin off a whole bunch of clones with slightly different demographics which will attract their own advertisers, then suddenly you have a gold mine.
    – slugster
    Commented Feb 16, 2011 at 8:14
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    @slugster Two years after your comment, does it feel even more true than when you said it?
    – corsiKa
    Commented Mar 13, 2013 at 14:51
  • Jumping in: not for me. stackexchange.com/about That's a whole LOT of folk to "nurture" there per month. So much for the dreamers thinking Joel & Co. can afford big villas with the zillions of $$ they get as a revenue. E. g. 25 employees, $50k yearly average salary; there it goes, your $1.25 million. So telling from this purely theoretical math lesson, you're gonna need several million to have a good basis. And that's no overnight thing to achieve. Excellent management & hard work req'd. Continually.
    – syntaxerror
    Commented Nov 3, 2014 at 23:40
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Joel's right -- you don't have to pay back Venture Capitalists. You can go broke leaving them holding the bag and walk away from it to get another job at some other company, like the idiots EE's VCs hired back in the last century. Or go back to blogging and speaking at seminars.

Nobody at EE ever ignored SO, let alone laughed at it. In fact, before SO got started, Jeff was asked why he was such a hater, and his responses showed how little he knew about EE, but EE gives him credit (although they know Joel does all the heavy lifting and Jeff is the mouthpiece) for actually getting off his duff and building something he thinks is better. But there's a difference between getting a whole bunch of people to sign up and play and having a business plan that's based on something more than stealing underpants.

Joel IS ducking the question -- not because he doesn't know the answer, but because he DOES know the answer. He knows that wht Marcus posted about his revenue stream, and knows the implications for his website.

People who think geeks buy things should talk to anyone who runs a casino during CES. Geeks show up in Las Vegas with two things: a crumpled shirt and a crumpled $20 bill... and they leave with both. They don't buy things from ads, and don't spend any money they don't have to -- and the people who place advertising know that. Sooner or later, the advertising has to pay off -- or an advertiser isn't going to buy. Besides... SO gives ads away. That tells you exactly what SO thinks advertising on its site is worth.

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  • 13
    Et tu, Brutus? ♪
    – Grace Note StaffMod
    Commented Feb 17, 2011 at 20:48
  • 5
    For full context: A Case of Mistaken Identity
    – BinaryMisfit
    Commented Feb 17, 2011 at 21:03
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    +1 for geeks being cheap. Fortunately stackexchange is targeting a much larger market.
    – Pollyanna
    Commented Feb 17, 2011 at 21:05
  • I think SOIS would have been fine without VC money, but you either go big, or go home, and they are betting the farm on the idea that this system will work, and will profit them sufficiently to keep it running. One of the best parts about their decision, though, was to use CC-WIKI. Thanks for taking the time to respond, btw.
    – Pollyanna
    Commented Feb 17, 2011 at 21:13
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    Geeks are cheap? Maybe, but they need expensive tools. There's plenty of money being spent in IT.... I would be interested to hear what you think is the answer to the question?
    – Pekka
    Commented Feb 19, 2011 at 12:13
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    @user157455, if the "geeks" aren't buying anything then they are the product, thats what the whole jobs model is.
    – user146401
    Commented Aug 11, 2014 at 18:49
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    @GraceNote Et tu, Brute*
    – Ulad Kasach
    Commented Aug 14, 2015 at 14:55
  • @Nappa This post was surmised to have been written by a fellow named Brutus Lyon, judging by the signature "B Lyon" that was edited out back in 2012. Hence the comment.
    – Grace Note StaffMod
    Commented Aug 14, 2015 at 17:21
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    @GraceNote Vlad is referring to the Latin [en.wikipedia.org/wiki/Vocative_case#Latin) which turns "Brutus" into "Brute"
    – Pekka
    Commented Oct 10, 2015 at 18:30
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    Who is Marcus, what did he post about his revenue stream, and what were the implications for his website?
    – Mazura
    Commented Jun 14, 2016 at 20:35
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Most people have answered:

  1. ads (which show you stuff to buy)
  2. careers

I would add:

(3) lead generation: for each stack, there are companies that want you to become their customers, and will pay Stack Exchange every time they drive a new customer to their site. For example, GitHub, MSDN, and Red Hat may not necessarily want to show you ads to get you to buy stuff, but they would like Stack Exchange to get you to come to their site and sign up so they can later market to you.

(4) brand awareness. quick... which company sponsored Watson versus Human in Jeopardy this week? If you can answer this question, you now understand brand awareness.

