What is Ello? A social network with a terrible business plan

This is why you've been hearing so much about Ello, and why you might not hear much of it in the future.

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This week you may have come across mention (online, at least) of something called Ello. I know I sure did, and once I’d seen the term enough times I finally looked into it.

I was disappointed. Ello is (another?) social network that gained a lot of attention this week as a result of Facebook's ongoing rift with the LGBTQ community. Facebook alienated many in the community by mandating that its users' use their legal birth names in their Facebook profiles, even going so far as disabling the accounts of drag queens who used their stage names for their accounts. Many high-profile drag queens called for a large-scale boycott of the social network in response.

Ello founder Paul Budnitz told The Daily Dot that the site's spike in membership requests (it's still an invite-only site in beta) occurred shortly after the Facebook boycott. So, as a result of an influx of users looking to make a statement about Facebook, a social network that has gone largely unnoticed for its first six months of operation is suddenly getting a lot of attention.

This soap box has let Ello tout itself as some sort of social media utopia. The company has repeatedly boasted its mission statement – to provide a completely ad-free social network that does not sell its users' data to marketers. But, in interviews with media outlets and emails to users, Ello has also asserted itself as a social network that will be devoid of cyberbullying and stalking, and that will permit users to publish and share NSFW content without exposing them to obscenities like bestiality and child pornography. Budnitz even made these promises before the company has developed the tools to live up to them.

"As soon as the LBGTQ community started coming on in large numbers, we decided that we needed to add privacy controls and new ways for users to report abusive behavior by others," Budnitz told The Washington Post. "Basically, we are protecting everyone on Ello (including LGBTQ users) from people who may post hateful comments."

That sounds wonderful, but how is it any different from the stated privacy policies of every other social network? And, more importantly, how have those policies worked out? Spend a few minutes on Twitter and decide for yourself whether its tools for blocking users and reporting inappropriate content have done anything to protect users from seeing hateful posts or offensive content.

In order to accomplish this, Ello is going to need to develop some very impressive web tools, which is going to cost money. As a social network promising to never flood users with advertisements nor sell their personal data, Ello’s plan to make money is based on premium features within the site. Not unlike Tumblr, which allows user to use free blog templates but charges a fee for its nicer ones, Ello will offer a free service with the ability to pay for features that users might want. If that doesn’t sound like the business plan of a company looking to make a splash on Wall Street, that’s because it isn't. From BetaBeat’s profile of Ello:

"Rather than clutter up eveyone’s Ello with a bunch of stuff most people don’t need, we will let specific users select options they really want and lay down a few bucks for them," Mr. Budnitz said.

They’re also just not that concerned with making money. Is it naive of them to think that they’ll never get desperate? Maybe, but Mr. Budnitz is truly unfazed, and he says so far their costs are pretty low.

"You'd be surprised how little data costs nowadays," he said.

An ad-free social network that refrains from selling users’ data to marketers is a noble idea. But it’s just not feasible. It’s likely that Ello’s operational costs have remained so low simply because it hasn't had to support a significant amount of users.

The trend in web startups like this, particularly with social networks, is to open the gates and let the audience rush in before determining how to make enough money to keep them there. Ello has elicited comparisons to Twitter and Tumblr, and both of those sites have had to rely on advertising and user data to earn revenue. With all these early-stage promises, Ello has already painted itself into a corner, and it could very likely end up breaking those promises just to stay afloat.

Copyright © 2014 IDG Communications, Inc.

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