Text: Koert Bakker Photo: Jamie Kripke
A shorter version of this article was first published in Dutch marketing magazine Adformatie.
Ello, the latest ‘alternative’ social network has received worldwide attention and, at times, criticism since its launch in Summer 2014. Many people think Ello started in Silicon Valley, but its roots are actually in Boulder, CO, where founders Paul Budnitz, Todd Berger and Lucian Föhr met in the startup community. The Boulder startup community is tight-knit – as a result I see the designers Berger and Föhr regularly at startup events. Budnitz has since moved to Vermont where he continues to work as CEO of Ello. I got together with Todd and Lucian in the BergerFöhr office to discuss the highs, lows and future of Ello.
What is Ello in a nutshell?
We’re a social network and publishing platform where ideas can spread and people can connect to the people behind these ideas. We want to be the place on the Internet where the best content lives, where ideas come together and stimulate dialog and thought, a tool to move all of us forward culturally. There is no other place on the Internet where you can upload a huge photo, a giant animated gif and any kind of multimedia content.
Ello does not have an advertising-model, why is that?
Think about all your favorite places, whether it’s at a friend’s house, an art gallery or museum, being in the woods or in the mountains. All of them are free of advertising. It’s a breath of fresh air. It feels good and inspirational, you can think more freely and more clearly. Looking at advertising next to art ruins the experience, it compromises the purity of the idea.
That’s why we feel so strongly about data privacy. A big part of Facebook’s staff is either aggregating data or selling it. People think they get a free product, but they pay a huge cost that is totally invisible. Any business is built to serve its customers. When you sell ads, your customer is the advertiser, not the user. The user is the product. At Ello, you are not a product. We want our users to be our customers and dedicate 100% of our time to them.
So, how will you make money?
We are a business, we want to be profitable, we don’t live in some altered reality. We will make money with features and services for profile customization. It’s a proven model in the gaming industry to have freemium features. People are used to paying for mobile apps now. We will essentially create our version of an App Store. Initially we’ll make our own apps, over time we may open up to other developers.
We also plan to make money with off-network partnerships, like our current collaboration with Threadless. We plan to do that with more likeminded creative entities.
Some people criticize Ello for its overly minimalist design. What’s your response to that?
Ello looks simple because our focus is on the content. We have no events, group, calendar, timeline. We took it all out to create a place where content is most important.
Some of the criticism we get is fair. We are open and responsive to it, that’s how we make Ello better. People forget it’s only been 4+ months since we released. Now we have a community, we can listen to them and make refinements. All founders have lots of dialog with users on the network. We run all features on staff first, then we go to a group of experimental users and finally roll it out to a larger group. It’s great to have such a dedicated and thoughtful community.
Why did you develop for desktop first? Most companies go mobile-first these days.
Makers and thought leaders spend a lot of time behind their desktop. All professional content hits the desktop at some point. Illustrators create on their computer. Furniture gets designed on a computer. If you are a top photographer, your professional content still hits the desktop.
When is mobile coming - and what’s next after that?
We are currently working on a significant redesign, to offer a smoother experience and less bugs. Mid-January we’ll introduce reposting, audio and video embeds, a bookmarking tool and a savable personal stream. We plan to release our iOS app in the spring followed closely by Android. After that we plan to introduce private accounts and private messaging.
Down the line, we’re thinking of Ello scholarships and opening physical inspiration places where we would showcase art and ideas from our community to the public. A bit like what we did with our previous company JoyEngine and what you guys did back in the day with Fanclub in Amsterdam.
The moment you launched, things exploded. Did you expect this, and how did you handle the growth?
We did not expect this growth at all. We initially designed Ello as a small private network for 100 people, and expected it to grow slowly from there once we opened it up. We thought we’d first be picked up by innovators, artists and designers - people who understand what we’re trying to do while we’re figuring things out. But the media bombarded us as the new Facebook and everyone jumped on it. The first two months were pretty crazy. We did not anticipate the LGBT component after Facebook enforced its real-name policy. We made Ello public only 8 weeks prior and did not have the tools these people needed like blocking, muting or NSFW. Our early product wasn’t ready for people’s expectations and we were dealing with exploding technical problems. We were freaking out. All founders were running their own businesses as well – BergerFöhr, Mode Set and Budnitz Bicycles – and we had to shed all our clients to focus on Ello.
We’re just getting through it now, and starting to build a strong organization with the help of the $5.5 million funding round we received in October 2014.
Only 20% of people who signed up are still active. Who do you see as your ideal users, and how do you plan to increase their engagement?
Are there brands on Ello, and how are they using it?
Anyone with ideas to share can use Ello, and so can brands. Penguin books is on Ello, as well as a lot of big media brands such as Bloomberg news, Huffington Post, Chicago Tribune and Al Jazeera. We also have an apparel brand, boutiques, furniture makers. There’s lot of users on Ello and we’re not giving anyone special attention. Brands are treated the same as artists, designers and butterfly collectors. I believe that if you give certain brands or celebrities special treatment it hinders how the community develops. One of the features we plan to sell in our app store is the ability to manage multiple accounts. This would be more relevant to brands.
You started with an initial investment of $435K and now raised another $5.5 million. Who are your investors and what’s the agreement?
Ello was founded by 7 partners: Paul Budnitz, Todd Berger, Lucian Föhr and four people from software company Mode Set in Denver. In October 2014 we raised $5.5 million from a group of investors led by Foundry Group, Techstars’ Bullet Time Ventures and FreshTracks Capital. Investor equity is diluted proportionally across the original 7 founders who still overwhelmingly own the majority.
We had a lot of investor interest, and chose Boulder and Vermont-based investors with the same values and belief system. Our investors had to sign an agreement, saying that:
• Ello must never make money from selling ads
• Ello must never make money from selling user data
• In the event that Ello is ever sold, the new owners would also have to comply by these terms
Why did Ello start in Boulder and not, for instance, in Silicon Valley?
The culture in Silicon Valley is more about young people trying to make billions, whereas people in Boulder tend to make life-choices based on other, less monetary values. The culture is more about access to nature than about becoming rich, and the community is free-thinking and supportive. All the founders met here, our investors are based here. They were all here, personally, to enjoy the Boulder lifestyle, and we all knew each other through the community. Budnitz bicycles was our client at BergerFöhr, we worked with Mode Set before, we knew David Cohen and Mark Solon from Techstars, Seth Levine from Foundry Group. Ello could only start if all these people were all in one place. We came together and invented this new thing Ello that maybe does not live here culturally but the thinking behind it lives here. Paul Budnitz now moved to Vermont where he will run operations, community management, marketing, customer service and finance. But Boulder will remain the hub for product design, and Denver for development.
Would you sell if Mark Zuckerberg offered $10 million?
No. It would be way cooler to make Ello a public company. But we haven’t determined our exit strategy. Our investors are committed to supporting us to build a cool company, and we have the time to focus on building the product and community. With Ello we’re trying to make a cool thing. If it makes a lot of money, great. If it makes little money that’s OK too. And if it makes no money, then that’s what happens. You take risks and see where the cards fall.
Over the last years we’ve seen many new social media networks come and go. Why will Ello be different?
I would like to say it’s the founders, we are rather experienced. No-one is in it to get rich quickly, we’re in it because we believe in it. Furthermore, we are entirely user-centered. It feels like the zeitgeist is good for this, the conversation about privacy is moving forward and companies are becoming increasingly radical in how they exploit people’s data.