This story was written by Rafat Ali.
FastCompany has unloaded the biggest piece of Turducken shaped in the form of a cover story on Ning, in the lastest issue. And for once, Valleywag is actually tame in its skewering of the story. In terms of hype, this is of BW-cover-story-on-Digg proportions (hence the similar headline in my post). Keep in mind this is a post about the lameness of FC's story and the hype its journalist spews in this story...Ning has all the right to hype itself however it wants.
Some pompous gems from the story:
-- Red flag phrases: "viral expansion loop"; "self-replicating, borglike"; "stackability"; "phantasmagorical growth"; "automagically". Magically minted words.
-- "The secret is what's called a 'viral expansion loop,' a concept little known outside of Silicon Valley (go ahead, Google ityou won't find much)." Of course you wont' find it on Google (NSDQ: GOOG). Cause it's some B-school phrase meaning viral growth, which you'll find everywhere on Google.
-- "You can build a billion-dollar business from scratch". Um...where?
-- "It's not unlike taking a penny and doubling it daily for 30 days. By the end of a week, you'd have 64 cents; within two weeks, $81.92; by day 30, about $5.4 million." Keep in mind, there is no proof that's actually money we're talking about, in Ning's case.
-- "The company estimates that, at this rate, by New Year's Eve 2010 it will host some 4 million social networks, with tens of millions of members, serving up billions of page views daily." This is exactly how Clay Shirky brilliant dissected the Second Life hype, also in the pages of Valleywag. Active social network numbers, please?
-- "Which is how Ning has been able to grow at a daily average of more than .4% and add 500 new groups a day, doubling roughly every 137 days. 'It's the power of compounding, predictable growth rates,' Bianchini says." Actually, no, if it is viral, then no way it can be predictable. And yes, as Vwag points out, whatever the growth is, it won't be sustained. Period.
-- "When your currency is ideas, people become emotionally attached," Ning's Bianchini says. "Then you become a public utility like Blogger, YouTube, or Facebook." Um, again, no. Ning is not a public utility by any stretch of imagination...if the whole idea for Ning is mini-social networks for groups, then those group are self-limiting by definition. And hence, no way Ning will ever become a utility...especially with tons of alternatives.
-- "Lehman, in its latest report, predicts that the domestic online-ad market will grow 23.6% in 2008, to $26.2 billion. Ning's "billions" of predicted page views would leave it poised to claim a nice slice of that revenue." Proof? X percent of inconsistent and unpredictable pageviews, is still, well, inconsistent when it comes to revenues.
-- "Viral expansion loops have long existed in the offline world." Um..what was that part about "a concept little known outside of Silicon Valley"?
-- "Significantly, viral-loop networks don't create contentthey organize it. They provide an environment that is, in theory, almost infinitely scalable, and then rely on the wisdom of crowds to create or aggregate masses of material to fill it." Almost infinitely scalable? Really?
-- Andreessen points out that "eventually, everyone tend to be on such a network, the way that everyone has a telephone and everyone has an email address, because the value to being on it is so huge as a result of everyone else being on it." True, only in this case, on any one of the social networks, no on a Ning network. So the utility is connection through social net, not any one company.
-- Nicholas Economides, a professor of economics at New York University's Stern School of Business, characterizes this as "a network effect." See, it is that simple...all the words written before this was just words strung together to say just that.
-- "As NYU professor Economides reminds us, 'being big doesn't necessarily mean you will make a profit.'" Thank you, sir.
-- "Ning swells like a river fed from an ever-growing number of tributaries." I think I just threw up a little in my mouth.
-- "Then no one can stop it." Stop it, please.
And for the record, I actually think FC 2.0, under Mansueto Ventures, is much better than the predecessor, both in terms of the quality of stories, and in terms of staying way from the "FreeAgent Nation" tangle of hype spewed out during the first boom. The company is a partner of ours for the EconSM conference. If you see them limping at the conference, well, for this one, they deserve it.
By Rafat Ali