Tuesday, April 29, 2008

Ning: a good idea, but “infinite growth”?

I recently read an article in Fast Company about Ning by Adam L. Penenberg. Ning is a web site from Gina Bianchini (the chairman is Marc Andreesen) that has received quite a bit of press lately. Penenberg boasted that the site has a discovered a model for "infinite" growth. According to the article, the site, which allows users to create their own (free) social networks, has grown from 60,000 networks last June to over 230,000 in April. The article is pretty convincing in showing how "viral" the site's growth has been and will likely continue to be in the absence of competitors.

The reason I say "in the absence of competitors" is simple. Ning is not the same as a social networking web site like Facebook or MySpace. The latter two have established such a large market share that barriers to (successful) entry are very high. Newcomers like Pownce and Yahoo's Mash may be able to get some users through marketing, but Facebook and MySpace will always be dominant because that is where most of our friends already have profiles. Why get crazy with Pownce when all my friends are already on Facebook?

Ning offers a great service, and as long as there are no real competitors they will probably see viral growth. If you want to launch a new general social networking site to attract lots of new users, you need more than marketing to take users away from kings like Facebook since users already have all their friends on Facebook and have no real reason to leave. If you want to launch a competing site to Ning, all you really need is marketing. Of course you need smart people and other things as well, but at the end of the day there is no inherent reason to start your own social networking site at Ning vs. an emerging competitor since you still have the work of attracting your own users either way.

True, because Ning has 230,000 networks already, there is value to beginning your own social networking site on Ning since there are no doubt Ning users who browse the site for other social networking sites to join. But that in and of itself is not enough of a barrier to entry for Ning to be able to count on being king for long.

Viral growth? No question. Infinite? Well, until a competitor comes along anyway.

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