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Estimated Value: $7 billion

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Business: User generated encyclopedia.

Location: San Francisco, California

More Info: Wikimedia Foundation

CEO: Jimmy Wales

Investors: Donations

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Analysis: Yes, yes, Wikipedia is a non-profit asset owned by the Wikimedia Foundation, which itself is a non-profit. But we're talking about asset value here, not corporate structure, and we estimate that the value of the Wikipedia asset is at least $7 billion.

How do we get there? According to Dan Malven, who argued recently that Wikipedia would do more good for the world if it converted to a for-profit and gave its profits away, Wikipedia generated 40 billion pageviews in the year through October 2007, and at the end of that period was still growing 66% per year. If we assume Wikipedia generated 50 billion pageviews in calendar 2007 and will grow 40% in 2008, the site should generate about 70 billion pageviews this year.

Now, imagine that a for-profit Wikipedia put ads and sponsorships on some or all of those pages. Assume the ads are targeted but relatively unobtrusive, so that the company generates revenue-per-thousand pageviews of, say, $5. (For comparison, Silicon Alley Insider currently generates about $20, with minimal sales effort). That would put you at a revenue rate of $350 million annually.

Costs?

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Wikipedia doesn't really have any costs. Why? Because you and everyone else donate time to help create all the Wikipedia content. Sure, there are some storage, bandwidth, and administrative costs, and if the company actually converted to a for-profit, there would be modest sales and management costs, but you're still not talking about a big number. So this company could have extraordinary profit margins--well over 50%.

Now, a company with margins like that with Wikipedia's growth rate would be worth at least a 25X revenue multiple, if not considerably more. But, of course, all this is hypothetical, so lets just use a 20X multiple. 20-times a hypotethetical revenue run-rate of $350 million a year gets you a $7 billion valuation.

Non-profit; revenue source is donations. Cash contributions of $2.2 million in 2007, $1.3 in 2006. Jimmy Wales says it's worth '"billions," and other estimates peg it from $500M--$5 billion.

See Also: Wikipedia Should Go For-Profit, Give Profits Away

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