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  • 1
    Do you have any evidence for (3)?
    – AliceD
    Commented Jan 17, 2015 at 12:14
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    @Christiaan - People in marketing like their job security, so no, you will not find written evidence for #3.
    – Mazura
    Commented Jun 14, 2016 at 20:32
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    Even without firm evidence, could you explain what kind of techniques would be employed for (3) to lead visitors to a website without using ads at all? I can imagine product placement i.e. embedded marketing, which may work on some parts of the website like the StackOverflow blog (although I'm not sure what actual effect a classic "Check my GitHub repo" would have); but when it comes to the main website, what comes to me is the frightening idea of inserting fake user content (questions, answers and comments) containing links to said website. Well, as frightening as visiting MSDN could be.
    – hsandt
    Commented Apr 2, 2019 at 17:09
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Listen, The Hyphen Site just drew attention to themselves and got a tiny bit more relevant for a while. The fact is, their business model is basically trying to get people to pay for an answer that MAY be there. It may work as long as they are listed on Google, etc., but it doesn't scale (to people who are smarter than that) and it is probably not going to last: if Google and other search engines decided to exclude The Hyphen Site, their revenues would drop like a stone.

Let them do their thing. Stack Overflow makes money in the following ways for now.

  1. Ads for the relevant audience, which can fetch a premium for being targeted by keyword. The psychology is, Stack Overflow is helping you, so you are more inclined to click the ads -- especially if they fit with the message of helping you (by giving you the developers some tools). So I expect Stack Overflow ads to convert better than your average site.

  2. Jobs site. Stack Overflow should really beef this up and make it more of a cash cow, in my humble opinion. Look at Craigslist: they generate the majority of their revenue from charging for a few sections, most notably job posting. I would suggest letting each user put up a resume for example, and charging a monthly fee for recruiters and other companies browsing this site to see the resumes, and purchase credits to contact the actual users with job offers. Just a thought.

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6

Just as an update since the existing answers are a little out dated. They now also make money from a newer service called Stack Overflow Enterprise. This is a private version of Stack Overflow that companies can host on their own servers or Stack Overflow can host. The amount depends on how many users you have, I am assuming, since it does not have a pricing page.

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In this podcast I think Joel said, that last year's numbers were ...

  • $44 million from Jobs (careers)
  • $28 million from Teams (software to Enterprises)
  • $16 million from Ads (mostly for Azure)

... so about $70 million.

I think that their plan (the opportunity they perceive) for future growth is various flavours of Teams -- i.e. licensing the software to companies etc. for their private/internal Q&A.

And that they also intend to continue "public Q&A" -- which I think of as being "pro bono".

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  • I think 40% of the Azure numbers are from me accidentally clicking through while trying to scroll down on my tablet browser interface.
    – Scott Seidman
    Commented Feb 11, 2020 at 16:16
  • The public Q&A is the driver of the ad revenue.
    – Scott Seidman
    Commented Feb 11, 2020 at 16:17
  • @ScottSeidman I think they're hoping to grow total revenue to $700 million in a very few years -- and that that 10x growth will be from increasing the Teams revenue stream -- at which point the $16 million from Ads might be a nice little bonus but only 2% of total revenue. I'm not sure what the public Q&A is doing commercially, apart from goodwill -- maybe the company's being famous and "public" will also help when it's time for it to try an IPO?
    – ChrisW
    Commented Feb 11, 2020 at 16:25
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Right off of the bat, I'd suggest selling the user data to brokers, plus paid job listings and advertising. Add in PPC ads and it's the Facebook model.

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  • 40
    selling user data? Scandalous.
    – George Stocker
    Commented Feb 15, 2011 at 21:29
  • 1
    Maybe so, but at the going rate of $3 a pop per record, that would be my first guess.
    – Marcus Shockley
    Commented Feb 15, 2011 at 21:54
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    Yes, and they should add all manner of tracking cookies. Maybe also use exploits to give us free rootkits! That's another $3 per user/machine, at least. :)
    – Awesome Poodles
    Commented Feb 16, 2011 at 6:22
  • 1
    $3 per user lol... sure, show me that site. If it does exist they are going to want a lot more information on me than my name/dob and if I know HTML.
    – Tom
    Commented Feb 16, 2011 at 11:50
  • This is the "quantity over quality" model... and frankly, I think Facebook has it about wrapped up. Think, "matchmaker".
    – Shog9
    Commented Feb 16, 2011 at 13:29
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    $3 per user to data brokers is the going rate for name, salary, age and browsing habits. But I'm not saying that's what SO is doing. I'm saying that's where a lot of big sites expect their VC return.
    – Marcus Shockley
    Commented Feb 17, 2011 at 0:05
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    "Selling Data" can mean different things. For example Twitter sells access to their full update stream to Google+Bing for millions.
    – Mike Buckbee
    Commented Feb 17, 2011 at 1:23

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