Ello, an alternative to the popular Facebook, has now declared itself a Public Benefit Corporation, meaning it cannot sell user information or displays ads. This has attracted the eye of many investors.
According to an earlier report from The Inquisitr, Ello may have declared itself a Public Benefit Corporation, but it has already received capital funding from controlling groups that are unconcerned with user privacy. This may impact Ello’s promise to its users.
Ello’s decision to become a Public Benefit Corporation has pushed investors to pledge $5.5 million to back the corporation.
“There are ‘freemium’ successes like LinkedIn and in gaming. Ello is taking a unique spin on this,” said Lee Bouyea, of Fresh Track Capital, one of the platform’s new backers. “We are long-term investors. We have a company on our portfolio we invested in for nine years before they were successful. We look long term for a company to grow something of scale and value.”
Ello may charge users for its special privacy because of its lack of ads.
“You don’t invite your friend to connect with you if it costs your friend money. Even in the world of digital music, you can pay for services but most people don’t,” James McQuivey, an analyst at tech research company Forrester, recently told BBC News.
Ello’s founder, Paul Budnitz, however, claims that they do not need ads.
“Our business model is tried and true – it’s used all over the place, it just hasn’t been applied to social networks,” he said. “You get an iPhone and it comes with basic apps – you can call, text and so on, but everybody buys apps because they want to customise their experience. For a few dollars, you can customise Ello to do what you want.”
Ello is relatively new, so it does not have a large staff.
“While Ello has grown incredibly fast, we still have 14 staff. We’re adding a few more people to help handle growth – but because we’re not selling ads or mining data, there’s a whole load of people we don’t need to hire,” Budnitz explained.
Ello’s recent rise to the spotlight may cause trouble for popular social media companies like Facebook, Twitter, and Tumblr. Ello’s charge for using it, however, may deter some users away. The added bonus of privacy and no ads is a benefit.
[Image via Google Images]