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Ello Raises $5.5M, Legally Files as Public Benefit Corp.

• jscheel 12y ago
  Ello is the new Clinkle
  • th0br0 12y ago
    What's Clinkle?
    • kolev 12y ago
      The new Color.
      • joeblau 12y ago
        LOL, This entire thread has me in crying. I think the underpinnings of Color were very ambitious, but the way the product was released was not orchestrated very well.
        • smacktoward 12y ago
          Indeed, it's almost like they fell onto the wrong Path.
  • kolev 12y ago
    Ello is the new Color.
• jnsaff2 12y ago
  Two observations: a) after signing up there setting "Allow Ello to gather anonymous information about your visit, which helps us make Ello better. Learn more." defaults to YES. This from a site that is selling themselves as a privacy conscious is simply comical. b) https://www.ssllabs.com/ssltest/analyze.html?d=ello.co https://www.ssllabs.com/ssltest/analyze.html?d=ello.co - SHA1 cert - No FS - Defaults to RC4 Their ops team has not paid attention to properly configuring TLS. Not encouraging at all. If anyone at Ello is reading this there is an excellent resource for securing your TLS setup at https://wiki.mozilla.org/Security/Server_Side_TLS https://wiki.mozilla.org/Security/Server_Side_TLS
  • ddw 12y ago
    Their app is full of hilarious bugs and hacks. But I guess that money can buy them a real dev team?
    • rco8786 12y ago
      Don't really fault them here. Every startup's app is full of hilarious bugs and hacks.
    • valarauca1 12y ago
      SSL configuration are a pain, especially across multiple sites. Even if you can afford a full dev team, case and point: https://blog.docker.com/ https://blog.docker.com/
• minimaxir 12y ago
  Note that the Twitter response to this news is generally "wait, Ello still exists?" Additionally, let's say they'll make their money through subscriptions instead of display ads. Then they can just adjust the UI/UX to push toward subscriptions, which will result in the problem that Ello had claimed to be solving. The $5.5M has to result in an exit, somehow, and therefore the incentives between business and consumer are misaligned.
  • 67726e 12y ago
    > $5.5M has to result in an exit, somehow. Or maybe they'll run an actual business, instead of the startup pump-and-dump. Not every success story has to be "an exit"
    • sanderjd 12y ago
      > Not every success story has to be "an exit" I think every success story that starts with raising millions in VC funding pretty much does have to be "an exit"...
      • 67726e 12y ago
        Alternative: A profitable, privately held business. Those are "exits", but you can also run a real business instead of running away with your bag of gold as soon as is possible.
        • alain94040 12y ago
          This is your third message saying essentially the same thing, but you still didn't address the key factor here: how will VCs recoup their $5.5M investment? Running a profitable privately held business doesn't return enough multiple to the VCs. Therefore the VCs will need to sell their stock eventually, one way or another (IPO, acquisition). That being said, I'm not too concerned in that particular case, I don't see Ello going anywhere anyway.
          • 12y ago
• reduce 12y ago
  "which Ello says makes it legally impossible under US law for investors to require Ello to show ads, sell data, or sell the company to any buyer who would violate those conditions" Quite possibly the silliest thing I've ever seen written in Techcrunch.
  • bgun 12y ago
    Silly because it's factually incorrect? If so, why?
  • _delirium 12y ago
    Yes, the status is pretty weak if you think of it as some kind of protection from investors. A "public benefit corporation" compared to a regular corporation removes only one specific route investors could use to force a company to do something: a shareholder lawsuit alleging that the company is failing to maximize shareholder value. But in the post-WW2 era, even regular corporations have no legal duty to maximize shareholder value, and can be run according to a number of principles (the belief to the contrary is a mixture of some early 20th century cases combined with a good amount of urban legend about corporate law). Especially considering that nearly anything can be justified as "part of our brand image", and courts aren't interested in second-guessing that: if Ello thinks it's important to its brand image to not show ads, a court is not going to inquire into whether this is a good or bad business decision, regardless of whether it's a public-benefit corporation or a regular one. All the other ways investors could force a corporation to do something, such as pressuring the board, voting in directors, voting on shareholder resolutions, etc. remain available. If the investors think Ello should show ads, or should sell to Google, or anything else, they have good ways of making that happen (given sufficient share ownership/etc.).
  • iancarroll 12y ago
    Can you elaborate?
• gk1 12y ago
  I still don't understand what value Ello brings. It seems to be a social media network for the sake of being a social media network. Myspace let young people (and then everyone) connect online, share photos, and declare who's their friend. Facebook let young people (and then everyone) chat with and follow their classmates, and eventually let everyone keep in touch (using that phrase loosely) after graduation. Ello let's -- uh, let's say tech-savvy 20- and 30-somethings? -- do -- uh, let's say send messages? -- without seeing ads. The mission statement is equally vague. "Ello is a simple, beautiful, ad-free social network."
