Social media companies are increasingly incoherent

In addition to never wanting to hear “Web 2.0″ come out of anyone’s mouth ever again, I see some interesting implications for these businesses:

Meanwhile, a slew of Web 2.0 companies such as Ning, Hi5, and Digg are replacing CEOs,eliminating free services, whacking employees, or becoming social-gaming companies. Just last summer Ning raised money at a $750 million valuation. This spring, however, it named a new chief executive officer, cut 40% of its staff, and announced plans to start charging users. New Ning CEO Jason Rosenthal says the goal is to “build the best service for the most active group of users.” Not the most users, as once was the goal, but the users willing to pay. It’s a shift that companies like Tagged don’t have to make, because they took far less investor money and have more flexibility about how they run their business.

What these companies are doing with what flexibility they have strikes me as duplicative and reactive to the point of incoherence. I’m sure there are some companies that can completely change their business models and leadership whilst continuing to be successful, but none immediately spring to mind. What would be the benefits of starting off in a new direction with all the baggage of the old? Sure, saving a company and having some structure in place are useful, but–and this may be the entrepreneur in me talking here–why would you want to take someone’s exhausted idea and try to bolt a new one on to it?

Isn’t it better to build from your own vision than to preside over someone else’s?

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