Ello Raises $5.5M, Legally Files as Public Benefit Corp.
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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)
Capitalism.
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.
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.
There also effects like people who don't dream big because what's more important is ensuring that they can pay the bills; capitalism is also responsible for this, and it has nothing to do with IT.
> 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.
The whole world benefits at a cost to the company itself, though. It's not surefire either way, but the company is more likely to survive if it is selfish than if it plays charitably.
Is your company's failure worth the potential benefit to the world? It's easy to say yes from an armchair. It's a lot harder to say yes when the market report is explaining how your competitors are taking advantage of the value you've created to shut you out of the market. Should you still say yes? Probably. Become a Netscape. Fight a losing war against Microsoft and get bought by AOL to become a brand name to fleece the ignorant.
> The whole world benefits at a cost to the company itself, though. It's not surefire either way, but the company is more likely to survive if it is selfish than if it plays charitably.
Sometimes it's a matter of choosing a business model. There are companies (Basho comes to mind) that do serious open-source work and take money for consulting/support. But I'd hazard a guess such models are only possible because IT is not competitive enough. As competition in any field gets more intense everything tends to degenerate, as those unwilling to sacrifice some value in exchange for profit get outcompeted by those who do. Governments are there to offset some of those problems with regulations, but this has a whole other set of issues.
When you have to agree to API terms / "rules of the road" in Twitter's legalease / or revocable oauth tokens, things stop being a free language.
The oath tokens are there because too many developers don't seem to understand good security practices when storing usernames and passwords
Perhaps something running on Sandstorm will make it easy enough for people to run their own nodes.
I think Kenton is onto a winner with Sandstorm - it stands half a chance to actually unify different blogging platforms. So while you may use a different blogging tool and comment - you have a unified email-like identity that follows you between tools, nodes and networks.
Social networks have the funds to hire these people: http://www.wired.com/2014/10/content-moderation/
I'm doubtful about how long Sandstorm would be able to stay strictly hands-off. Sooner or later everyone who allows random strangers to interact has to get into policing the content and that's nobody's idea of fun.
The fraction of users who actually do this is so tiny that they don't make a dent in Twitter's userbase. The vast majority of users don't care about "trust", or "privacy", or ads, or federation, or API limits, or the ability to leave the provider if it turns evil. They care about where their friends are. That's literally the only feature that draws users in the numbers that make a social network last. I wouldn't expect Ello to be able to convince enough people to join and stay without massive, enthusiastic, engaged adoption -- and what engagement it has is coming from the bandwagon effect, not its promise of no ads.
By the way, remember Diaspora[0]? It's an open-source, federated social network that anyone can host, that requires no trust in any individual provider, and with no ads. It still exists, after attracting quite a lot of attention and Kickstarter funding a few years ago. And it dropped almost entirely off the radar, because its selling points have nothing to do with people's friends actually being there.
I would definitely agree that Millenials are optimistic. About themselves personally. Defeatist about everyone else. That was what I was talking about in the above comment and maybe I should have clarified that more carefully.
I would love to see positive change in this area, but we need to be aware of what's really important to our intended audience if we're going to try. I could storm off of Facebook and leave a post behind to follow me to my self-hosted Diaspora pod, but I know no one's going to do it, so why bother? My friendships are worth more than my irritation at Facebook-the-company, and I can promise you that the vast majority of users will come to that exact same conclusion. Let's be honest with ourselves about that, before we try to fix this problem. Otherwise we'll only get as far as Diaspora did.
I'll give you an example. 15 years ago most people thought being Vegan was borderline insane outside a couple cities and college towns. There were little if any Vegan options at restaurants and if you asked they often gave a puzzled look. It looked hopeless. I can't tell you how many times I've been yelled at and made fun of. But we didn't do it because we knew it would be successful. We didn't do it to be cool. We did it because we felt it was the right thing to do. We had feelings, and we followed those feelings. We believed in something bigger than ourselves. Fast forward to today. Things look a lot different. Just think about the amount of carbon emissions that did not happen in the last 15 years for that crazy ideal? No one makes the world a better place because they know it will be successful. Or even if any of it is going to work. They do it because the care.
