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3.8.07 Only truly big sites deserve VC investment By Richard Koman for Silicon Valley Watcher

(Via Tim O'Reilly)Venture capitalist Jeremy Liew says any investment needs to havepotential to reach $50 million. If your brilliant idea is for anad-supported Web 2.0 site, here's how big you'd have to get to makeLiew's investment pay off. With today's CPMs, really big.

1. Be a site with a broad reach (say general socialnetworking, communications, news). At large scale, without a great dealof targeting possible, a startups run of site or run of networkadvertising might be able to get to the $1 RPM range (Revenue perthousand impressions). To get to $50m in revenue you would need 50billion pageviews in a year, or just over 4 billion per month.

2. Be a site with demographic targeting (say a Latino portal, or asports site (targeted at men) or a social network targeted at babyboomers). Although in TV and in magazines, demographic targeting cangenerate double digit CPMs, online at scale, RPMs tend to be in the lowsingle digit range. Lets assume a $5 RPM. To get to $50m in revenue youwould need 10 billion pageviews in a year, or just over 800 million permonth. (More than

3. Be a site with endemic advertising opportunities (say a siteabout movies that movie studios will want to advertise on, or a siteabout cars that auto manufacturers will want to advertise on, or a siteabout travel that hotels and airlines and online travel agencies willwant to advertise on). If you have a highly targeted audience that isinterested in buying a specific product, you can command RPMs wellinto the double digits. Lets assume a $20 RPM. To get to $50m inrevenue you would need 2.5 billion pageviews in a year, or just over200 million per month.

Pretty nasty stuff. So you don't want an exit strategy, just makeenough to pay the bills and have a good time, as Tim suggests. He alsothinks there's an aggregation option:

The other option, implicit in Chris Anderson's longtail hypothesis, but not mentioned by Jeremy, is that you aggregate alot of other sites. There are different models for this: Gawker andWeblogsinc launched multiple sites, publishing blogs like they werebooks, with some expected to succeed and others to fail; FM Publishing(in which I am an investor) doesn't aggregate ownership, but providesmarketing services to an aggregate of clients.

NEW STORIES: 3.15.07 Cisco buys WebEx3.15.07 Viacom suit is an assault on Silicon Valley3.15.07 Charges against Dunn dropped, Hurd wins battles with retirement fundsGOOG Will Hold Private Search Data for up to 2 YearsTech CEOs' Green Report Calls for Government Green$$Hong Kong Lawmaker Continues Attack on Yahoo over Journalist Jailing in China3.14.07 Dylan Hears a Who3.14.07 Cuban: Google doesn't know how big Viacom suit really is3.14.07 Is Slacker competing against iPod or XM/Sirius"Mind the Gap: Venture Capital's Exit Problems

March 8, 2007

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Reader CommentsDavid Scott Lewis on 3.14.07 Cuban: Google doesn't know how big Viacom suit really is

Richard, at the risk of sounding stupid, I'm not sure I can explain it. Okay, just kidding.

Thepower of the "Grid" is that it controls everything, kind of like HAL orColossus (although we all hope in a benign way). Underneath the "Grid"are the databases, IR systems, content management systems, even down tothe OS and compilers (for that matter).

The "Grid" is the ultimate, consummate distributed system. The trick is to get everyone on the "Grid," and I believe that Googl

David Scott Lewis on Warsaw University Team Are World Programming Champions, Again

I love the Polish people and wouldn't want to detract anything from them.

However, I've been a member of ACM for many years and they tend to be a bit on the theoretical side.

Frankly,in high(er)-end programming, Poland, Russia and China kick India'sbutt. But in everyday, real-world endeavors (especially in theenterprise sector), India is nearly impossible to beat.

It's really a reflection of their educational systems. I can only speak briefly about Poland (or Russ

Tom Foremski on 3.12.07 Wikipedia deals with fake experts

Gregory:There is a tremendous amount of goodwill towards Wikipedia, it willtake a while for that to run out but it could run out sooner thanlater.Richard: Good points. Wikipedia is only as good as its trustedinformation sources. We need a "TrustRank" applied to people and tocontent

Gregory Kohs on 3.12.07 Wikipedia deals with fake experts

Scandals seem to be having an adverse effect on the daily financial donations to the Wikimedia Foundation:

Maybe Wikipedia will shrivel up from lack of funding, if their leadership keeps making such ethically questionable decisions.

Richard Koman on 3.14.07 Cuban: Google doesn't know how big Viacom suit really is

Tom,point taken that Google owns content. But "content" refers to"consumable content." And what I mean by 'Google doesnt want to owncontent' is: Google wants to aggregate other people's content (a laNews and indeed AdSense). YouTube isn't technically Google's content.It is really owned by the people who created it and "licensed" toYT/GOOG.

WhatI mean is GOOG doesn't want to "tell stories" (as Eisner does), doesn'twant to fund young artists, doesn't want to buy production comp

Richard Koman on 3.14.07 Cuban: Google doesn't know how big Viacom suit really is

Atthe risk of sounding stupid, I guess I don't understand the Googlegrid. I thought the Grid involved sharing computing power among alarge, diverse number of computers, a la SETI@home. But Google's gridis really a data center, no" Using the power of connected inexpensivemachines to be sure, and as Scoble pointed out in the post I pointedto, GOOG is kicking MSFT's butt in the datacenter. But is the GOOG Gridsomething different than the the GOOG datacenter" Educate me.

