“Next generation” of Ning coming in 90 days after “painful” restructuring

Ning, the build-your-own-social-network company cofounded by entrepreneur-investor Marc Andreessen, is letting go of nearly 70 employees, or 40 percent of its workforce. It plans to relaunch as a paid-only service.

Ning’s new chief executive, Jason Rosenthal, said the company will release new premium features, a mobile experience and new application programming interfaces in 90 days. It’s been a difficult transition for the company, which was valued at $750 million during its most recent financing. In 2008, when Ning raised $60 million, Andreessen described it as preparation for “nuclear winter,” shortly before the economy tanked. But Ning’s business turned out to be the real bomb.

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Rosenthal’s analysis of the business may have been presaged by a post on VentureBeat in 2007, which pointed out that the company’s growth in hosted social networks was a meaningless statistic.

Ning’s previous chief executive, cofounder Gina Bianchini, stepped down last month. Rosenthal said the company’s other cofounder Marc Andreessen, who founded Netscape, will be involved in finding laid off employees new work.

Rosenthal said:

I’ve taken a hard look at our business in the 30 days since I became CEO, and I’ve decided to focus the company 100% on our paid networks business. The tens of thousands of paid Ning Networks today represent over 75% of our US page views, and we believe completely focusing on this opportunity is the best path for our company, our Network Creators, and our users. I believe this market will grow enormously over the next few years and, with this focus, we will be able to provide the best solution in the market, by far.

There are two important decisions that I have made as a result, both painful but necessary:

· We will soon phase out our free service. Existing free networks will have
the opportunity to either convert to paying for our premium services, or
transition off of Ning, and we will fully support each Network Creator’s decision.

· We are reducing the size of our team from 167 people to 98 people. Marc and
I, along with the team at Andreessen Horowitz, will work diligently with
everyone affected by this to help them find great opportunities at other
companies.

Within 90 days we will launch the next generation of Ning, which will include a range of new premium features and services for our Network Creators, a new mobile experience, and a new set of APIs. I look forward to talking to you about these changes as we get closer to launch.

His original memo to company staff (which reiterates much of what’s above) is here:

Team,

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.

Thanks,

Jason