Pragmatism can be a dangerous thing when used as an excuse not to try.
And in any case, I'm not saying we shouldn't try. I'm saying we should be respectful of what our audience actually wants as we do. The uphill battle is the social aspect of convincing users that the change is worthwhile, not the technical aspect of building it (which is easy).
I might as well complete the circle; "Shut up, gramps, you don't understand me!" Now the conversation is truly tiresome.
I really wish XMPP was more prominent than it is. It's an incredibly powerful protocol.
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
- 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
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."
It's like asking "what value does Nike/TapouT/Starbucks logo have?" Sure, you can get better coffee for less, but good coffee is not really what they're selling.
Standing against commercialism sounds very noble, but a very small percentage of my friends and family care enough about that to jump ship to a new social network.
1. They let you choose any name you want (none of the "real name" stuff)
2. They are very friendly, focused and responsive to the needs of LGBT community
3. No ads (and thus less incentive to data mine the users, one hopes)
4. They simply don't have the history of Facebook and co
5. At least right now they are young, hip and very exclusive with invite-only membership (unlike Facebook that has everyone AND your grandma)
Ello lets somewhat older young people (and probably eventually everyone) chat with and follow their friends, acquaintances, and people they find interesting, without needing to use their real identity or make their private data available to advertisers.
The market definitely exists, but is probably quite a bit smaller than the facebook market, and people have tried and failed to tap it in the past. Its time may have come due to the various real name policy backlashes against other services. It's also very possible that it will run into the same brick wall as everyone else who has tried this has.
What special needs does the LGBT community have, that are not being filled by other social networks?
Also, transgender people had some issues with facebook recently. [1]
[1] http://www.cnn.com/2014/09/16/living/facebook-name-policy/
They're new. It's hard to get history yet. That's not a USP unless you're easily bamboozled by the latest shiny.
Whether it succeeds or fails will hinge on if there is a market for something that has similar features to Facebook/Twitter but solves a problem that people have been objecting to.
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.
Misson statements are always vague in some sense. "Organise the world's information" was probably strange once upon a time.
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).
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.
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.
Looking forward to the billion dollar valuations.
Pretty & usable are easily purchased. Throw an expensive dev team at it. Brand and reputation are more difficult.
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.
Quite possibly the silliest thing I've ever seen written in Techcrunch.
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.).
Public Benefit Corporations really don't have teeth, at least as far as I am aware.
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.
> 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.
How much, per user, does it cost to run a social network? Not much.
How much, per user, does it cost to run a social network at scale? Quite a bit more.
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?
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.
Or maybe they'll run an actual business, instead of the startup pump-and-dump. Not every success story has to be "an exit"
If they won't do advertising and they won't exit, then how should they stay out of bankruptcy?
There are many alternatives, none perfect (otherwise everyone would be doing it), but enough to generate income of the company is willing to use a "combined arms" approach.
I'm not saying it's impossible, they could probably find a way to become a break-even business easily, but taking venture capital puts a lot of added pressure on them.
If there's other ways, please tell me; I'm genuinely curious about this! But as far as I can tell, even "run[ning] an actual business" has to have some sort of "exit" for the investors. It's my hope that Ello can buck the "acquire or IPO" trope, but their investors have to be on board with it. And with $5,500,000 invested, even the most patient investors have a limit.
The last company I was a part of had a similar level of investment, and they aren't selling. They aren't looking at an IPO, instead they manage a healthy 20M/year in revenue, with a a healthy profit margin. Not everything is an "exit"
I think every success story that starts with raising millions in VC funding pretty much does have to be "an exit"...
That being said, I'm not too concerned in that particular case, I don't see Ello going anywhere anyway.