Ello Raises $5.5M with Its 'Facebook Is Evil' Positioning

Ello Raises $5.5M with Its 'Facebook Is Evil' Positioning

By Shirley Siluk / Sci-Tech Today

Dubbed an 'anti-Facebook' since its launch with 90 users this past August, Ello has quickly gained widespread publicity and a fast-growing number of adherents. Thursday -- armed with $5.5 million in new funding, and driven by a binding manifesto declaring it will never make money by selling ads or user data -- the Vermont-based startup was preparing to take its anti-Facebook ethos to even greater heights.

Ello announced Thursday that it had converted to a state of Delaware Public Benefit Corporation. As a benefit corporation, which in some states is a legally binding business structure, Ello commits itself to having a material, positive impact on society and the environment, and to make decisions based not only on the potential impact on shareholders and investors but on employees, the community and the environment as well.

Ello's first major round of funding (it garnered a seed investment of $435,000 this past March), also announced Thursday, was led by Foundry Group, Techstar's Bullet Time Ventures and FreshTracks Capital. The investors joined Ello CEO and co-founder Paul Budnitz in signing onto the company's new charter declaring its ad-free and public-benefit-driven future.

Facebook Revolt Brings Ello Boost

Ello's development got a large and unexpected boost in late September following news that Facebook had sent out numerous messages to drag-queen users that they either had to use their legal names -- as opposed to monikers like 'Sister Roma' or 'Lil Miss Hot Mess' -- or risk having their accounts disabled. That revelation sparked a considerable outcry from the lesbian, gay, bisexual, transgender and queer (LGBTQ) community, and saw a large number of Facebook users move their social media profiles over to Ello in response.

Facebook eventually apologized to its drag-queen users and stated it would allow profiles under the 'authentic name they use in real life,' rather than under their legal names. By then, however, Ello had gained widespread notice as the 'anti-Facebook' (in addition to being ad-free, Ello notes on its 'About' page that it believes collecting and selling users' personal data for profit is 'creepy').

While originally launched as an invite-only, private social network, Ello is today seeing as many as 45,000 invite requests coming in per hour. (Would-be users who don't know anyone currently on the network can request an invitation by submitting their e-mail address through the company's Web site.)

Internet as 'One Giant Billboard'

In addition to declaring that it will remain ad-free and not seller user data for profit, the new Ello manifesto also stipulates that -- should the company ever be sold -- the buyer would also have to stand by those commitments.

'The Internet is turning into one giant billboard, and with essentially all social networks relying on advertising, data mining, and selling user data, it can be hard for some people to imagine a better way,' Budnitz said upon announcing the company's new charter.

Seth Levine, a managing director at the Foundry Group who will be joining Ello's board of directors, said in a post on his organization's Web site: 'We'll either build a business that doesn't rely on third-party advertising or the selling of user data or we won't build a business. Our belief is that there are products and features that Ello can develop that users will be willing to pay for. While the price points may be low, as part of a much larger ecosystem with millions of users, (these) will provide an economic model for the company which supports the business and our investment.'

Posted: 2014-10-23 @ 1:27pm PT

Posted: 2014-10-23 @ 1:19pm PT