Ning to Yammer: a product design primer

Ning and Yammer are probably two names that have touched your daily lives or you have heard of in the tech press. While the two products sound completely different in terms of offerings domains — former in enterprise, the latter in consumer, they’re essentially very alike. Taking a closer look at their differences promises to be a excellent resource for those interested in product design. This will become clear when we examine what led to one’s successful exit and the other’s demise.

A Little Background

To get everyone familiar with these two company’s products, let’s start off with some background.

Ning defines itself as a Do-It-Yourself Social Network (consumer focus) which got very popular particularly between 2008–2010. The company raised a staggering $134MM (particularly for its time) and ended up with a rumoured exit around $150MM. Not a great return.

On the other hand, Yammer was a private social network for the enterprise. It started 4 years later than Ning, raised $142MM and had an exit at around $1.5B. As part of the Microsoft Office suite, it continues to grow. Its exit price is nearly triple that of the market capitalization of their main public competitor Jive Software.

I began to watch these two companies closely because of my own company Grou.ps, which started at around the same time with Ning. Yammer’s success was instrumental in my decision to turn Grou.ps into a Yammer like model with consumer focus. This led to one the group’s markets rising above the others, and hence our recent shift to the health & fitness with GymGroups. These two companies are a great example of how minor changes in product design and strategy can result in major differences with your financial success and the popularity of your endeavors.

A Summary

Layout

As a product designer, the first question you have to ask yourself is “what is my main object of activity” and design your product from ground up accordingly. Having a layout more similar to Facebook’s, where the central object is people and work groups (or teams), worked well in Yammer’s case. The social-first design makes organic content creation much easier. Creating long-form content is cumbersome; it takes hours. People expect to be paid for these types of an efforts. On the other hand, creating a profile in a field that you’re passionate about, like an FRP game or hobby project or health & fitness, is fun and relevant to the purpose of the network. Ning was more focused on content, and suffered from the debilitating frictions of long-form content.

Even the company Medium decided to allow a shorter form of content very recently, most probably for that same reason. They previously were solely focused on blog entries as a long-form content platform.

To make a long story short, find the easiest action you’d like your target audience to perform on your product. Then focus on that particular action as your central object of activity, particularly while you’re still operating in MVP mode.

Social-First (of Yammer, in the left) vs Content-First (of Ning, right)

The differences between the two products may seem subtle, but it’s certainly more than having the navigation bar in the left-hand side or the top of the page.

Membership Permissions

Yammer has one permission level. People who sign up with the same email domain (ex: @microsoft.com) belong to the same network. Again it’s pretty similar to the model with Facebook which started off with .edu emails.

Ning is much more complicated. The network founder is offered a bunch of options. They can accept pretty much anyone, moderate it manually, or invite a selected cluster of people in order to create a social network that suits to their goals. While this vast array of options may sound like it makes Ning a more rich platform, it also makes it much more difficult to use.

If you are targeting consumers, your product shouldn’t be Salesforce-complex. There is a reason why Salesforce administrators’ jobs are in very high demand here in Silicon Valley. Therefore, unless your value-add is Salesforce-material, it’s not going to work.

Ownership Model

At Ning you create the network, and you own it, it’s simple.

At Yammer nobody owns the network. Anybody can start a network with their corporate email address. What makes the Yammer model great is that everyone starts off as a consumer, which makes it much less complicated to get started. The fact that it’s open to anyone to purchase creates a sense of urgency in IT departments to take control and eventually purchases the group. This creates a more robust business model and a stronger revenue stream for Yammer.

Pricing

Storage is a very low margin business. Even Dropbox and others are trying to run away from it with their new product lines. From day one Ning’s based their pricing on hard-cost items such as bandwidth and storage. They also promoted premium features. The problem was that a group with 10,000 members and another with only 10 would pay the same.

As for Yammer, pricing has always been very straightforward. It was based on the number of members (hence employees) at companies. The idea was that the more employees and bigger the company meant they could likely afford to pay more.

The Yammer model can only work in an enterprise setup, but this is why the product design is so strategically important because it directs the focus and what features to streamline.

Focus

Yammer’s enterprise focus not only made the product simpler, but also it allowed the company to integrate with a targeted set of partners and own a robust developer ecosystem. This is largely thanks to its niche appeal. It can be tough to convince developers to invest time & resources when the niche use case is an unknown percentage of the total usage, and likely very small.

In the end, Yammer’s focused approach won over Ning’s generalistic one because it allowed the messaging to be clearer and the product simpler…. Facebook-easy. Users could have the same level of customization as Ning’s only if they were a paid user, but everyone started off using the product as a regular member. Ning may have started earlier and had the first mover advantage, but these nuances make a major impact on the outcome.

At a time when even the Googles and Craigslists of the world are losing market share to the Yelps and Handys, which I collectively call the Yahoofication of web 2.0, the Ning-Yammer story is something that requires thought while designing your product offering.