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Ning’s Bubble Bursts: No More Free Networks, Cuts 40% Of Staff
- jbyers 17y agoWith $120M in funding, this blows my mind. I'm reminded of Ho Nam's Fat Startup Watch. Today's announcement suggests that despite massive growth and traffic, Ning did not find sustainable product-market fit. http://www.blog.altosventures.com/vc/2010/03/fat-startup-watch.html http://www.blog.altosventures.com/vc/2010/03/fat-startup-wat...
- petervandijck 17y agoIt's probably partly because of that funding :)
- jbyers 17y agoOh -- I completely agree. What blows my mind is the magnitude of the loss, both monetary and human.
- javery 17y agoI really wonder what the 500M and 750M valuations are based on, or are those just the numbers needed to justify additional investment.? Also, it would make sense that this is slimming up with the hope of being acquired. Reduce head-count, pour effort into premium services to bump revenue, then sell.
- froo 17y agoI'd suggest the valuations are based on perceived value by the investors. That's how we get insane valuations of $15 billion for Facebook when they were hemorrhaging money (not the case now of course). Either way, I suspect its part voodoo and part negotiations when you're talking about speculative valuations like this
- va_coder 17y agoNing Free had way too much Ning branding.
- teej 17y agoYou get what you pay for.
- raganwald 17y agoTrue, although the parent post could be read as follows: Ning Free had too much branding to attract the kind of sites that would later upgrade to pay plans. It could be that the Ning branding interfered with the Freemium model. I'm not speaking for the parent post, of course, just pointing out that there may be something interesting to consider...
- colinplamondon 17y agoThe interesting part is that, if 75% of their traffic are from paid networks, all that much heralded viral growth must have really just been bizdev deals to get existing brands and communities onto Ning. If that's the case it's pretty shocking they didn't do this sooner.
- dannyr 17y agofrom @dhh: Ning raised spent $120MM of other people's money over 6 years to come to the conclusion that free doesn't pay.
- staunch 17y agoIf Ning networks had exploded as they had hoped there wouldn't be any emphasis on paid today. The plan was to have a billion people participating in 10 million different networks. That didn't pan out. If it had worked DHH would have simply said that they're one of the lottery winners.
- Tawheed 17y agoYes, he would have, but he'd also be right, since there are so few that succeed with that model.
- chaosmachine 17y agoWould he be wrong, though?
- izendejas 17y agoThis is just the beginning of a reality check for social media.
- Gormo 17y agoOnce it becomes clear that Twitter has no viable revenue model, that Facebook's model will be undermined by the same effects that caused the videogame industry to crash in the early '80s, and that "Web 2.0" has largely turned into a fad, we'll probably face another Dotcom crash. Meanwhile, genuinely emergent social media like IRC, Wikipedia, etc. keep chugging along.
- luu 17y agoFor those of us that weren't around in the early 80s, what caused the video industry to crash back then, and what are the parallels to social networks?
- PostOnce 17y agoI think it's pretty widely acknowledged that the gaming crash of the '80s was due to a glut of horrible software, since there was no approval process, crap flooded the market, and since people had no way to judge what was crap, they bought random games and hated them, and therefore stopped buying. I'm not sure this is relevant to Facebook. Nintendo came along with an approval process (Nintendo Seal of Quality) and made games popular again. Sort of makes Apple look sensible for all their iPhone shenanigans.
- Gormo 17y agoI think it's relevant to Facebook, given that they're heavily focused on third-party apps, especially games like Mafia Wars, Farmville, etc. In the '80s, companies like Atari collapsed because third parties were publishing large amounts of crap for their platforms, and this ultimately undermined the platform itself. The increasingly common crap apps and scams on Facebook seem to parallel this. In fact it may be worse for Facebook, because the Nintendo solution would be much more difficult to apply. With video games, the revenue stream for both the platform developer and the third-party developer comes from end users. But with social media, the revenue stream comes entirely from the third-party affiliates - who would pay to use Facebook? If the people pushing the crapware are also the ones paying your bills, it's a lot harder to dictate quality standards. I think the endgame here is sites like Facebook having to decide between attempting to directly monetize the use of their service, or opening the floodgates to spam. Either option will drive users away.
