Did Anti-Facebook, Ad-Free Social Network Ello Already Sell Out?

Corners of the internet have been abuzz about the arrival of Ello, an ad-free and privacy-respecting alternative to Facebook and other big social networks. Their bold manifesto unambiguously rejects selling user data to advertisers. And yet, they have already received venture capital funding that could hand control of the upstart Ello to others unconcerned about user privacy.

The Vermont-based Ello is currently in beta testing with new users only able to sign up by receiving an invitation from a friend. Their launch has coincided with a rough summer for Facebook, where a growing number of users are becoming fed up with the forced use of the Facebook Messenger app, news feed manipulation and the insistence that profiles use real names. That last sticking point, which has big ramifications for the transgender and drag queen communities, has resulted in what The Daily Dot describes as the “great gay Facebook exodus.” And Ello, which allows people to pick any name for their profile, is benefiting.

“Ello welcomes the LGBTQ community and we’re very excited to see so many people moving over,” Ello founder Paul Budnitz told The Daily Dot.

BetaBeat reports that Ello is also comfortable with pornography and other NSFW images and art, unlike Facebook, which is drawing artists to the new platform.

According to CNET, Ello is gaining 35,000 new users an hour, which caused them to temporarily limit invites. That’s barely a drop in the bucket compared to Facebook, but for a platform that has existed for less than a year and has been invite-only for about six weeks, that’s worth noticing.

One of the big attractions to Ello is its philosophy, outlined in its manifesto. “You are not a product,” it concludes. When a user joins, they must agree to the manifesto, like terms and conditions. Choosing instead to disagree takes the user to Facebook, serving to highlight the differences between the two social networks.

However, despite the buzz and excitement over a fresh alternative to Facebook, Ello may not be as free and independent as it claims.

Aral Balkan is a staunchly independent designer who runs ind.ie, a new technology company that rejects spyware and other applications of tech that infringe on personal freedoms. Balkan claims he was approached by Budnitz last May and did some pro bono consulting for the development of Ello. Aral later discovered that Ello received $435,000 in seed funding from FreshTracks Capital, a venture capital firm also based in Vermont. A filing with the United States Securities and Exchange Commission confirms this. A FreshTracks newsletter from March announces the investment as their second FreshTracks III investment.

“FreshTracks recently led a Series Seed transaction for Ello.co, completing its second investment out of the firm’s 3rd Fund,” the newsletter reads. “The company is still in stealth mode, but you can visit Ello.co today to sign up to be notified once the company opens its doors to the public. The company was founded by serial entrepreneur Paul Budnitz, who lives in Shelburne VT, alongside designers Berger Fohr and engineers ModeSet from Colorado.”

Balkan goes on to explain that venture capital funding means there is an “exit strategy” to sell Ello, and the new owners could dump the current manifesto and revert to more traditional social network business plans of cooperating with advertisers. The filing places the offer at $750,000, with $315,000 remaining. The offering is not intended to last more than one year.

However, Paul insists Ello is not interested in becoming a massive company like Facebook, so courting advertiser isn’t necessary for them.

“You’d be surprised how little data costs nowadays,” he told BetaBeat.

Whether Ello becomes just another social network or holds out for independence remains to be seen. But for now, the minimalist design, ad-free environment and strong privacy protections are attracting those burnt out on Facebook.

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