Paul Budnitz paces his bicycle shop in blue sneakers. The 47-year-old co-founder of Ello speaks into a headset to a reporter, one of many interviews since his new social network went viral in late September. “The way to think about Ello is there are absolutely no advertisements, no data mining,” he says. “And there never will be.” Todd Berger, a partner in Ello and one of its primary designers, listens as Budnitz ticks off his talking points, sinking into a tangerine couch. “S---’s crazy,” Berger says. “It’s been wild.”
The Ello office, in a renovated loft in Burlington, Vt., is filled with shiny bicycles and Apple (AAPL) products perched on standing desks. Upstairs, espresso makers purr with Counter Culture Coffee grinds, and bespectacled tech bros hunch over laptops. The entryway is painted with a quote from Hunter S. Thompson: “Wow! What a ride!”
Ello launched in beta mode on Aug. 7, and by the last week in September, the team was receiving 50,000 requests per hour to join. “Right now we’re throwing the coolest party on the Internet,” says Berger, swinging his leather boots up onto a stool shaped like a robotic rabbit. Ello’s been referred to as the anti-Facebook (FB); on the site’s About page it’s described as a “simple, beautiful, and ad-free social network created by a small group of artists and designers.”
Ello is invite-only—you have to either be asked to join by one of its existing members or send in a request. Lucian Föhr, another partner, explains this philosophy: “We don’t want every person in the world to be on it, so we don’t have to design for the lowest common denominator.” Invites are selling on EBay (EBAY) for $100.
If you do manage to wrangle one, you’re taken to a stripped-down white page where content is divided into Friends (the people you follow) and Noise (everyone else). As on Tumblr (YHOO), users can post pictures or text; video and audio capacity is coming soon. Unlike Facebook, Ello doesn’t require members to use their real names—Facebook angered some in the drag queen community when it implemented that policy in late September. (The dictum has since been amended to allow people to use stage names.) “We embrace the LGTBQ community,” Budnitz says, “including their adult-oriented content needs.” Ello allows porn but asks members to flag it as “not safe for work” as a courtesy.
All the featured profiles on Ello seem to be high-end designers or children’s book illustrators, and the popular feeds are filled with Pop Art references and quirky photographs of common objects in strange places. If Facebook is a massive state university filled with your loudest and most obnoxious friends, Ello is a small liberal arts college overrun with snobbish pseudointellectuals.
When Budnitz finally hangs up and sits down, he launches into Ello’s origin story: No one the founders knew liked Facebook or Twitter (TWTR); they wanted a space where creative people could collaborate and share ideas without worrying about privacy; they hated invasive ads; they thought they could do it better. So Budnitz banged out a manifesto. Right now, “you are the product that’s bought and sold,” it reads. “You are not a product.”
Mission statements are supposed to sound radical, but Budnitz says he’s actually a big fan of capitalism. He previously founded a number of companies, including a high-end toy and accessory business, Kidrobot, as well as a clothing line that once sold a collectible pair of Levi’s for $35,000.
So far Ello has raised $435,000, all from FreshTracks Capital, a venture firm focused on New England businesses. Budnitz has gotten flak online for accepting outsiders’ money. “FreshTracks Capital is my neighbor,” he says. FreshTracks’ other investments include Vermont Teddy Bear and Budnitz’s own bike company, Budnitz Bicycles. “Cairn [Cross, FreshTracks’ co-founder] rode over to hang out with us yesterday on his motorcycle and brought over homemade beer,” Budnitz says. “He wears suspenders and is just a rad dude, and they’re totally with the plan.” Berger chimes in, “Everyone’s with the plan.”
The plan is to turn Ello into a profitable, sustainable company and not just the hot new social network of the month. The business uses a freemium model, meaning the basic platform is free and features can be added for a small fee—just as users buy apps for their iPhone. “Those who know us know we’re not in it for a quick flip,” says FreshTracks’ Cross. Budnitz says Ello will accept additional financing only from backers with similar values. “I have every investor in the world in my inbox. Someone today offered to fly us out in a private jet to talk, and we said we’re just too busy.”
Although it’s stridently anti-ad, Ello is happy to have brands join the network. Speaker maker Sonos was among the first to hop on, after Budnitz Bicycles. “The challenge we’ve created for brands is to find a way to communicate,” Berger says. “It’s an opportunity to find a new way to advertise. If Pepsi can find a way to create content that people appreciate, more power to them.”
But Ello’s utility for big brands isn’t readily apparent. “Most startup sites are too niche to provide truly meaningful metrics for major brand marketers,” says Randall Rothenberg, president and chief executive officer of the Interactive Advertising Bureau, a New York-based trade group focused on online advertising. “It can certainly make sense to engage in R&D experiments with them, but your conclusions will purely be seat-of-the-pants.” Sonos, for example, has already decided to abandon the platform. “Despite having our initial request approved,” a company spokesperson says, “we’re not going to participate in this forum.”
Ello is venturing where others have tried and failed before. Diaspora, an open-source privacy-oriented platform started by New York University students in 2010, raised $200,000 in crowdfunding. Despite months of hype about the “Facebook killer,” a bug-plagued alpha launch fizzled into a now largely defunct operation. Gary Vaynerchuk, a social media expert, says the problem with new networks is that “people don’t care that you’re selling their data. We want ads that are targeted, way more than you think,” he says. “Once they stop being ads and start being content, it actually brings you value.” Ello, he says, will be a tough sell. When Vaynerchuk asked people on his YouTube (GOOG) channel if they’d be willing to pay a nominal fee to use Ello, only 2 out of 214 commenters said yes.
“I hope the rapid growth doesn’t change the community,” Budnitz says. “It’s a little crazy right now.” Two employees are tasked with full-time defense, as the company faces hackers; on Sept. 28 the site was down for about half an hour after an attack. “Yesterday,” Berger says, “a company actually held a hackathon to hack us. We wrote them a note saying, ‘Come on! We’re just seven guys sitting in a bike office.’ ”
It may not matter. In the two months of its existence, Ello has already ridden the hype wave from tomorrow’s next big thing to today’s punch line. On Oct. 8, the humor website Funny or Die put up a mocking video in which a guy is rejected by Ello and then walks despondently into the sea. “That’s enough, social media,” the screen reads. Then it cuts to black.
Parshley is a Bloomberg Businessweek contributor.
