Ning Cuts Staff, Ends Free Networks

Ning made the decision this week to terminate its free service that allows users to create and customize their very own social network. In addition, Ning is laying off over 40% of its staff.

Last month, Gina Bianchini stepped down from her role as CEO of Ning to become Entrepreneur in Residence with Andreessen Horowitz. The COO at the time, Jason Rosenthal, has since taken the helm as CEO of Ning.

According to TechCrunch, below is an email Rosenthal sent to his staff this week:

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 Rosenthal

The news isn’t mentioned on Ning’s homepage and it appears that users can still create free social networks on the ning.com domain for the time being.

What are your thoughts about Ning’s changes? Is Rosenthal taking a step in the right direction?