Professional Documents
Culture Documents
Jeremy Liew
Partner, Lightspeed Venture Partners
www.Lightspeedvp.com
Lsvp.wordpress.com
Its cheaper than ever to start an internet company…
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
200
70 60
48
20
3
As a result, getting to breakeven isn’t too hard…
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
Media E-Commerce
$ '000s % $ '000s %
Staff Costs
Infrastructure 1,000 36% 1,000 14%
EBITDA - 0% - 0%
PUBLIC COMPANY ’07 REV MULTIPLES REVENUE NEEDED FOR $500M EV*
MEDIA 12.2x $333M
3.8x $131M
1.5x $41M
1.8x $277M
0.6x $87M
* Assumed minimum public company scale to sustain meaningful trading volume and analyst coverage
5
Source: Goldman Sachs Research, March 25, 2007, Lightspeed Analysis
Significant variation in revenue targeted for internet
companies to breakeven versus to be public
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
Endemic
Advertising $10-40 Fandango $25M** 50M 600M $41.67
Source: Myspace, Merrill Lynch; Facebook, MSNBC; Fandango, Techcrunch; Traffic, Comscore; Lightspeed Analysis
* RPM = Revenue per thousand pageviews, taking into account multiple ad units and all forms of advertising: CPM, CPC and lead gen
** Facebook revenue estimate “well over $100m”, Fandango revenue estimated to be “around $50m with half from
8
advertising and half from ticketing”
To reach breakeven, US traffic requirements can
become quite meaningful, depending on RPMs
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
•NFL.com 49M
demographically
Not necessarily
•Nextag 48M
Demo $5 47M
targeted
•Wash’ton Post 47M
•Heavy 45M
•Technorati 12M
Not necessarily
•WinAmp
endemically
12M
Endemic $20 12M
targeted
•UFC.com 12M
•Digg 11M
Source: Comscore, Lightspeed Analysis 9
US traffic requirements are even higher to reach public
company levels
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
•Live.com 2,819M
demographically
Not necessarily
•Youtube 2,539M
Demo $5 2183M
targeted
•Go.com 1,559M
•Pogo 1,544M
•MSNBC 592M
Not necessarily
•Expedia
endemically
522M
Endemic $20
targeted
546M
•Paypal 495M
•Weather.com 488M
Source: Comscore, Lightspeed Analysis 10
E-Commerce Companies
Many e-commerce niches are large enough to support
$7M in revenue, our illustrative breakeven level
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
13
Relatively few pure play e-commerce companies have
achieved over $271M in annual sales so far
Lightspeed Confidential - Not to be copied, distributed or referred to without the prior written consent of Lightspeed Venture Partners
Amazon.com
Company 2005 Revenue
Amazon $8,490M
Newegg $1,300M
Overstock $804M
Netflix $688M
Drugstore $399M Newegg.com
Buy.com $345M
17