So lets assume that the costs for a successful web company are a small fraction of revenue (maybe 20%?). That's profits of 100 million a year for last-year's-Facebook.
So if this company makes 1/10th the profits of Facebook, it will take 50 years to make enough profits to cover it's current valuation. Of course, if this company is as profitable as last-year's-Facebook then their total profits will exceed their valuation after 5 years.
So I guess the question then is whether social-networking apps have the potential to generate similar revenues to the big social networking sites.
Facebook was anticipating on the order of $30 million in profit, as I recall (serving out billions of pageviews is never cheap). Feel free to multiply all of your time estimates by three.
So if this company makes 1/10th the profits of Facebook, it will take 50 years to make enough profits to cover it's current valuation. Of course, if this company is as profitable as last-year's-Facebook then their total profits will exceed their valuation after 5 years.
So I guess the question then is whether social-networking apps have the potential to generate similar revenues to the big social networking sites.