A month ago, I defended a diploma, and as part of my work I investigated the use of real options for the valuation of the “dot-com” cost. The work won the thesis contest, and I myself enjoyed writing it, but this is not about now.

The bottom line is that I developed another model for estimating the value of Internet companies and estimated the cost of Google with it. And then (for myself) I decided to evaluate two more well-known social networks: Odnoklassniki and VKontakte. And here a surprise awaited me.

The cost of "Odnoklassniki" was about $ 60 million , and this, in general, is consistent with common sense. A year ago, a 30% share of Odnoklassniki was bought out for $ 10 million , i.e. the entire business cost about $ 30 million. With the growth of the site’s audience, as well as the success of income-earning managers and promises of annual revenue of $ 20–25 million , the business could easily go up in price.
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The cost of "VKontakte" was about $ 780 million. And, in truth, this also agrees with common sense. If we compare the cost of Facebook ($ 15 billion) with the cost of "VKontakte" in proportion to the volume of their audiences, we find that VKontakte could cost almost $ 1.5 billion.

However, the main question that I would like to raise is not at all in justifying the fairness of valuation. The main question is: why do two Russian social networks with practically identical volumes of audience of loyal users differ in cost by an order of magnitude?

There is a simple explanation for this, which is not even related to the entire complexity of my valuation model (yes, real options have nothing to do with it). I asked the incoming parameters of the model based on the statistics of visits to Odnoklassniki and VKontakte, and I made some assumptions that I could not do without (for example, predicted audience growth rates) for the purity of the experiment. The difference was more than an order of magnitude in only one input parameter, which led to such a dramatic difference in results - the number of pages that the average user views in one session. At Odnoklassniki, this indicator was 10 pages, at VKontakte - 137 . That's all.

If you think the meaning of this indicator is very important. In fact, it is a measure of the user's interest in the site. From a financial point of view, the more users browse pages, the more theoretically they can show ads. Yes, now there are no ads on VKontakte, but this does not mean that the advertising potential of the site is worth nothing.

Why do loyal users of both sites treat them with such a different degree of interest? Based on the observations of my familiar users of both networks, I put forward the following hypothesis: the guest system on the Odnoklassniki website extremely constrains users in the freedom to move around the site. Once again, a person does not click on someone else's page, because he knows that he will be "spotted", and from that side there may be questions "And who is this who came to me and why?", Which are not always pleasant. I heard a lot of negative reviews about this guest system, but I never thought that it could affect the business capitalization so much.

Now on "VKontakte" there are discussions about whether to make your own guest system there. There are both supporters of the idea, and its ardent opponents. But from the point of view of the owners of the social network, the system of guests, in my opinion, is extremely harmful.

So what?

1. The number of pages of your site that an average user views in one session is a measure of user interest in a site. Maximize this figure.
2. Business capitalization remains a key indicator of its success, including in the dotcom industry. Before taking into account the views of individual users, consider the possible impact of planned innovations on the capitalization of the business.

Original article published in my blog.

UPD: The data for the study is dated by the beginning of May 2008. Now the site statistics has changed somewhat.