Putting a value on private companies is hard enough for insiders and venture capitalists who have full access to the company’s financial statements. When outsiders try to do it, even well-informed ones, it is nothing more than a guessing game. But it is nonetheless perhaps one of Silicon Valley’s favorite parlor activities.
Today, Henry Blodget & Co. at Silicon Alley Insider try to peg valuations on 25 private Web companies. Facebook is at the top of the list, but it is valued at $9 billion instead of the $15 billion that Microsoft’s investment put on the company. Why? Because everyone knows that the $15 billion is too high, so SAI decided to apply a 25X multiple on Facebook’s 2008 revenue forecast of $350 million. Does that make its valuation correct? Probably not. But in the absence of any true market pricing, anyone can go ahead and make a guess.
The same goes for any of the valuations on the SIA 25 list, which puts Wikipedia’s worth at $7 billion, Craigslist’s at $5 billion, Mozilla’s at $4 billion, LinkedIn’s at $1.3 billion, Ning’s at $560 million, RockYou’s at $325 million, and Spot Runner’s at $250 million. Note that three of the top five (Wikipedia, Craigslist, Mozilla) are essentially not-for-profits sitting on very valuable assets. The valuations for those three are based on what they would be worth if they were run differently with an eye towards maximizing revenues—which, of course, could impact how consumers interact with them, which in turn would impact their valuations.
Another 25 startups make up the contenders list, which includes Federated Media ($245 million), Yelp ($225 million), Meebo ($220 million), Mahalo ($150 million), Digg ($125 million), Etsy ($115 million), Powerset ($80 million), and Twitter ($75 million). A full list that changes dynamically every 20 minutes, based on changes in the Nasdaq, can be found here (although, exactly how the valuations are linked to the Nasdaq is never clearly explained)
Some of these valuations have more merit than others. Some have none whatsoever. For instance, SAI gets at its $125 million valuation for Digg by “splitting the difference” between a $200 million buyout rumor we reported and the $60-to-$80 million that Kara Swisher came up with. Splitting the difference between two rumors is not exactly the height of financial analysis.
But what are you gonna do? At least SAI acknowledges that the list is an imperfect work in progress. Don’t get too caught up in the actual numbers. It is more useful really as a starting point to think about relative valuation between different startups. Is Meebo really worth three times as much as Twitter? Is Ning worth as much as Slide? Let the parlor game begin.
See all
Post
Facebook is easily worth 100 billion theoretical dollars
How is Facebook going to make $350 million with 15cent CPM?
I don’t trust Blodget with any valuations. He’s a cheat.
His valuation metrics are total b.s. Anyone with half a financial brain would realize:
a) Never value a not-for-profit: that’s just dumb (Good job to TC on pointing out that going from not-for-profit to for-profit will undoubtedly turn away certain people - however, TC should apply the same logic to startups that have no business model - once you put ads or charge, people leave)
b) Don’t buy Facebook’s $350 MM projection. It’s total crap. It’s more like $200 MM.
Mahalo for 150 million. Are they kidding?
Ning’s valuation is purely based on the money they’ve raised and the BS numbers they throw out there. I want to say that I feel bad for the company that spends 550m for Ning, but I won’t since they should know better. LinkedIn is a better deal at twice the price than Ning.
Sorry that 560m, even worse
Wow, some some of these valuations caught me by surprise. But when it comes to valuing companies, Henry Blodget is widely known as the best in the business, so expect the numbers to be accurate to within 10%.
Facebook is worth $1 to 1.5B tops. 25x revenue? Their only exit is an IPO, and even their payment system wouldn’t give them revenues high enough to justify $9B to wallstreet. The 90’s, they been there and done that.
HA! Somebody please save that list!
In five years only Mozilla and Wikipedia will be around.
LOL. Doesn’t seeing the worth of Wikipedia at $7B make you contributors feel a bit used?
