Following a recent influx of raising $5.5 million in venture capital, the new social media platform Ello, striving to stay ad-free while achieving financial stability, has become a Public Benefit Corporation. But what does this change mean? Is it something to get excited about? Let’s investigate.

Paul Budnitz, Ello CEO. Image via Re/code

Ello’s Big Promises: $5.5 Million Secured in VC Funding

The funding announcement likely won’t surprise anyone who’s been following Ello’s trajectory. During its peak hype period (seemingly a few weeks ago), the site reportedly received up to 50,000 membership requests every hour. Re/code, the source that broke the news of Ello’s successful funding round, also revealed that the platform recently surpassed 1 million users (although details about active users remain undisclosed). Currently, around 3 million users are on the waiting list, eager to experience the site. Many might find themselves puzzled about its purpose before returning to familiar platforms like Facebook or Twitter. According to Ello’s CEO, Paul Budnitz, every venture capitalist was vying to invest in the platform. However, it was the Foundry Group that provided the most significant investment, a large portion of which Budnitz intends to allocate towards improving the site’s backend infrastructure.

Can Ello Truly Stay Ad-Free?

A major attraction for many is Ello’s promise to remain ad-free. This commitment has enticed numerous individuals to explore the platform, particularly those tired of being treated as commodities by other social media giants.

Remember this? Ah, those were the days. However, as previously highlighted, Ello’s privacy statement reveals a confusing stance on its ad-free commitment:

Instead of relying on advertisements, Ello’s strategy mirrors that of many online gaming platforms - “microtransactions.” Users can unlock specific features for a small fee. While this model has proven successful in gaming where players are willing to pay for enhanced experiences, its viability in a social media context is uncertain and, frankly, doubtful.

Conflicting Signals: Ello’s Transition to a Public Benefit Corporation

The screenshot above remains on Ello’s website at the time of writing. However, Ello is sending mixed signals amidst ongoing speculation surrounding its future revenue model. Recently, the company announced its transition to a Ello formally converted to a Public Benefit Corporation, or PBC. Essentially, PBCs are companies that, as the name suggests, balance public benefit with shareholder profit. Ello’s conversion to a PBC doesn’t negate its profit-making objective but underscores the founders’ seriousness about remaining ad-free.

Ello: The Quietest ‘Busy’ Social Network You Haven’t Joined

Despite securing over $5 million in funding and amassing over 1 million users, Ello seems relatively inactive. As brands ramp up their advertising spending on Facebook and Twitter, the concept of an ad-free social platform, especially one prioritizing user privacy, is enticing. However, even if Ello maintains its ad-free model, which appears likely given its firm stance as a PBC, it’s not enough to make it a compelling alternative to the social media giants.

Without increased user engagement alongside its growing user base, the platform risks stagnation. The fate of Google+ serves as a cautionary tale of what happens to social networks lacking the crucial “social” element. If Ello fails to scale and attract new users, it could become a ghost town inhabited by marketers hyping non-existent future features.

Social Network Experiments: 5 ‘Ad-Free’ Platforms That Fizzled Out

While it’s still early to determine Ello’s success in fulfilling its ad-free, profitable model, it’s worth examining other failed social media experiments that made similar promises but ultimately faltered.

App.net

App.net, the brainchild of entrepreneur Dalton Caldwell, was another platform that pledged to stay ad-free. The service gained significant traction between 2012 and 2013 due to its ambitious goals and a $2.5 million investment from Andreessen Horowitz. However, its popularity waned quickly, partly due to the ill-advised decision to implement subscription fees from the outset.

Although App.net initially offered developers substantial flexibility through its APIs, it failed to recognize its Twitter-like microblogging platform as the core of its product offering, a critical oversight that hampered its progress in the fiercely competitive social media landscape. Consequently, the platform witnessed an exodus of developers as user growth stagnated. While App.net eventually reversed its subscription model, it was too late to salvage its reputation.

Diaspora

Diaspora emerged two years ago with the goal of providing a user-owned, ad-free alternative to Facebook and its counterparts.

However, despite a dedicated community maintaining the platform, Diaspora’s leadership team stepped down this past summer, leaving its fate uncertain.

Path

Remember Path? Not many do. This struggling mobile social network, notorious for its wrong reasons last year, recently announced a shift to a “freemium” subscription-based model to remain ad-free.

Although Path boasts 20 million users, many question the logic of paying for a subpar service offering features readily available for free on Facebook.

Pheed

Following its featured in Forbes in 2012, Pheed experienced a brief surge in popularity. This platform, offering features similar to other major social networks, distinguishes itself through a revenue-sharing model for users who upload content. While Pheed remains ad-free for now, its user base remains negligible.

Unthink

A disclaimer is necessary here – Unthink, possibly the most unintentionally ironic name for a social platform, isn’t actually a social network; it’s an “emancipation platform.” Similar to Ello, Unthink has a “manifesto,” albeit more pretentious than Ello’s, if that’s even possible. Its creators aspire to liberate users from the clutches of capitalist behemoths like Facebook. Self-proclaimed “CEO activist” Natasha Dedis describes Unthink as a “promised land that [users] own and can build as they wish.”

Actual screenshot from unthink.com Despite having little to show for it, Unthink has somehow managed to raise $2.5 million. While its anti-advertising stance is evident, its future remains uncertain. Currently, it resembles a platform for political posturing rather than a genuine attempt at building a social network. Only time will tell.

A Brave New World? Not Quite

Only time will tell if Ello can deliver on its promises of an ad-free, profitable, and engaging social network. However, one thing is certain: Ello will continue to attract attention, users, and venture capitalists for the foreseeable future.