CEO of Demand Media

Estimated Value $750 million

Last Year’s Rank  Valuation #10  $1.3 billion

Business Content creation and publisher

Location Santa Monica, California

CEO Richard Rosenblatt

Investors $375M in total venture capital raised. 3i Group, Generation Partners, Goldman Sachs, Oak Investment Partners, Spectrum Equity Investors.

Analysis Demand Media recently filed for an IPO. According to documents, Demand revenues reached $114 million for the six months ending June 2010 with a loss from operations of $4.3 million. That compares to $91.3 million and $11.4 million last year. The company hasn’t made a dime since its launch in 2006, in fact it’s lost a total of $52 million.

We have a few concerns. The content business is only 56% of revenue. The other 44% comes from its eNom domain registration business, which has essentially zero barriers to entry. The company's content business faces competition from rivals including About.com (NY Times), AOL and Associated Content (Yahoo!). Demand Media is also quite dependent on Google. Its do-it-yourself site eHow gets 60% of page views from Google searches. Those ad agreements are expiring over the next couple of years.

Given the company is less profitable than previously thought with the above concerns, we apply a conservative 3x multiple to annualized 2010 sales of ~$250 million and we get a valuation of $750 million.