How does a site with 180K visitors/day become a company?

Let's try and guess...

180K x 3 pages per visitor = 600K pages per day

It's a social network, so let's say $5 CPM. So that would be 600 x 5 = $3,000 / day or roughly $1M per year.

It's doubtful the traffic pays those bills.

Can't see how a social network would have a CPM of $5. People on social networks aren't looking to buy things.

I'm trying to give the site the benefit of the doubt. Even with a HIGH CPM of $5 (for a social network), the traffic still only works out to a million dollars a year.

With a staff of 12 or more people, that doesn't seem like enough traffice to pay everyone.

never mind the salary they pay, but the other costs of running a company (buildings and ...) involved just doesnt match up with the earnings!

never mind the salary they pay, but the other costs of running a company (buildings and ...) involved just doesnt match up with the earnings!

I was looking at Alexa the other day and I noticed that my busiest site gets more traffic than the site for a .com where someone we know works. They make a lot more in revenues than I do, but I actually make more net profit than they do because I don't have much in the way of expenses. The dot.com has pretty much been living on investors money for a number of years.

Do they get money from angel investors or does that traffic pay off the bills?

They do what other "normal" businesses do. They write a bulky business plan, buy a nice suit and go to the bank to beg for money. This gives them a few years breathing spell to build their business. After that period they are either successful, bought by a competitor or bankrupt.

I personally find CPM not the best method to calculate revenue for sites where people are viewing a relatively large number of pages like on forums or social networking sites. Each individual person only wants to leave the site once per visit (either directly or via an ad) and I think adding a value per visitor is better than adding a value per page view. If we take a CPV of $5, we get $330,000 per year. Certainly not enough to pay the wages for 12+ people and all additional costs in any decent country. They must be gambling on expanding their business to become profitable. That is probably also the reason they are hiring now. Their business plan demands them to do so.

aggre with lammert, their bussness plan want them to do so