Impossible to say for the others but the $5 billion valuation for Betfair will be news to their shareholders. Betfair have just done a re-capitalisation valuing themselves at £1.5 billion / $3 billion (I got my new share certificate this morning). If Blodget and co would like to by my remaining shares at $5 billion then let me know!
wow thumbs up for yandex.ru 3B USD :S Yandex’s audience are from russia and post soviet countries, and its known that there are not much advertising dollars in russian internet. how can it be worth this much?
mail.ru must be as big as yandex, why is not it listed?
Ridiculous.
A “company” with negative or flat revenue stream (since inception) AND without proven business model should not be valued one dollar more than what it actually cost to build so far.
Carsten, you think you are better at determining the value of a company than Henry Blodget. What qualifications do you have? Have you any “real-world” experience in the art of company valuation? Don’t talk a big game when you don’t have the credentials to back it up.
And Hot or Not, a business which was actually profitable, sold for only 20 million?
@Carsten, I’m really not sure why John took such offense to your comment. I’d don’t see how you were “talking a big game” but rather, just expressing your personal opinion, which I happen to agree with…as I’m sure many others would as well. John is probably in negotiations to buy Ning for 560 miilion and is a little sensitive.
Funny how there is a seamless extrapolation from: “A group of people (or sometimes one person) decided to value this company at X, so we will assume that the company valuation in the capital markets would also be around X”.
Most often this group of people also bought a small portion of the company. The analogy would be for me to pay 10 dollars for one share of Techcrunch (assume 100 million outstanding shares), immediately making Techcrunch a billion dollar company.
How can these companies receive such high valuations when they DO NOT OWN MOST OF THEIR OWN CONTENT! If all of the users left Facebook, DIGG ect.. there would be no more facebook or digg overnight. To me that is risky. Would somebody kindly give Abstract10.com a valuation considering we own and control an entire library of PROPRIETARY content. Based on this list, simply owning your own content should automatically put you in the 50-100mm dollar range. yes?
This guy may have friends in the valley but here on the street he has about as much credibility as hugo chavez. I can’t believe you even published this nonsense.
btw; SAI, not SIA. Silicon Alley Insider
SAI, not SIA. Silicon Alley Insider
Mahalo above DIGG, - idiot statement
Microsoft bought part of Facebook, and people based a 15 billion valuation off this number. But they also received advertising rights as well. Are those rights worth nothing, or why are they never factored in? Everyone who buys a piece of Facebook during an IPO for example is not going to receive advertising rights. Explain this to me.
Mahalo at $150million? hahahahahah
Does anyone actually use Mahalo that doesn’t follow startups?
lolfail. Can I project my revenues at $120 billion and get a massively false valuation?
@JASON JENKINS
Very poor assessment on your part. Your argument can be said of any company. If everyone left Yahoo tonight Yahoo would be no more. Come on. These companies did not have high valuations overnight too. I agree that they are richly valued, but your point is moot.
How can Wikipedia be worth $7 Billion when it runs on both financial contributions and input from the global web community.
Don’t get me wrong, Wikipedia is my favourite web site, but this value is pure monopoly money.
I think this chart needs to take away at least a zero from each companies value, to bring a complete reality check to the table.
What value do we now place on MySpace and YouTube?
They were both brought for $540 million and $1.8 billion respectively. But yet even though both sites have such huge reach and popularity, their annual business revenues is still small potatoes, compared to the revenues earned by their parent companies.
I would really feel sorry for anyone that wishes to buy shares in any of these companies that may go public over the next few years.
The Web 2.0 Bubble truly pops with this chart.
Top of the Pops, anyone?
How did Craig’s List get up there so fast?
@dA cOMMISH
Please understand that content is king. For example, if all internet user decided not to visit a content providers website. That same content provider could still distribute their product in numerous other distribution outlets. WHY? BECAUSE THE OWN THE OWN CONTENT! Ill repeat, if all inet user left yahoo, digg, facebook, they would be done overnight because they do not control anything!.
