Answer by Jason M. Lemkin:
The basic idea of "tornado" investing (Geoffrey Moore's term) is to delay monetization in B2C investing if monetizing ihibits massive userbase "hypergrowth" (ultimately to a Top 50-100 or better website to make this work). If monetization inhibits the "tornado", the rapid switch to a new paradigm from the niche-adoption phase of "The Bowling Alley" (which would be easy to monetize, albiet not to massive levels) … it isn't worth it.
It justifies not just Quora, but perhaps even more relevantly, Twitter, Instagram, Pinterest, Tumblr, etc. Pinterest was apparently valued at well over a billion dollars without a revenue stream.
It does make sense, albiet there can only be a handful of success stories here.
But just one pretty much makes the math work. Facebook is the greatest VC investment of all time, so far.
What takes guts is investing before the Tornado. That's investing in Quora, which is still a (well populated) Bowling Alley. But if you invest after the Tornado, it's not only obvious … it's too late.
Given the track record of the Quora team, and its obvious and early Bowling Alley success … it seems like a fair bet.
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