Eyeballs, Training, China: Reasons for the Stack Overflow Acquisition
Prosus, the largest technology company you never heard of, announced its intention to buy Stack Overflow for $1.8 billion this week. The Netherlands-based technology investor owns 29% of Tencent and a wide range of consumer internet companies. The purchase of Stack Overflow will provide a huge base of developers to market to, content for training, and opportunities in China.
According to Amazon Web Services‘ Alexa.com website ranking services, Stackoverflow.com is the 48th most visited site in the world, and investors have repeatedly sought to monetize that. Yet, 76% of its traffic comes from search, which rivals Wikipedia — a site that holds yearly appeals asking for charity.
Both sites draw traffic due to their user-generated content, not primarily because of their respective brand name. Stack Overflow wants to be a destination site, like Amazon.com is for shopping, with registered users asking and answering questions. In StackOverflow’s own community survey, 83% of participants said they are registered users and 85% visit the site at least weekly. Sounds like a very strong community, but 66% said they do not participate in Q&A or at most do so no more than once a month. That’s one reason that less than 5% of those surveyed had visited the page for Stack Overflow for Teams, which had been launched two years earlier and was supposed to be the cornerstone of the company’s new profit-making efforts.
Prosus adds Stack Overflow to its portfolio of technology education investments, which also include Udemy, Codeacademy, and a soon-to-be combined Skillsoft and Global Knowledge. Even without the Q&A site, these companies are poised to compete with Pluralsight and LinkedIn Learning to train corporate technology workforces. The assumption is that users that are using Stack Overflow are self-learners, so they are already a qualified set of potential users of online training tools. A big caveat has to do with whether or not user needs can be matched with potential product offerings without violating privacy. If you are trying to debug a Java application, do you want to be bombarded with advertisements for Java classes for the next six months?
Privacy issues and advertising may have detracted suitors from looking at Stack Overflow. Its userbase of developers would likely rebel against intrusive policies. For this reason, the announced acquisition may also be motivated by a desire to further its push into China. Tencent has long coveted the developer market. As its largest shareholder, what if Prosus is making a strategic investment to help Tencent in this most important area? Let us explain.
Tencent is the company behind WeChat and QQ.com, the fourth most visited site in the world. It is also the fourth most active contributor to open source in China. The Chinese government and major companies are backing Gitee as part of an industrial policy to foster an online community to rival GitHub. Tencent rivals Baidu and Huawei have provided funding and pushed this effort through OSChina. The title of the largest online developer community in China probably belongs to CSDN, which according to the founder had 31 million users in 2020. CSDN is also the 15th most visited site in China according to Alexa, with an audience profile that overlaps with that of Stack Overflow, Tencent and another popular site, CNblogs.com.
We look forward to seeing if the new Stack Overflow tries as hard as it has in the past to be a good citizen among the developer and technology communities.