Ning, the social networking platform co-founded by high-profile Silicon Valley entrepreneur and investor Marc Andreessen, is a classic example of a Web start-up that received too much hype for its own good.
Online publisher and ad network Glam Media is buying Ning for $150 million in mostly stock, according to a person familiar with the deal, a fraction of the $750 million valuation that venture capitalists set just two years ago.
When Ning launched in 2004 the concept of social networking online was in its infancy. The reigning champion of social networks, Facebook Inc., was founded the same year. But, with Andreessen, regarded by many as the father of the modern-day Internet browser, and his co-founder Gina Bianchini steering the company, Ning received tremendous early hype. The site grew steadily, and investors paid up, valuing the company in 2007 at $214 million, then in 2008 at $560 million, and the following year at $750 million.
By that point in July 2009 the company had raised $119 million and had nearly 30 million users who used the platform to build their own social networks around various groups and interests.
Just a year later, Bianchini was out of the chief executive seat, replaced by current CEO Jason Rosenthal, and the company announced it was cutting 40% of its workforce and would phase out all of its free services. It claimed 45 million registered users and more than 2.3 million social networks at the time.
In April, Rosenthal told The Wall Street Journal that move worked better than expected. The company had been hoping that about 9,000 of its 285,000 free account-holders would agree to pay for the service. Instead, more than 50,000 made the shift. Prices for the accounts ranged from $3 a month to $50 a month.
Rosenthal said Tuesday that the company now has 100,000 paying customers and 60 million active monthly users. Its investors, which put in some $120 million, include Andreessen, LinkedIn Corp. Chairman and investor Reid Hoffman, Legg Mason, Allen & Co. and Lightspeed Venture Partners.
Bianchini, meanwhile, announced this month a new company, Mightybell, which lets users post experiences and goals that others can achieve by completing a series of steps.
Ning will now move into the hands of Glam Media, which itself has grown quickly since launching in 2005. It’s raised about $130 million in venture capital, and is now the ninth largest Web property by unique U.S. visitors since launching in 2005. Targeted at women, Glam sells advertising on its own sites as well as on a network of 2,500 websites that reach a total of 85 million unique U.S. visitors.
The Ning deal provides Glam the opportunity to offer publishers tools to make their websites more social, such as blogs, photos, chats and buttons to post content on social networks such as Facebook and Twitter.
In July the company rolled out the Glam 2.0 content model, powered by two recently developed technology platforms–GlamCreate, a content-management platform, and GlamConnect, a social networking platform for professional authors, bloggers and journalists. Ning will be leveraged for the social component of the platform. Meanwhile, Ning will leverage Glam’s sales team to monetize its networks.
“There is a huge shift happening on the Web right now. Users in the past would go to portals or search. More and more of the content sharing that is happening online is happening on social networks,” says Andreessen, who will join Glam Media’s board.
By Ty McMahan – WSJ