“Ning” Always Sounded Dirty

Posted on January 6, 2008
Filed Under Web 2.0 Kool Aid |

And according to a group called “CPM Advisors,” it is. Apparently, quite a few of the most trafficked Ning social networks are porn-related. Allen Stern at Center Networks has asked “Is Ning a Porn Facilitator?” and Valleywag has “Is Marc Andreessen running a porn ring?”

In the past, I’ve said that Ning is little more than Yahoo Groups 2.0 and I find it interesting that, in his response, Marc Andreessen mentions Yahoo Groups:

Yahoo has always had an enormous amount of adult activity and material — some estimates are that as much as half of Yahoo Groups’ activity is adult in nature, for example.

Marc goes on to argue that Ning is “pro-freedom” and so long as the adult content found on a Ning social network is legal, the company will allow it to stay. Frankly, I don’t take issue with this stance.

But I do think the situation highlights just how risky the $44 million investment in Ning is (an investment that was rumored to leave the company with a quarter a billion dollar post-money valuation). Here’s the bottom line:

At the end of the day, I’d observe that, as I predicted, Ning does seem to be following the same development path as services like Yahoo Groups. That is, it is attracting a lot of small groups and many of these are “lowest-common-denominator” groups. While there is definitely a market for these types of services, I sincerely doubt that when investors poured $44 million into Ning on such a rich valuation, they were hoping for these kinds of results. eGroups (which became Yahoo Groups) was purchased for $432 million in Yahoo stock at the height of Bubble 1.0, however given the current dynamic in today’s market, I don’t see a blockbuster acquisition in store for Ning anytime soon. And if the rumors about the valuation Ning received are accurate, the company would need to be acquired for over $500 million for investors to make a decent return. If I was a betting man, that isn’t a bet I would take.

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