Phil Butler on Old Media: You can't get there from here

What a nice piece. I love well researched copy. I am just curious about one thing, are we trying to be them"

I write articles and try to be enthusiastic and as correct aspossible, but often wonder if I am just becoming a half witted RalphNader.

How do we work the system differently "this time" to perhaps be better. Thanks, just thoughts. Phil

David Scott Lewis on Scoble: MSFT in it "to win"" Hardly.

Idon't always agree with Robert (the Twitter gang is in desperate needof an intervention; they have less of a life than the SL crowd), buthe's clearly on the mark this time.

Tom Foremski on 3.14.07 Cuban: Google doesn't know how big Viacom suit really is

David, GOOG already owns a lot of content. There is YouTube, plus it has a copy of the entire Internet sitting on its servers. Its Index is also content and very valuable and proprietary. And it has an enormous amount of metadata content, clickstreams, andbehavioural data content, and tremendous amounts of advertising contenttoo. GOOG is a huge content owner.

Tom Foremski on 3.15.07 Viacom suit is an assault on Silicon Valley

Amanda:You can "steal" this content if you want. Just attribute and keep mylinks and make money from it if you can. It's not plagiarism it'sdistribution When there is a pageview business model that works Ican shut the barn door then.

Moshe Maeir on gPhone confirmed"

In my opinion there is a much easier way for Google to get into the phone business and I gave free advice about it at"p=73

Krzysztof Hejduk on US and Polish Web 2.0 companies swap notes at Stanford

Stately article of recommendation. I needed to school wiadomosci.

David Scott Lewis on 3.14.07 Cuban: Google doesn't know how big Viacom suit really is

Richard,"Draconian" seems a bit strong, but that's really a matter ofperception and perspective. Frankly, I'm not sure I wouldn't mindseeing Washington rattle the cages of the elitists in the Valley:Probably a spanking that is way overdo.

Regardingthe "Grid," the "Grid" is everything, it's what makes Google trulyubiquitous and pervasive. Advertising is simply one of many ways Googlewill make money from the Grid. True, it's the primary way, but overtime, it may not even be

Dean Collins on 3.15.07 Cisco buys WebEx

Lol- yep while Cisco may be buying a trusted 'brand' in Webex it stilldoesn't make any sense the way it's been explained by a lot of people.

Sounds like the old dot com buybble strategy of "Synergies"

Ihave a joke theory - The acquisition strategy is being driven by theTreasury Department in Cisco who have so much cash in the bank justsitting there they decided the ROI on the acquisition was higher thanthe T bills they are currently invested in (and less work to manage a

Richard on 3.15.07 Viacom suit is an assault on Silicon Valley

Amanda:I don't advocate it and I assume Google doesn't (although there aresome stories to the contrary). The point is should an internet companyhave liability for what their users post. The law says no, unless thecompany is advocating, encouraging, etc. If Viacom is merely assertingthat YouTube in fact does encourage, IMO they don't deserve theprotection of DMCA. If, on the other hand, Viacom is arguing that theshould be changed, that YT should not be able to transfer the burden tothe

Amanda Chapel on 3.15.07 Viacom suit is an assault on Silicon Valley

I have yet to find a property owner who advocates someone else stealing it.

Amanda ChapelManaging EditorStrumpette

John Earnhardt on 3.15.07 Cisco buys WebEx

More flavor on acquisition on Cisco blog by Charlie Giancarlo (Chief Development Officer and President, Linksys) at:


Tom Foremski on Tech CEOs' Green Report Calls for Government Green$$

ThanksVindu. Yes, you are right on many points, and Silicon Valley hasbenefited tremendously from government money in the past and the VCsalways seek to limit their risks.

Inregards to ethanol, I'm not sure if it can be considered a success justyet. It is competing with food sources and has raised the cost ofliving in Mexico, for example, where corn is a vital part of the dietbut also a vital part of making ethanol. US government subsidies meanhigher food prices for people in

Tom Foremski on 3.15.07 Viacom suit is an assault on Silicon Valley

Excellentpoint Richard. There is some glee around Silicon Valley that GOOG isgetting a bit of grief from Viacom, but the truth is that if Viacomprevails then many SV startups that use other's content according tocurrent laws are vulnerable to similar lawsuits and damages. Not tomention the knock-on effect to ISPs etc if those safe harbors areoverwhelmed

Vindu Goel on Tech CEOs' Green Report Calls for Government Green$$

Hi, Tom. I agree with you that Washington is slow, but government policies do have a huge impact on energy development.

Look at ethanol, which is heavily subsidized. Without government money, it probably wouldn't be a competitive fuel.

What if you channeled some of that money to other energy research"

Themost important point the TechNet folks make is that the governmentshould focus on the results it wants to achieve -- uch as certain levelof energy efficiency -- and

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