Startup Chatter by Donna Bogatin

While touting Marc Andreessen’s Ning last week, Fast Company also shared the Fred Wilson “joke” that his Union Square Ventures could more aptly be named “Viral Ventures” since the VC firm dedicated the majority of its $20 million portfolio last year to so-called “viral-loop” companies, such as the latest blogosphere fad, Twitter.

The joke may now be on Wilson’s Twitter itself, though. Michael TechCrunch Arrington HOPES Twitter “amateur hour” viral misadventures are over. 

In “Ning: $60M VC for Facebook Fight, AdSense Optional” I underscore the fragility of “businesses” developed solely to create mass consumer “free” viral waves, refuting Wilson’s Ning and Twitter cheerlead in which he hailed a seemingly carefree “viral adoption model,” indicating at no time in history has it been possible to market to so many by starting with so little.

You DO get what you pay for, of course, and Mark Andreessen, for his part, apparently operates under the assumption that visions of fast-growing, highly scalable, multi-billion dollar viral (not so serendipitous) hits must be highly financed if the end-game of a lucrative exit is to be achieved. Andreessen’s Ning has accumulated a VC war chest of $100 million plus to build out the scalable infrastructure capable of sustaining his big money, big viral ambitions.

Viral adoption models are NOT “the cheapest way to grow an audience,” then, contrary to Wilson, if quality of execution is a core operating principle: Audience retention is dependent upon high availability and service reliability, costly endeavors requiring ongoing human resource and infrastructure investment, as Ning’s high level of financing acknowledges.

Ning’s financial backing dwarves Twitter’s venture capital. Ning seeks to be a “model of how to create a perpetual (user) growth machine,” whileTwitter apparently has less lofty ambitions, and much less resources for achieving any of them.

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