That is a really funny list. Made for a good laugh while in class.
Can there be a surer sign that the bubble is back than Blodget issuing so many lofty and arbitrary valuations? I wish I could short a Blodget index.
Not bad for wikipedia…
Powerset ($80 million) - hahaha…you guys are high on something.
Powerset is not even launched. My wife’s blog has more visitors than Powerset at the moment. This is plain dumb. Blodget should be credited for the downfall of startups by overhyping their “buddies”.
@JASON JENKINS, it doesn’t seem you are accounting for visitor numbers or switching costs/lockin. Sure, you “own” your content, but what would it take for me to start visiting/using a competitor’s website? Nothing. Don’t be blinded by Blodget’s BS. You want a real valuation? Look at your revenue and multiply by 5 (very gracious).
Don’t combine the word “billion” with FadBook please.
That frat-guyish website has absolutely no long term appeal.
My valuation, which is just as good as this guy’s is, and which is just as good as yours is, is at $200,000.00 and that’s for the hard assets like Aeron chairs and Herman Miller cubes.
Anyone who thinks otherwise should plug their ears because that bubble will make a huge noise when it pops.
Billions… scheesh!
lol @ 35
Where are the .net/.mobi websites? Did I miss those?
Henry Blodget:
“In 2002, Eliot Spitzer published Merrill Lynch e-mails in which Blodget allegedly gave assessments about stocks, which conflicted with what was publicly published.[5] In 2003, he was charged with civil securities fraud by the U.S. Securities and Exchange Commission.”
>LOL. Doesn’t seeing the worth of Wikipedia at $7B make
>you contributors feel a bit used?
I’ve found that volunteer communities, whether it’s Wikipedia editors, or the National Parks Service volunteers, are proud of creating value. It’s one of the primary motivations for volunteering.
Most volunteer communities don’t measure that value in dollars, but that other people do doesn’t take away from that pride. If anything, it’s a great external validation — that people not intimately familiar with the volunteer community’s motives nevertheless see real value in their contributions.
Anyone bashing this list is clueless. You really think you know more about corporate valuation than Henry Blodget, perhaps the most renouned and respected financial analyst on the planet?
If you don’t agree with the valuations, give some meaningful counter-arguments. Don’t just claim that a private company’s value cannot be more than 5 X revenues. Remember that pretty much all startups start off with NO revenues.
Frankly, I’m shoked that FaceBook was valued less than the $15 Billion than Microsoft assesed…since that time, Facebook has matured by leaps and bounds.
Take a look @ 38.
@John (#40), Sorry, you seem to be learning disabled, and Blodget was convicted of securities fraud. Company valuations for investment purposes are vastly different than you perceive. BTW, the MS investment in FB was an ad deal *cloaked* as investment.
Facebook apps and targeted ads to the demographics will likely increase the revenues of Facebook so I can see that number being accurate. Personally, I think Zuckerberg is a dumb arrogant kid - I’m 22 so I am young as well, but seriously, Zuckerberg needs to understand the true value of his company and the fact that the social networks may eventually go down one day or will need to become something much more.
The other sites seem valued correctly except Digg, why is Digg rather far down the list regardless of its number of users? Do they have an ineffective ad platform through Federated media?
SEC authorities and the judiciary should have put HB behind bars and tossed his cell keys into the Hudson. (Or, maybe they should have just tossed HB into the Hudson …)
Some of those valuations got me scratching my head
So was Blodget wearing an Iraqi Information Minister’s uniform when he presented this list?
> Splitting the difference between two rumors is not exactly the height of financial analysis.
Neither was lying to investors during the dotcom boom.
valuations are so overblown. How can these sites be worth way may than the New York Yankees who are valued at 1.3 billion. It makes no sense whatsoever. none, zip, zilch.
I am missing some european companies: Dailymotion, Netvibes, eBuddy, Bebo….
*That* Blodget + Facebook being big, big, big = Bubble 2.0 = Hold on to your wallet