  • enraged_camel 12y ago
    >> Myspace let young people (and then everyone) connect online, share photos, and declare who's their friend. Don't forget that it also allowed significant customization of user homepages, up to and including embedding music. Sure it got annoying sometimes, but it also added a lot of excitement to the experience. Things felt very... wild wild west.
  • amirmc 12y ago
    Your descriptions about Myspace and Facebook are post-hoc. It's easy once something grows big to retrospectively say {Service} let {certain people} do {something} in {some way} (e.g. I recall music being a thing for all my friends on Myspace). When something is small, it's not always clear how things will pan out or what direction they may take. Misson statements are always vague in some sense. "Organise the world's information" was probably strange once upon a time.
    • gk1 12y ago
      I think the benefit of FB was very clear from the beginning: Connect with people from your campus. I remember signing up for that exact reason, beginning of freshman year, after realizing that many other classmates were on it.
      • amirmc 12y ago
        Indeed, and I recall there being only rudimentary profiles and I'm not even sure there was messaging functionality. You had to actively visit people's profiles to see what they were up to and had to follow conversations from wall to wall. We all signed up but we jokingly referred to it as Stalkerbook. In other words, it was nothing like it is today, where it has become a replacement for a bunch of existing things (e.g maintaing address books) and allowed a slew of new things (light touch contact, wider networks and news feeds).
• SomeCollegeBro 12y ago
  Amazing to me that a site that is both hard on the eyes and not nearly as usable as its competitors has raised $5.5M. How do investors think they will make their money back? Simply by microtransactions and paid features? Perhaps the investors are that optimistic, and they think this is the future of social networking.
  • j10t 12y ago
    If I were a Vegas bookie, I'd think Ello has perhaps as high as a one in 10 chance of becoming the next major social network, and on the low end a one in 1,000 chance. A $20M valuation would place them at one 10,000th of Facebook. Pretty & usable are easily purchased. Throw an expensive dev team at it. Brand and reputation are more difficult.
  • enraged_camel 12y ago
    >>Amazing to me that a site that is both hard on the eyes and not nearly as usable as its competitors has raised $5.5M. Raising money, at least initially, is about two things: user traction and good PR. I don't know how many users Ello has, but I've personally been hearing about them all over the place, especially from my early-adopter type friends on Facebook. This leads me to believe that the company has a really good PR firm working for them behind the scenes (PG's "submarine" analogy comes to mind). And the thing is, Ello may be hard on the eyes and not be very usable now, but both of those things are relatively easy to improve. If they do have good user traction, that means they have solved the hardest problem, at least in my opinion. Achieve growth and the rest follows rather naturally.
  • TarpitCarnivore 12y ago
    Is there any other network that has tried this yet? I know Path and other messaging services have done sticker packs But as anyone done full blown features? This may be a crude comparison but I feel like they're trying to bring the concept of IAP for games to social networks.
  • AznHisoka 12y ago
    Because AOL or Yahoo will be dumb enough to acquire them obviously :P
• ryanpardieck 12y ago
  Well, that's interesting, although I'm skeptical. Can anyone with legal experience say exactly how much this means? If Ello genuinely just did something that makes it difficult for future investors/acquirers to turn Ello into a ad-fueled, data-selling, privacy-undercutting behemoth, then that's pretty encouraging. But ... it just seems "too good to be true." I've expected them to be about as "ad free" as every other business whose initial ideals are abandoned once the founders have gotten theirs and moved on.
  • aidenn0 12y ago
    IANAL, but the statute this is using is only a year old, so the answer will likely "we can guess, but don't know for sure until there is caselaw behind it" Until recently most public benefit corporations were specifically chartered by the government (e.g. USPS, CPB), but a number of states have created a law for privately establishing them recently.
    • ryanpardieck 12y ago
      Wow, that's really interesting. Did not expect it to be something so new. I'm going to have to read more about this ...
• imaginator 12y ago
  Facebook's statement: "Trust us. We'll show you ads." App.net's statement: "Trust us. We'll charge you so you don't have to see ads." Ello's statement: "Trust us, we won't show you ads." The statement we deserve is akin to email's promise: you don't have to trust us; competing providers keep the ecosystem honest. (And the service is federated so you can connect with friends on other services) Ello strikes me as another silo'd service. What happened to the dream of building "big" services that outlast a single company or team? The 30 year lifespan of SMTP+email, the 20 year life of HTTP, the 10 year life of XMPP. Today we have users voting with their feet: eg I use Twitter/I stopped using Twitter after they pissed off the developer community. Wouldn't it be great if we built services where the decision isn't use/don't use, more, my identity follows me to the best service provider (heh, like email!)? The real statement should be: "you don't have to trust us, this is a protocol: - developers can write services against it, users can choose the developers service they like the best. And when that service goes pop, or the developer moves onto a new project, you are not stranded - just switch providers. (disclaimer: this stuff makes me angry and we're trying to solve it at Buddycloud Towers)
  • saraid216 12y ago
    > What happened to the dream of building "big" services that outlast a single company or team? Capitalism.
