Saturday, April 21, 2007

The scary math behind Web 2.0, 1B page views to an exit | CNET

"1 billion or more, says Opus Capital partner Ken Elefant, which is why his firm doesn't invest in them.
'Most of them are features,' he said in an interview. 'Most of them can't be long-term sustainable businesses.'
Here's how Elefant comes up with his math. A web 2.0 company needs to be pulling in around $5 million in revenue a month to become an independent, viable publishing house. The average CPM is around $10. About half of the inventory on a given site remains unsold so the real CPM is closer to $5. Thus, you need 1,000 CPMs a month. A thousand impressions go into CPM."