Business model/value creation:
Zhihu.com is the largest Chinese question-and-answer website, with mostly user generated contents, connecting increasing well-educated middle class in China and mass market readers who have specific questions that cannot be simply and structurally addressed by Baidu or online search. (Note: Zhihu means Do You Know…? in classical Chinese)
It has 3 key products now and is still evolving.
1) Zhihu regular, similar to Quora where questions are posted by individual and voluntarily answered by users in the community
2) Zhihu Blog, Zhihu selected expert-level answerers based on its track record and viewers vote and open blogging access to them and feature their topics
3) Zhihu Live, an interactive online Q&A or lecture-type session where viewers can participate and pay as they wish
Launched in 2011, Zhihu has grown its registered users to 50 mm as of May 2016, with DAU of 13mm, monthly page view >5bn, average time spent 33min per user. The business is well respected from inception due to the group of predominant tech professionals that were invited to its platform. To name a few founder of Tencent Ma Huateng etc. Over the years its membership mechanism has transited from invite-only to open-to-public.
The way Zhihu incentivizes users on both sides, or more critically the answerers, is to allow readers to vote “agree” or “disagree” on the answers. With invite-only mechanism at the beginning, Zhihu managed to capture the 1% KOL in various fields, while better answers attract more votes which forms a positive feedback mechanism to the answerers to multi-home to other websites, therefore increasing the viewers’ stickiness. There are in total 10mm questions asked, 35mm answers submitted and 35mm “agree” voted, demonstrating high user engagement.
The issues of Zhihu’s business model includes 1) since opened to public, quality of both questions and answers seem to be diluted. This requires a more efficient information filtering and organizing mechanism by Zhihu 2) monetization
Since inception, Zhihu has set the access to both viewers and answerers for free. Only recently does it start to monetize moderately through Zhihu Live, designed as a live streaming Q&A session on certain topics and inviting high quality experts discovered through Zhihu regular version, by having audience voluntarily “sponsor” the speaker, usually in a very small amount ie 2-3 dollar per person.
Given the quality of the experts and the viewer group of Zhihu are mostly middle class well-educated Chinese, the voluntary feature may result in handsome amount of revenue directly to Zhihu. There is great potential for Zhihu to continue capturing the value through increasing fee or optimizing the existing platform into an expert network in the future. There are already some expert network websites in China such as Fenda (分答) which charges at least 20-30x more for one-on-one session.
In addition, in 2016 Zhihu opened the institutional client account after realizing the demand in this segment. Zhihu also created Zhihu bookshop curating good quality comments periodically and Zhihu daily, a daily news flash summarizing interesting comments, essentially entering the media space.
Zhihu has garnered a group of loyal answerers from educated middle class and readers spanning across varying education and economic backgrounds. It has a differentiated value proposition against Baidu, however once it started entering expert network, it would face competition from incumbent expert network exchange such as GLG, and app products that are already operate to connect field-expert with paying users.
I think the threat from the latter might be less severe given Zhihu’s first mover advantage and network effects – it can easily tap into those targeted free-lance experts who are not subject to legally binding agreements to its platform. Because the readers on Zhihu are more regular and bigger.