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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 ... a
by neilc 19y ago
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.
- gojomo 19y agoYes, "pmarca expects a 'nuclear winter'" is almost a headline-worthy item itself.
- wehriam 19y agoWhy 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.
- icky 19y ago> How do you spend $44 million and not make money? Investing in Ning? ;)
- wanorris 19y agoThey 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.