Can Self-Funded Win Out Against Investor-Funded?
KNOXVILLE, TN, May 4, 2010 – The social platform industry was shaken up recently with Ning's announcement that it would be forcing its free sites to upgrade or leave. Almost immediately after the announcement former free Ning users who no longer had a home for their community started looking for alternatives. Comments left on news articles about Ning's announcement revealed an underlying fear many of them had about switching to another free service: if the industry leader wasn't able to make it, how could any of the alternatives?
While other companies have shied away from answering this question, Spruz -- a free social website platform much like Ning -- has provided a direct response to it. "The bottom-line difference between Spruz and Ning is that we are a self-funded company that is already profitable," stated Jay Roberts, founder of Spruz, who went on to say, "While Ning had $120 million in investment from outside sources, Spruz has always operated as a boot-strapped company. This has resulted in our business model being completely sustainable from the ground up, with free sites being an integral part of it."
Other mentioned alternatives to Ning include Grou.ps and SocialGo, both with substantial funding. Startups who accept funds from outside sources have the difficult task of turning a profit much larger than necessary to maintain the service they provide, as most investors are interested in the acquisition value of a company. Jay Roberts added that, "Spruz has already experienced tremendous growth since Ning's announcement, requiring us to increase our staff and deploy additional hardware. The fact that we are profitable and have no venture funding means we are able to grow to meet the demands of our users without fear of imploding. We're looking forward to welcoming anyone looking for a stable platform to move their community to."
So, self-funded or investor-funded? The fate of Ning may serve as a very telling answer.
Jay Roberts explains the How Spruz Freemium is sustainable in http://my.spruz.com/pt/How-is-Spruz-Freemium-Sustainable/blog.htm
Spruz launched in 2007 as a hosted social website solution that makes it easy to create your own public or private community website about anything.