Earlier today, news broke on TechCrunch that Ning had eliminated it's free service and 40% of staff along with it, and news has spread on Twitter like wildfire  One of the more sardonic statements that has been retweeted for some time is simply put - "Ning raised and spent $120MM of other people's money over 6 years to come to the conclusion that free doesn't pay."

Let's start by acknowledging that it's never a good day when a company has to let go of any employee. I've been on both sides of that table in previous companies, and it sucks. And when a major shift causes 40% of the smart, hardworking, passionate employees to exit, it's truly a sad day. As a smaller competitor to Ning in the online community space, both of us at EditMe have always respected Ning and held their team's success in high regard. I take no joy in this news. But, at EditMe, we've taken a different approach to growing our product and clients to avoid this exact situation - a land-rush to grab users and sites at an extremely unprofitable position, only to result in an inevitable flame-out and let down of their fans, friends, and community.

EditMe began, at just about the same time as Ning, as a paid service from day one.  Following the principles that would eventually come to be defined as a Lean Startup, Matt Wiseley believed that the best way to build a company was to make a useful product that customers would be willing to pay for. He's explained why EditMe is not free. Following this approach, EditMe has bootstrapped operations with the revenue it made from paying customers and has been slowly but surely building a useful product the old fashioned way - brick by brick. This cycle of asking for customer validation and refining your product accordingly is a hallmark of a Lean Startup.

By contrast, Ning is a fat startup. That it isn't to say that nobody at Ning listened to customers. Rather, the focus was to acquire significant rounds of venture funding and use that as a cushion while racing out ahead of all other competitors. As the saying goes, the first rule of a bootstrapped company is to make money, but the first rule of a venture backed company is to spend money. We've always believed that fat startups creates an unhealthy environment which results in a competitive disadvantage for a fat startup.

Expectations of investors, boards, and the customers grow higher and higher in fat startups. Often, these heightened expectations are directly proportional to the amounts of money involved. With $120 million "in" at Ning, it must have been for a significant amount of pressure on the leadership team. One can only guess at how much time was spent on investor relations vs. customer development. By nature, this conflict of priorities is a daily fact of life at a fat startup.

The cycle of investment -> expectations -> letdown leads to an eventual bubble burst. We've seen it happen to so many internet software companies since the dot com era, and it appears to have happened at Ning today. What's left in its wake is a sea of unhappy employees, customers, and investors. Now, it's easy for me to sit here and play Monday morning quarterback, but I feel confident that EditMe's lean approach of building a useful product that requires client validation ($$) results in a better product, better focus on what matters (the customer) and a more dependable future for our company. 

I want to say Thank You to every single customer that has helped validate this product with their hard earned money, and feedback. We're committed to making EditMe the easiest way to build a collaborative website. Without your support, feedback, and passion for the communities you've built with EditMe, we wouldn't be where we are today.  And, if you've been with Ning's free service, I hope you'll consider EditMe as an alternative to a free Ning community. If you like us, you'll have to pick a paid plan that works for you when your one month free trial is over. You'll find that this allows us to be relentlessly focused on customer development and support everything we do here with fast, friendly service. 

Matthew Mamet
Head of Customer
EditMe