General Info - Costs

JUNE 4, 2007
Crunch Time At A Web Startup
Fast-growing Meebo has VC backing, great ideas, and rivals nipping at its heels

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It doesn't take much for a typical Web 2.0 media startup to reach breakeven--only around $2.8 million of revenues to cover expenses, estimates Jeremy Liew, a partner at Lightspeed Venture Partners. But to get a $500 million market capitalization--the kind of valuation that would justify a public offering and provide a good return to venture capitalists--revenues need to hit around $130 million.

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Right now the most hotly discussed topic among these friends is how to spend the money their companies have raised. Meebo has $12.5 million from two rounds of venture funding from Marc Andreessen, Sequoia Capital, and venture-capital firm Draper Fisher Jurvetson. That's about in line with the $15 million to $25 million some VCs estimate it costs to build a highly profitable Web-services company. For the moment, Meebo's fastest-growing expense is salaries. The company has 16 employees but expects to have 30 by yearend, with each new employee adding about $10,000 a month to costs.

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