So how much is a Web 2.0 startup really worth? Everyone is wondering that these days, especially since there are so few acquisitions or IPOs by which to measure them. That's why I like the slide below created by eSnips CEO Yael Elish. It gives an approximate value for many high-profile Web 2.0 sites by correlating publicly available Alexa Web traffic numbers with the value of known deals like YouTube's. This slide is hardly accurate for many reasons (see below), but it does help you visualize how one company may be doing against another.
By her count, Wikipedia, YouTube*, and MySpace are in that rarefied realm of Web 2.0 sites worth more than $1 billion. Just below that are Flickr*, Facebook, and Hi5. In the $100 million to $500 million range are LinkedIn, Bebo*, Digg*, Feedburner, Last.fm*, and Technorati*. And just below the $100 million mark is StumbleUpon*, Slide*, and Netvibes*. She values eSnips on the chart at about $30 million. (The asterisked names made the Next Net 25 either in 2006 or 2007).
There are lots of problems with this slide, the first being the accuracy of Alexa's traffic data, which is highly disputed. But as long as Alexa is equally wrong for every Website, that shouldn't too big a deal, especially if all you want to know is the relative value of one site over another. The bigger problem is equating eyeballs with dollars. Not every visitor is worth the same.
For instance, it is possible that social network Hi5 may be worth more than Facebook, but is Google-owned Orkut really worth more than either one of those? I doubt it. And Wikipedia might get a lot of traffic, but it is really not worth as much as YouTube since it is a not-for-profit that has no intention of ever displaying ads.
You can quibble with the exact placement of any of these startups on the slide, but eyeballing it as a whole it looks like most of the startups are in the right ballpark. Comments are open for anyone who wants to tear it apart or suggest improvements.