Is Ning Blowing up a Bubble?
While I don't know Marc Andreessen personally,I am among the many who have followed his legend and I greatly respect what he has done so far. I have followed Ning, the do it yourself social networking company only slightly and i think it shows some promise.
But Michael Arrington says that it's first external financing round was $44 million and that the company's post-money value is $214 million. This scares me. It scares me because I cannot conceive of any possible argument that this company is worth nearly a quarter billion dollars. Even considering the value of Marc's personal brand, the upside expectation seems to me to defy reality.
I am a survivor of the Great Dotcom Bubble. I remember hearing company valuations that seemed silly or worse to me, and I recall being shouted at because "I just didn't get it." What I did get was bubble splatter all over my nice PR guy suit, and then a nice long rest from work.
The Ning valuation scares me. I just don't get it. I hope someone else does.
While the valuation is high, I think it is finally recognition that there is room for more than just Facebook and MySpace in the social network arena. Other providers like ning and www.nexo.com provide more flexibility, privacy, and customization for the group than the earlier services.
Posted by: Gina | July 10, 2007 at 10:05 AM
Didn't know Ning was worth that much. It's only going to get larger because corporations have embraced it as a means of communication.
Posted by: Dan Schawbel | July 10, 2007 at 10:25 AM
Only if there are as many over-valued companies around as last time. And I don't think there are. I'm happy for Marc Andreesen if someone is really giving him that amount of money (maybe they were Hong Kong dollars?) but it takes more than one puff of hot air to make a full-on bubble. And Ning is at least a functioning service with customers - more than could be said for the most notorious chancers of last time around...
Posted by: Michael Clarke | July 10, 2007 at 02:06 PM
I agree, this valuation seems pretty high. But I'm pretty naïve about such things. I know he doesn't have to, and probably won't, but I'd love to hear what Marc has to say about this valuation. Maybe a post in his VC/startup series on valuation would be in order to help us understand it.
If you have some resources to help people understand valuations I'd love to see them.
Posted by: Nick Gerner | July 10, 2007 at 02:56 PM
What's really scary is that Ning has 60 competitors
Posted by: Jeremiah Owyang | July 10, 2007 at 03:49 PM
What's really scary is that Ning has 60 competitors
http://www.web-strategist.com/blog/2007/02/12/list-of-white-label-social-networking-platforms/
Posted by: Jeremiah Owyang | July 10, 2007 at 03:49 PM
This is what irritates me about it... I'm having a heck of a time finding qualified technical people for my own startup. Blowing up bubbles also means sucking up all the tech talent and there's already a huge shortage.
Posted by: Dawn | July 10, 2007 at 04:16 PM
I fear the valuation is "fuzzily" based on Marc Andreessen's name more than reality. Like you, I can't find any reason to value it that highly.
Posted by: Ken Camp | July 10, 2007 at 05:24 PM
I followed over from Scoble, and I read Tech Crunch and I don't get it the valuation.
How does Ning make any money? Are they getting a cut maybe of ads placed on all the social networks?
Or maybe they will be a paid version of Ning? I haven't even looked at what it can do yet except I know I can make my own social network. Big Deal
Posted by: Loren Nason | July 10, 2007 at 05:24 PM
have you considered that the investors know a whole lot more about Ning and their strategy (which IMO has been excellent so far) than what the sideline commentators do?
being able to raise so much is a sign that they are onto something really good, its not a sign that the bubble is back
Posted by: nik cubrilovic | July 10, 2007 at 05:50 PM
"I greatly respect what he has done so far"
What would that be?
Posted by: anona | July 11, 2007 at 01:00 AM
Anona,
That would be inventing the first browser for the masses and building Netscape. We all owe Marc some gratitude and respect.
Posted by: shel israel | July 11, 2007 at 07:34 AM
1) The Great DotCom Bubble was caused by crazy stock market valuations - not valuations by VC firms. We've yet to get to that.
2) "VCs admit that valuations are an artifact. They decide how much money you need and how much of the company they want, and those two constraints yield a valuation."
- http://www.paulgraham.com/guidetoinvestors.html
Posted by: bean | July 11, 2007 at 02:25 PM
"being able to raise so much is a sign that they are onto something really good, its not a sign that the bubble is back"
It's definitely one or the other. And for the sake of everyone with their feet in the water, I hope it's just that Ning has incredible revenue potential.
The potential I see is that advertisers can target uber-focused communities. That would make the impressions a lot more valuable. So maybe...
Posted by: Mark Jaquith | July 11, 2007 at 06:56 PM