This post originally appeared in Inc.
It’s a hot afternoon in early June in downtown Denver, but Paul Budnitz is cool as a cucumber in the dog- and bike-filled headquarters of Ello as he preps his company to make its proper public debut. Again. The launch of its first mobile app in the Apple Store on Thursday would be, effectively, Ello’s second chance to make a first impression. And, many would say, its last chance to prove its relevance.
The 47-year-old CEO, who has just flown in from his home in Vermont, declares himself “one step above don’t-give-a-shit” about anyone else’s expectations.
Launched in beta last August by a small team of designers and programmers based in Boulder, Colorado, and Burlington, Vermont, Ello got its 15 minutes of fame a lot faster than anyone expected, thanks, in part, to Facebook’s crackdown, last September, on users with made-up profile names. Among other things, the rule change prompted a vocal contingent of Facebook’s LGBTQ community to seek out an online home more supportive of people who, for reasons of personal safety or self-identity, choose not to use their real names online—and they found Ello. The exodus attracted a swarm of media coverage and set off a flurry of desperate messages among other disgruntled Facebook users looking for an invite to still-in-beta service. (Yes, this actually happened.)
At the height of the September frenzy, Ello was getting 40,000 to 50,000 invite requests per hour. In October, Budnitz—who founded the collectible art-toy company Kidrobot in 2002, sold a majority stake to animation studio WildBrain in 2006, and got out of the business completely in 2012—claimed the site had more than 1 million users, and another three million on a waiting list. “I’ve had, like, every VC in the nation in my inbox trying to invest in Ello,” Budnitz told the tech site ReCode at that time.
And whatever Silicon Valley haters said about Ello’s lack of a business model, or the incompatibility of venture capital with Ello’s high-minded ethics, the company was quickly funded. Before the end of October, Ello announced a $5.5 million Series A round, led by Boulder-based Foundry Group, and its formal registration as a “Benefit Corp.” that would never make money from selling ads or user data.
By Christmastime 2014, Ello was a ghost town by social media standards. Data from Compete.com shows a steady decline from a peak of 2.2 million unique visitors last October to fewer than half that three months later. These days, Ello itself does not disclose any internal user statistics, but Compete.com shows about 500,000 unique visitors in April 2015. (And ComScore doesn’t currently track Ello’s number because it hasn’t met the minimum reporting standards for the past several months, according to an analyst there.) Compare that with Facebook’s 210 million or LinkedIn’s 114 million monthly unique visitors.
But as Budnitz and a skeleton crew of about 20 programmers, community moderators, and others here in Denver prep for the launch of Ello’s best last chance to make a first impression, his nonchalance seems real. “The app is fucking amazing—it’s beautiful,” he says. When pressed, he says, “I’m nervous for the release, because it’s big.”
It’s big because people now use social media almost entirely on their devices, and not on their desktops. According to ComScore’s 2015 Digital Future in Focus report, in 2014, 74 percent of social media use (by users 18 and older) was on a mobile device. And mobile-first platforms like Snapchat and Vine were among the fastest-growing digital properties in 2014. Until right now, would-be Ello users could get there only via the Web—a shockingly retrograde state of affairs these days.
Patient investors—which also include Techstars’ Bullet Time Ventures and Vermont-based FreshTracks Capital—have helped Budnitz keep his mellow as he’s consolidated almost all of Ello’s employees in Denver and Boulder, and kept them focused on building the app and adding such features as a “Love” button and bookmarking to the Web version. “Ello blew up and we had the challenge of trying to fix it slightly with all these people on the network,” Budnitz says. “We took the time to do this right.” (Budnitz still lives in Vermont and flies in to Ello HQ almost weekly; at home he runs the boutique bike-maker Budnitz Bicycles.)
Budnitz doesn’t really acknowledge the obvious decline in activity since Ello’s all-too-brief heyday, but points to notably engaged Ello communities—artists and designers, D&D fans—and small businesses ranging from indie record labels and Etsy-style makers to the Chicago Tribune (with nearly 1,700 followers) using the site. “Social networks are the hardest thing to start,” says Budnitz. “There’s a chicken-and-egg problem. But in the next six months we’re going to see a real cultural movement around the real-name Facebook stuff—you’re safe online when you can control what you put on the Web.”
It’s not hard to find Ello doubters. “The key question about any social network is, what type of personal expression do they offer that others do not?” says David Pakman, a partner in the New York City offices of venture firm Venrock. “I don’t understand what Ello provides on that measure. Without that, I don’t believe there is a strong enough reason for users to adopt it, and create the network effects that power success.”
Will the mobile app solve that problem? A demo version updated over the past week is clean and uncluttered, carrying Ello’s trademark black and white palette, sans serif typeface, and ample use of white space to smaller devices. But the user interface remains somewhat cryptic. Think Facebook remixed by design students.
Whether $5 million and change will get the company to a profitable business model is another question. Budnitz and his investors have suggested that users might eventually pay for premium features. For now, Budnitz is insulating himself from naysayers, avoiding Denver’s many new accelerators, where “everyone thinks the same” and steering clear of Silicon Valley, where “people just repeat the same wisdom over and over.” Going his own way has worked so far, Budnitz insists. “I’m just not a freaking-out kind of guy, and I’m good at what I do, whatever that is.”
In Denver, Budnitz says goodbye and points me to a stack of Ello stickers and some bags of Ello pins, and turns back to doing whatever he does, bopping from one workstation to another—a couple minutes here, a couple minutes there—leaving me to wander freely, chatting up employees, petting dogs, looking at people’s screens. Can you imagine this happening at a certain massive social network?
Still it’s one thing to put on a convincing demonstration of the idea that “Ello is not Facebook.” Is that, and a new app, enough to build a business on?
We’ll have to get back to you on that.