    • imaginator 12y ago
      I don't think that creating systems != capitalism. Indeed companies that helped grow ecosystems (like Netscape) have been hugely successful. I'm guessing this comes down to deciding to create money today to create a legacy later or to creating projects today that go onto become your legacy later. We each strive for what resonates with us and (hopefully) accept others that make different choices in life.
      • TeMPOraL 12y ago
        I'd say capitalism is partly responsible, but not completely - IT is not that competitive yet. I agree with your conclusion; I think it's about deciding not capturing all the value you create, i.e. not being too greedy. Some companies do make this choice, and whole world benefits.
• gault8121 12y ago
  A benefit corp can always vote to remove its benefit corp status. If a majority of the ownership goes to investors, they can vote to revoke the no advertising clause. Public Benefit Corporations really don't have teeth, at least as far as I am aware.
  • BashiBazouk 12y ago
    According to the Delaware Public Benefit Corporation rules it requires a two thirds majority of share holders to change status. If that is held up by the courts it's some teeth but not absolute protection against change.
    • sandycheeks 12y ago
      If they gave over a third ownership to EFF things would become interesting. Don't see it happening though.
      • BashiBazouk 12y ago
        Under 2/3rds I wonder what would be best long term? A founder owning at least a third could be a problem if when they died, those shares went to someone who was more interested in profit than stated goals. Maybe to get access to the social network you have to buy a share? Spread out the shares to enough individuals and put in language to prevent proxy voting and require a minimum percentage of share holders to vote to change those stated goals?
• pearjuice 12y ago
  Lovely how $5.5M is thrown at a simple CRUD app without revenue, exists due to viral marketing and not even near a stable or representative user base (people want to get in for the sake of being in). How can a social network be invite only? It is the "cool people" table all over again. Looking forward to the billion dollar valuations.
• vesche 12y ago
  It all sounds nice, but we all know there's always two end senarios if their service takes off... They grow a user base, get shot a NSL: 1) Keep the success rolling and continue on business as usual while their naive users are data farmed. 2) Pull a lavabit. Think we all know senario two is unlikely. I'll stay away from social media for the time being, perhaps until some decentralized mesh net encrypted p2p service becomes a reality. 2020?
• Animats 12y ago
  Ello is demonstrating something important - you can now undercut "free with ads" on price. How much, per user, does it really cost to run a social network now? Not much. Hosting is so cheap that Atlantic will rent you a full-time virtual machine for $0.99/month. Ello's actual computing cost is probably less than that. Selling ads is expensive. A majority of Google's headcount is ad sales reps. The main search engine, a few years ago, was developed and run by about 90 people, I was told by an ex-Google employee. Google probably spends far more running the ad side of the business than the search side. Craigslist has 40 employees, and they've been able to crush the newspaper classified advertising industry. They charge for a few categories of listings. That's enough to keep them going. At some point, users sense that there are too many ads. Myspace went there when they had a revenue drop and tried to make up for it by increasing the ad density. Big mistake. Myspace usage went into a screaming dive and never pulled out. The big ad-supported web-based businesses are fighting Moore's Law. What they do is getting cheaper, but their price, in terms of ad density, isn't going down to match. That makes them vulnerable. There's hundreds of billions in market cap out there just waiting to be destroyed.
  • rco8786 12y ago
    The overall sentiment of your post is correct...you can run a social network cheaper than FB if you're not concerned about profit(note that PBC is still "for profit"). > How much, per user, does it really cost to run a social network now? Not much. That's a broad brush. > Hosting is so cheap that Atlantic will rent you a full-time virtual machine for $0.99/month. If you're serious about uptime/failover/any sort of SLA this figure is totally meaningless. > A majority of Google's headcount is ad sales reps. Because they produce the revenue :) > The main search engine, a few years ago, was developed and run by about 90 people Their salaries are minuscule compared to the millions/billions it takes to keep the datacenters that serve search running. Not to mention that the 90 people figure doesn't(can't) include things like network engineers, hardware engineers, capacity, provisioning, monitoring, cloud infra, etc. There are LOTS of supporting actors that aren't directly on the "search" team. This is the beauty of technology. The size of the engineering team does not scale linearly with the size of the userbase. e.g. you can have a relatively small team of engineers write code that is used by billions of people. In contrast, a sales team will scale linearly with revenue. More sales people = more revenue, all other things being equal. Thus you see large sales headcounts at these companies pushing ads to people.