Marc Andreessen is best known for creating two companies worth more than a billion dollars: Opsware and Netscape.But in building both there was a crucial pivot point where Marc realised his company needed to radically change its original business plan and go after another opportunity.
Now one of Marc’s protegés, Ning CEO Jason Rosenthal — himself a Netscape and Opsware veteran — is trying to pull off a similar trick.
Since Marc cofounded Ning in 2004, it has been a service for people who want to set up custom social networks. There was free version and a paid version of Ning. Users who paid got more features.
Today, Ning formally announced it is shutting down the free version. Users who want to keep using the service will get three options: Ning Pro ($49/month), Ning Plus ($20/month), and Ning Mini ($3/month or $20/year).
(Teachers and students who use the service for free will be allowed to continue to do so, thanks to sponsorship from an as-of-yet unnamed “major educational company,” says Jason.)
So why the change?
Jason told us that about a month after taking the CEO gig in March, he boiled down the numbers and learned that paid users accounted for 80% of the Ning’s revenues and about 75% of its traffic.
Faced with a “list longer than my arm of things we could do for our most passionate users,” he decided to re-shape Ning into a company that caters to these paying customers only.
“If you’re running a service that’s so inherently valuable to your users, it’s a logical next step to have them pay a nominal fee to use it,” Jason explained.
“It’s A Funny Thing Happened On The Way To Forum kind of deal,” Jason told us over the phone.
“You’re head down and focused on something and along the way you realise there’s a much bigger opportunity staring in your face and you want to correct course and go after it.”
AdWeek’s Brian Morrissey puts it another way: “The ‘funny thing’ Ning belatedly realised is [that] the Silicon Valley belief in an ‘ad revenue faucet’ is a fallacy, viral loop or no viral loop.”
Ning sizes the new premium market at around $4 billion.
Disclosure: Marc Andreessen is an investor in Business Insider.
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