Say Hello to Ello, Alternative to Social Network Facebook

[Anthea]

Bloomberg

Say Hello to Ello, Alternative to Social Network Facebook

To understand the buzz around Ello Inc., consider why Jon Harney recently signed up for the social network.

Harney, an art director in New York, got an invitation to be part of Ello from a friend two months ago. He quickly registered after hearing that many of his artist and design buddies had also joined the service, which has no advertising. Those distinctions made Ello a counterpoint to Facebook Inc. (FB), the world’s largest social network, which shows promotions in users’ feeds and doesn’t require invitations.

“I don’t want to see ads, I just want to see people posting interesting stuff,” Harney, 29, said in an interview. With Ello, “the message of buy, buy, buy is toned down.”

Harney is just one of the people flocking to Ello, a Burlington, Vermont-based startup that has caught the attention of users and investors since its debut on Aug. 7. The free invite-only service receives more than 45,000 requests an hour, according to co-founder Paul Budnitz, who said he came up with Ello because “none of the social networks are fun anymore.”

The attention around Ello illustrates how even with Facebook and Twitter Inc. (TWTR) dominating the social-media landscape, there is still room for alternatives to grab users, especially as the larger networks have evolved into big businesses that cater to marketers as much as consumers. With a black and gray site that emphasizes photos, Ello is designed instead to “be about conversation and high-quality content,” Budnitz said in an interview.

Unlike Facebook, which requires members to sign up with their real names, people can also be anonymous on Ello and use different names. All the site asks for is an e-mail for registration.

Startup Challenges

Ello, which has raised $435,000 from FreshTracks Capital, still faces hurdles in getting beyond its buzz. Other startups that have tried to challenge Facebook and put individuals in control of their data have ended up flopping, said Anand Sanwal at venture capital researcher CB Insights in New York.

Still, Ello is making some of the right moves by being invite-only and focusing on designers and artists initially, Sanwal said.

“It’s good that all these tastemakers are on Ello,” he said. “They could grow out of the artist community organically.”

For Fun

Budnitz, 47, is the son of a social worker and nuclear physicist. After growing up in Berkeley, California, he studied film, sculpture and photography at Yale University, graduating in 1990. He then made films and dabbled in other ventures. These days, he operates a Burlington-based luxury bicycle company, Budnitz Bicycles, and a toy creator company, Kidrobot.

Budnitz said he conceived the idea for Ello while talking with Todd Berger and Lucian Fohr of the Boulder, Colorado-based design firm Berger & Fohr about how social networks aren’t really enjoyable anymore. Mode Set, a software consultancy based in Denver, also got involved and built Ello as a private network for 100 people.

The group then began getting requests from friends and others to join Ello, so they constructed a public version of the service. Ello was incorporated last year, according to a filing with the U.S. Securities and Exchange Commission.

Budnitz declined to give Ello’s total number of users, citing the fast rate of sign-ups. While the service is free, Budnitz said Ello may charge a few dollars in the future for certain features, such as a designer emoji pack or a multiple-account login.

“We actually put out a call asking people what they would like and we’ve had thousands of people that have written in offering features to pay,” Budnitz said.

Underserved Market

The opportunity for Ello is large, said Timothy Davis, an investor at FreshTracks Capital in Shelburne, Vermont, given that the ad-free social network market is underserved. Davis added that his firm invested in Ello given Budnitz’s design sense.

Harney, the New York-based art director, said he now uses Ello to show off his photography work and enjoys seeing what his design and artist friends are doing on the site.

“Ello’s community of creative is what appeals to me,” he said, adding that he’s not sure if Ello will ultimately be able to stay ad-free. “I think it started as a fun project, really not serious. I hope it stays that way.”

Budnitz said ads are not on the horizon for Ello since “we put such a big stake in the ground, and if we change that, people would leave.” Ello’s aim also isn’t to be the anti-Facebook, he said.

“Our goal is not to take over the world,” he said. “We’re not here to compete with Facebook.”

(An earlier version of the story corrected the spelling of Jon Harney.)
To contact the reporter on this story: Denni Hu in New York at chu87@bloomberg.net
To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Carlos Caminada

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