- deleted 17y ago[deleted]
- suckafree 17y agoFree is not a business model. Within 12-18 months expect Facebook and Twitter to go the same route. Their burn rate is starting to catch up to them and Twitter's search deals will shrink.
- subwindow 17y agoDo you have any idea how much money Facebook is raking in with advertising? The targeting available on Facebook is unparalleled in human history, and they are making a mint on it.
- borism 17y agooh yes, they do! much better than google! however there's absolutely nothing advertised on them that I'm interested in. I literally can count on both hands number of times I clicked on google or facebook ads.
- il 17y agoSo obviously nobody else clicks on Facebook ads either, right?
- petewarden 17y agoIn my experience, a good click-through rate is about 0.1%, which makes sense since they're essentially banner ads 2.0, there's no intent captured at all. That said, they were cheap enough that I was able to acquire new users for my Facebook app at around $2 each in my small-scale tests.
- borism 17y agoobviously a lot of people do for now, since it's kind of novel and obtrusive way of advertising. the point is - online ad market is getting saturated.
- axod 17y ago
- apphacker 17y agoThing that always bothered me about Ning was there no way to browse networks. At least I never saw such a thing, just featured networks and search.
- joshuarr 17y agoJeeze, never saw this coming.
- johnrob 17y agoPicking losers is a lot easier than picking winners.
- Tawheed 17y agoFree can work, if you can keep you overhead low. They clearly failed at that.
- MartinCron 17y agoAbsolutely. I find the notion that there's only one true business model that's ever successful to be extremely arrogant. Organizations are like organisms, there are many different workable strategies. Take a look at nature, there's no one-best-way to be a successful animal.
- proee 17y agoIn a way, the stack exchange product and ning are very similar. Both tried to create an out-of-the-box product to fill a need. The reason both did not succeed is probably the same as well - too many half-baked communities with nobody behind them. If hindsight is 20/20, what could Stack Exchange and Ning do different to make it work? Or on another note, what sites out there have tweaked the model and are doing well?
- SlyShy 17y agoThey could take a hint from Hacker News. Creating a successful community is all about pre-seeding it. Of course, the problem is this can't be scaled. Making enough friends to found a domain specific website with a good group of them isn't easy work. Communities aren't easy.
- sriramk 17y agoSO did successfully create a community. I think they ran into the problem that SO itself was successful because of the 'personal brand' of Jeff Atwood and Joel and this didn't extend easily to other communities. Or maybe it is because the coders who hang out on SO are a weird bunch :)
- netcan 17y agoWell, if their statements are anything to go by, we can see what they are going to do differently to try and make it work. They are moving away from the 'provide the platform, get out of the way, let 1000 flowers bloom.' Stack Exchange is going to be launching sites themselves with a more regimented process that (they hope) has a high success rate. *After seeing Slinkset (I liked that one), these two, Wikimedia etc. have such a hard time getting successful sites going, I have a new appreciation for forums. Forums work. There are a lot of non ghost town, forums started by non social software gurus.
- mhartl 17y agoThis sucks. Get Satisfaction tried something similar recently (eliminating even basic admin tasks from free plans), but realized their error and elected to grandfather in current members. Ning should do the same thing with their free networks, perhaps with a total traffic limit. (If even that's not economically viable, then I don't know what the hell they were ever thinking.) I sure am glad I never made an investment in building traffic to a Ning social network. I'd be pretty hot under the collar just about now.
