Ning and the receding Freeconomic tide

Friday, April 16. 2010

Ning and the receding Freeconomic tide

We wondered what was going on when photogenic Ning CEO Gina Bianchini moved off the hot seat, now we know. Today brings news of the demise of Ning as a Free state - first the blah, then the punchline:

As many of you know, we made a decision yesterday to focus 100% of the company on enhancing the features and services we offer to paying Ning Creators. The tens of thousands of you who already use our paid service represent over 75% of our traffic, and we’ve heard repeatedly from you ways that we can deliver a killer service to help make your Ning Network more effective. Some examples of things we are working on that you’ve asked for include new APIs, a new mobile experience and new advertising and revenue opportunities.

As part of this change, we’ll be phasing out our free service.

If there was ever a sign of the receding freeconomic tide sliding back down the beach, this is it. Ning was the poster child social media site hosting network, backed by Marc Andreessen and fronted (and how!) by Gina Bianchini, it dripped Web 2.0' ness. If anything was going to make it, this was, we were told.

The company managed to raise $119 million in venture capital backing over five rounds, including $15 million last summer at a $750 million valuation. Now the CEO has gone upstairs to be an Executive in Residence at Andreessen's new gig, leaving the Ning COO to deal with the sh*t - like firing 40% of the staff yesterday (you'd have thought she could have done that before leaving,thus giving the new boy a decent chance!)

There is a harsh lesson in VC selection bias here by the way, as many were sceptical (including us) about it in concept, but with a backer like Andreessen and a model CEO it was always going to get funding.

But, as we pointed out 2 years ago - Ning and many of these similar projects were funded by hopeful capital, not ongoing revenue, and the idea of FreeConomics - now mutated into Freemium (the many free customers being supported by the few paying ones) - is, in most cases, a dream.

Posted by Alan Patrick in Business Models at 23:35 | Comments (6) | Trackbacks (0)

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Alan,

I agree with your perspective on Ning's sustainability as a free product, although I see its shifting business model and redundancies as more of a signal of the wider (and yes, predictable) changes that many free-based Web 2.0 businesses are having to confront and deal with. Plus many traditional media businesses - see that larger shrinking industry: newspapers.

There's also a separate discussion to be had on the value closed networks can bring for their owners and users - let's schedule that in

However your analysis is marred by the irrelevant personal remarks and inferences about the CEO - from which we are to infer what exactly in regards to the business model? That VCs were conned out of money by a siren call? That thousands of customers were hypnotised into signing up for the service and then some didn't use it much once the trance wore off?

Other female CEOs, VCs and leaders better watch out. Maybe Google's Marissa Meyer and Rashmi Sinha of Slideshare will some day find their looks are shoehorned into analyses of reasons for the past valuations of their companies, should their businesses ever falter or experience a period of decline and change [whereas non-female leaders gain respect, credibility, and learn valuable lessons from experiencing failure, and their looks are rarely if ever mentioned]. In fact I am sure this will happen. The magazine covers and random photographs will be hauled out of the archives. Look: a woman wearing figure-hugging clothes and make-up, yeah, no wonder they failed! Will you be joining in that circus?

I think that conversely, the VCs and media fell for the simplified "viral loop" story, and got entranced in the spectacle of free. Users and communities found a service with some very good and some not so good elements and had lots of different outcomes from their usage of it.

Some relevant thoughts on the efficacy and workings of viral/cybernetic loops in different settings - or on open vs closed networks - might have made this blog post more nuanced and compelling.

PS. And you wonder why women have underlying fears about speaking in public? I really can't think why...
http://www.broadstuff.com/archives/2042-London-event-for-Women-who-want-to-build-public-speaking-confidence.html

PPS. James Harkin has an interesting analysis of OODA loops in cybernetics and its subsequent appliance to military operations in his book Cyburbia. There's a summary-style review here:
http://marctyrrell.com/2009/06/02/cyburbia/

#1 Deirdre (Homepage) on 2010-04-17 14:00 (Reply)

Deirde, ordinarily I'd agree with you - but in this case (and in a few others - I certainly think Marissa Meyer risks this if you look at some of the more recent "lifestyle" pieces on her) they (in my opinion anyway) deliberately used her looks as part of the buzz / marketing spiel at Ning - the Fast Company covershoot that Gawker sends up being an example

Fwiw I also think male CEOs risk the same sort of thing if they try and create personality cults around themselves.

#2 alan p on 2010-04-17 18:24 (Reply)

That may be Alan, but isn't what you're alluding to (the Fast Company and Gawker coverage - and your rehashing of some of it) a function of how the media - generally, not always I admit - frames women when they agree to be profiled?

And also, does it mean that women and men who cater to such demands damn themselves in the future, when their companies' futures change?

Are you equally consistent on this? Maybe there are some women and men (could you reference examples of the latter please) closer to home that you have complimented on your blog on on Twitter as such, that you will in future damn for their boldness and its implied vacuity..? You can see the absurdity of this logic I hope.

Personality cults are one thing - the norm is to venerate the charismatic leader and there is obviously something in that. But what you originally inferred in your blog - with a woman CEO - was the belief that appearance is somehow germane to business acumen. I haven't seen you apply the same thinking to a man in my reading of your blog over several years. Happy to be corrected.

So, are Ning's issues the case of a good looking woman who had it coming? Or is it the freeconomic model that you are laying Ning's trouble at the door of? Or both?

If it's the first or the last of these explanations, and not just the middle one, it would be good to hear what advice you might give to others in the future. Is there a "median" approach to appearance for women in terms of media coverage that meets your standards?

It seems irrelevant to me - but it would be useful to get some more detail on your thinking so we can have a productive discussion going forward.

#3 Deirdre (Homepage) on 2010-04-17 22:19 (Reply)

Deirdre, to me the Ning / Gina thing was more an opportunity to take a potshot at the way they used her good looks in marketing the business in the good times - they were certainly not backward in putting her forward, so prime Broadstuff territory

I don't think Gina's looks had much to do with the eventual failure of Ning as a "Web 2.0" darling - that I think was down to an over-reliance on the freeconomic model du jour

Where I do think there is a case to be answered is twofold:

(i) Did using her assets to create "buzz", - potentially - allow Ning to obtain higher valuations of investment that would otherwise have accrued? If yes, what does that tell you?

(ii) Personally, I think that given it was clear that they had to sack a lot of the workforce, I think she should have done that and then exited, leaving the new CEO a chance to heal the remaining organisation afterwards. Not doing so was imho a poor show and put reputation over responsibility.

You make a good point re "do all women in tech risk this" and my observation is that it depends on how they project themselves in the meedja.

As to complimenting them only to pull them down, I think you'll find we've been pretty snarky about Ning throughout - and rude to to a lot of other people to boot

#4 alan p on 2010-04-18 20:00 (Reply)

Can you sprinkle a little more sexism in your article...I don't think there's enough innuendos!

#5 Charbo on 2010-04-22 13:01 (Reply)

Nope, any more would have been in bad taste

#6 Alan P on 2010-04-22 17:15 (Reply)

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