I had missed the departure of Gina Bianchini from Ning a month ago (around the time of my mother’s death, and I wasn’t paying much attention), but the current plans that the new CEO, Jason Rosenthal, has sounds like the death spiral has started. He’s laying off 40% of the staff — 70 people — and canceling free accounts. As Jason Kincaid points out, this is going to piss off a lot of people, and scare off others who might have used the system.
Here’s the email from the CEO:
When I became CEO 30 days ago, I told you I would take a hard look at our business. This process has brought real clarity to what’s working, what’s not, and what we need to do now to make Ning a big success.
My main conclusion is that we need to double down on our premium services business. Our Premium Ning Networks like Friends or Enemies, Linkin Park, Shred or Die, Pickens Plan, and tens of thousands of others both drive 75% of our monthly US traffic, and those Network Creators need and will pay for many more services and features from us.
So, we are going to change our strategy to devote 100% of our resources to building the winning product to capture this big opportunity. We will phase out our free service. Existing free networks will have the opportunity to either convert to paying for premium services, or transition off of Ning. We will judge ourselves by our ability to enable and power Premium Ning Networks at huge scale. And all of our product development capability will be devoted to making paying Network Creators extremely happy.
As a consequence of this change, I have also made the very tough decision to reduce the size of our team from 167 people to 98 people. As hard as this is to do, I am confident that this is the right decision for our company, our business, and our customers. Marc and I will work diligently with everyone affected by this to help them find great opportunities at other companies.
I’ve never seen a more talented and devoted team, and it has been my privilege to get to know and work with each and every one of you over the last 18 months.
We’ll use today to say goodbye to our friends and teammates who will be leaving the company. Tomorrow, I will take you through, in detail, our plans for the next three months and our new focus.
So, they are going to make people convert from free to some form of paid account, but a lot of those will move off, I bet, to something else, like Facebook.
Ning has occupied a weird space in the social communities world: a customizable solution for a personalized social network. But those that have really specialized needs can’t be satisified with what they offer. Perhaps they will move in that direction, and carve out a new competitive strength. But right now I fear they are running out of runway.
Rosenthal says that they will announce detailed plans in two weeks. We’ll see what he has to say.