PermanentlyUnprofitable      Dr. Augustine Fou      http://www.linkedin.com/in/augustinefou      May 24, 2012.
Pandora (P)               160               140      Revenues               120                        Total Operating    ...
Demand Media (DMD)               400               350               300               250               200              ...
Angie’s List (ANGI)               160               140                      Revenues               120                   ...
SINA (SINA)               600               500               400               300               200      Revenues       ...
InfoSpace (INSP)               250               200               150                        Revenues               100  ...
Rediff (REDF)               45               40               35               30               25               20       ...
InterActive Corp (IACI)               3000               2500               2000               1500               1000    ...
TheStreet (TST)               100                90                80                70                60                5...
AOL (AOL)               6000               5000               4000               3000               2000                  ...
Yahoo (YHOO)               8000               7000               6000               5000               4000               ...
So What?      “Companies whose revenue is directly      related to cost of revenues (e.g. „traffic-      acquisition costs...
Dr. Augustine Fou – Chief Digital Strategist   “I advise clients on building new   high margin products and evolving   bus...
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Permanently Unprofitable Internet Companies by Augustine Fou

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Some companies' revenues are permanently associated with rising cost of revenue to the point where they are permanently unprofitable -- e.g. Pandora makes less ad revenue per play than the licensing cost of the song.

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Permanently Unprofitable Internet Companies by Augustine Fou

  1. 1. PermanentlyUnprofitable Dr. Augustine Fou http://www.linkedin.com/in/augustinefou May 24, 2012.
  2. 2. Pandora (P) 160 140 Revenues 120 Total Operating 100 Expense 80 60 40 20 0 2008 2009 2010 2011May 24, 2012 2
  3. 3. Demand Media (DMD) 400 350 300 250 200 150 Revenues 100 50 Total Operating Expense 0 2008 2009 2010 2011May 24, 2012 3
  4. 4. Angie’s List (ANGI) 160 140 Revenues 120 Total Operating 100 Expense 80 60 40 20 0 2008 2009 2010 2011May 24, 2012 4
  5. 5. SINA (SINA) 600 500 400 300 200 Revenues 100 Total Operating 0 Expense 2008 2009 2010 2011May 24, 2012 5
  6. 6. InfoSpace (INSP) 250 200 150 Revenues 100 50 Total Operating Expense 0 2008 2009 2010 2011May 24, 2012 6
  7. 7. Rediff (REDF) 45 40 35 30 25 20 Revenues 15 10 Total Operating 5 Expense 0 2008 2009 2010 2011May 24, 2012 7
  8. 8. InterActive Corp (IACI) 3000 2500 2000 1500 1000 Revenues 500 Total Operating Expense 0 2008 2009 2010 2011May 24, 2012 8
  9. 9. TheStreet (TST) 100 90 80 70 60 50 Revenues 40 30 20 Total Operating Expense 10 0 2008 2009 2010 2011May 24, 2012 9
  10. 10. AOL (AOL) 6000 5000 4000 3000 2000 Revenues 1000 Total Operating 0 Expense 2008 2009 2010 2011May 24, 2012 10
  11. 11. Yahoo (YHOO) 8000 7000 6000 5000 4000 Revenues 3000 2000 Total Operating 1000 Expense 0 2008 2009 2010 2011May 24, 2012 11
  12. 12. So What? “Companies whose revenue is directly related to cost of revenues (e.g. „traffic- acquisition costs‟) may see increases in revenue but still never achieve profitability.” - Dr. Augustine FouMay 24, 2012 12
  13. 13. Dr. Augustine Fou – Chief Digital Strategist “I advise clients on building new high margin products and evolving business and pricing models to thrive in the new digital world.” FORMER CHIEF DIGITAL OFFICER, HCG (OMNICOM) MCKINSEY CONSULTANT CLIENT SIDE / AGENCY SIDE EXPERIENCE PROFESSOR AND COLUMNIST ENTREPRENEUR / SMALL BUSINESS OWNER PHD MATERIALS SCIENCE (MIT 95) AT AGE 23 ClickZ Articles: http://www.slideshare.net/augustinefou LinkedIn: http://www.linkedin.com/in/augustinefouMay 24, 2012 13 acfou@mktsci.com

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