

Social network creator Ning raising $70M at $560M valuation - rami
http://venturebeat.com/2008/04/18/social-network-creator-ning-raising-70m/

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neilc
I thought Marc A's comment at the end of the article was interesting:

    
    
      We raised the money to enable us to keep scaling given 
      our accelerating growth ... and to make sure we have
      plenty of firepower to survive the oncoming nuclear
      winter. At current growth rates, we don’t need it to get
      to cash flow positive, but having lived through the last
      crunch, it’s good to be conservative with these things.
    

Which is at least a reasonable justification for getting so over-capitalized:
get the money while it can be gotten for cheap, don't burn through it, and use
the cash reserve to survive the downtown Marc A. is predicting.

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wehriam
Why aren't they "cash flow positive"? How do you spend $44 million and not
make money?

I'm not being rhetorical, I admire what Ning is doing.

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wanorris
They must be investing in some enormous infrastructure. Server farms,
international markets, maybe Akamai.

But in general, it's not uncommon for companies that raise a lot of capital
for rapid growth to not be profitable. Back in AOL's heyday, they had huge
revenue growth, but they were reinvesting it in customer acquisition so fast
that they never started to make money until their growth slowed down. This
also happened in the retail boom in the 80s with companies like Home Depot and
Staples. They kept building out more stores, which cost them more money than
they were making.

Having said all that, I really fail to understand valuing Ning at half a
billion dollars. It seems like a useful thing, but only an incremental
improvement over, say, Yahoo Groups.

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reitzensteinm
Splitting hairs a bit, but Marc says $60m:

[http://feeds.feedburner.com/~r/pmarca/~3/273226506/ning-
news...](http://feeds.feedburner.com/~r/pmarca/~3/273226506/ning-news-
serie.html)

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fallentimes
net investment banker fees

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reitzensteinm
Ah. Should have studied finance. :)

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fallentimes
haha believe me it wasn't worth it

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DocSavage
The investment bankers who got the missing $10 million might differ in that
opinion :)

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fallentimes
touche - but not the lower level analysts who worked 100 hours a week at
essentially McDonald's manager wages (100k per year divided by 50 weeks
divided by 100 hours per week = $20 per hour), staring at TPS reports,
pitchbooks and never ending excel schedules.

which unfortunately would be my level.