- deleted 17y ago[deleted]
- mschaecher 17y agoGo to ning.com (logged out if you are a member) There is literally no attempt to sell you on anything unless you create a network. No feature listings, no pricing, nothing. There homepage is half dedicated to showcasing networks you might be interested in. To get a light overview of the features you have to go three clicks deep into the site. They should be more focused on selling their product not the various networks. The networks should drive the traffic to themselves based on their own merit and efforts. Compare that with a competitor, SocialGo, which is pretty clear in explaining what you can get from their service at various price points. Whereas Ning doesn't appear to be trying to sell me anything, let alone compare my options.
- hop 17y agoLooks like they spent none of their $120MM on that UI. That is rediculous, these VC's must be wildly out of touch.
- motters 17y agoRegrettably, this probably means the end of Ning. It's the classic dot com business model. Once you engage in "community breaking" activities, like kicking off your users or trying to force them into paying subscriptions, the amount of animosity and bad publicity generated by users who have invested a lot of time and energy into the service usually ends up killing the company. However, I'm not sure that this has wider repercussions for other social networking services. I assume that Facebook is making enough out of advertising to be sustainable (although I could be wrong).
- netcan 17y agoI want to point out something. The majority of these 'swing-for-the-fence' ideas are expected to fail. It's what is supposed to happen. Doesn't mean anything is broken with the system.
- marknutter 17y agoTell that to the people who ponied up the cash.
- netcan 17y agoYou mean the mega angel-investors-slash-repeat-founder or the venture capital funds? Presumably, they all know. They probably insisted on it.
- MartinCron 17y agoA few months ago I got contacted by some overly friendly recruiters working on behalf of Ning. I'm ignored them because I'm crazy happy at my current job and can't even really think about relocating. Curiosity being what it is, I took a closer look and was surprised to find it such a large/heavily funded/fast growing organization that I had never even heard of. I find my "thanks but no thanks" instinct vindicated today.
- jemfinch 17y agoAs one of the 69 people who were laid off from Ning today (after a mere six weeks with the company in my case), allow me to say the obvious: Need a Python/C/C++ engineer with an algorithmic bent and a strong knowledge of scalable data storage and analysis? Email me at jeremy@finchers.us.
- ajju 17y agoFrom my friend, HN'er, and recent ex-Ning'er rjurney (works at LinkedIn) : http://twitter.com/rjurney/status/12236580762 http://twitter.com/rjurney/status/12236580762
- jemfinch 17y agoOne of the real challenges for me is that I was a remote employee, and I'm not based out of an area with a reasonable tech sector. Telecommute positions (especially with companies of Ning's caliber) are hard to come by, and I'm not significantly free to relocate for another 14 months. Finding an arrangement that satisfies both my personal (family) and professional needs is going to be a real challenge.
- patio11 17y agoI'm not based out of an area with a reasonable tech sector I know how you feel -- there were so few decent jobs in tech in the town I wanted to live in, I had to bloody make one to give it to myself.
- jemfinch 17y agoEntrepreneurship just isn't in my blood, unfortunately. Nor is the risk particularly desirable given its potential effects on my kid's college fund :)
- earl 17y agoA recruiter from Ning contacted me on either Tuesday or Wednesday. Although obviously my situation doesn't compare to yours, it sure is nice of the company to keep trying to hire when the upper echelons knew damn well they were going to lay a ton of people off.
- thenbrent 17y agoSounds like the perfect opportunity for Automattic to introduce a BuddyPress.com using the Wordpress.com model.
- OldSnakey 17y agoGoogle is looking for people with business and tech skills, come check it out! April 29 - San Francisco open house http://www.google.com/intl/en/jobs/landing/psomixer/ http://www.google.com/intl/en/jobs/landing/psomixer/
- c00p3r 17y agoThe longer investors pours money, the more money founders and top personal earns. That is the business model. =) The art is about chatting investors as long as possible and to leave on time - http://en.wikipedia.org/wiki/Marginal_value_theorem http://en.wikipedia.org/wiki/Marginal_value_theorem