This lecture looks at how Ning, the Marc Andreessen Social Network company initially started with a Freemium model but later switched to a fully paid subscription service

1. (Stanford BUS-21)
Martin Westhead
Mastering Marketing
Free Case-Study: Ning
How to make money
by giving things away

2. Overview
 Ning history
 Monetization
 Analysis
- Successes
- Challenges
- Lessons
Disclaimer: My view only based on limited info…

3. HISTORY

4. Timeline
2004
- Founded 24hr Laundry
2005
- Launched platform to create social apps
2006
- Pivot to focus on 3 apps: Videos, Photos, Groups
2007
- Ning launched based on combining these apps
2009
- 1M social networks
2010
- 2M social networks
- Jason Rosenthal takes over as CEO
- Free -> subscribed
2011
- Bought by Mode Media (formerly Glam)

5. 24 Hr Laundry (2004)

6. Founders
Gina Bianchini Marc Andreessen

7. Funding
 Unknown amount - Series A
- Jan 1 2007…(possibly earlier)
- Investors: Marc Andreessen, Reid Hoffman, SV Angel
 $44M Series C
- Jul 1 2007
- Investors: Legg Masson
 $60M Series D
- April 1 2008
- Investors: Allen & Company
 $15M Series E
- July 1 2009
- Investors: Lightspeed Venture Partners
 Total: $119M

8. Platform for building
Social Apps
 Toolkit for building and hosting social network
applications
 Build your own Facebook, Linked-in, Myspace
 Underlying functionality
- User accounts
- Friends
- Blog posts and discussions
- Messages
- Photo, Video and music sharing
 Mix and match and add your own

9. The Demo App took off

10. Pivot
 Hosting other people’s code is hard
- Poorly written code hard to control
 More interest in the application than in
developing
 After several years of not being a social
network company…
 Ning was born, a provider of social networks

11. Product turning points
 2007
- Ning launched
 2008
- Shut down API
- Ban Porn
 2009
- Ning as a hub

12. Success and Celebrity
 1M networks 2009
 2M networks 2010
- 40M users

13. New CEO
 2010 Jason took over
 Changes
- Laid off 40% team
- Move to paid
- Building subscription
business
Jason Rosenthal

14. Ning bought by Glam
Media
 Tech-crunch estimates they paid $150M
 Glam (now Mode) Media
- Advertizing
- Specializing in the long tail
- Potential monetization engine for Ning
 Ning 3.0
- Relaunch of subscription product
- Totally new user experience

15. MONETIZATION

16. Early Freemium
 2007 Premium Services
 Place holder
- Show users they would
have to pay for something
someday
 Created two classes of
customer / user
 Plus additional
monetization challenges
down the line

17. Virtual Gifts

18. Advertizing

19. THE SWITCH TO PAID

20. Pricing

21. Why Subscription?
 Ads
- Best inventory sold
- Hard to target the log tail
- Hard to identify brand-safe content
 Value conflict
- Free sites – maximize page views
- Paid sites – want control
 User generated content policing
- Costly and risky

22. How did the new model
fair?
 Only lost 15% of traffic
- Although millions of networks
 Careful management of customer
communications paid off

23. Customer Reaction
Some customers pleased...
...others less so…

24. Competition?

25. ANALYSIS

26. Successes
 Successful product
- Rapid growth
- Diverse and fascinating use-cases
- People loved it
 Scale
- In the top 20 websites in the world
 Hot area
- Social networks
 $119M funding

27. Challenges
 Too many pivots
- Long-time users fatigued
- Flip-flopping on white label
 Limited cross-site network effects
- Each Ning was an island
- Tried to fix it but failed to find the right product
 Building communities is hard
- Not just a technology problem
- Needs an “abundance” approach
 Market perceptions changed
- Early on Social Networks were being discovered
- Today: Facebook + Twitter
- Harder to create mindshare foothold

28. Lessons – Scale isn’t
everything
Internet scale does not guarantee monetization
 Ning had scale, engagement and growth
 Still failed to succeed at Monetization

29. Lessons – Think Ahead
It pays to think about Monetization early
 Sold premium ad inventory
- Worth $1000’s per month
- For $19.99
 Hard to put the Genii back in the bottle
 Early paid networks include Marquee VIP
customers

30. Lessons - Pivots
You only have a small number of pivots – use them
wisely
 Hard to bring existing customers along
 Each pivot reduces user faith
 Bigger you are the harder the pivot
 Be lean
- Treat each model as an experiment
- Understand clear criteria for success
- Pivot early
- Fail fast

31. Lessons – Network Effects
Network effects
 Double viral loop
- Networks pull in users
- Who create networks
 However
- Unable to leverage cross site traffic
- Each site had to build its own following
- We needed something like the Tumblr model

32. Lessons – Two Customers
Paid and Free users in opposition
 Different user segments
 Different expectations
- White label
- Ownership
 Early premium offer created more problems
than value

33. Lesson – Customer
Expectations
Manage Customer Expectations
 Move from Free to Paid managed well
- Consultation with customer council
- Overall transparency
- Advanced notice
 Creation of Paid customer segment
- Created unreasonable expectations
- Charge was way too low

34. Summary
 Ning history
 Monetization
 Analysis
- Successes
- Challenges
- Lessons
Disclaimer: My view only based on limited info…