New social media network Ello is doubling down on its promise not to feature advertising by becoming a Public Benefit Corporation, a move which legally prohibits breaking such a pledge.
The charter for a Public Benefit Corporation cannot be changed even if a company is bought. Not only that, but investors cannot force the company to do something that goes against the charter.
"The Internet is turning into one giant billboard, and with essentially all social networks relying on advertising, data mining, and selling user data, it can be hard for some people to imagine a better way. At Ello, we're building it," said co-founder Paul Budnitz in a statement. "We're fortunate to have a passionate global community that supports Ello's mission, and like-minded, socially conscious investors who understand that a company can provide a fantastic service, and be profitable, without advertising."
The news about becoming a Public Benefit Corporation coincides with a new $5.5 million funding round from Foundry Group, Bullet Time Ventures and FreshTracks Capital.
"Ello is using the power of their business to solve an issue that has been on the forefront of social networking for the better part of the last decade," said Seth Levine, managing director at Foundry Group. "We're committed to their manifesto and are in this for the long haul."
Since Ello first hit the news a few months ago it has been trying to be everything that other social media networks (such as Facebook) are not. Now, however, it is official the company cannot legally serve ads.
The company does, however, want to be profitable. While it will not serve ads, it will make money through other venues such as charging for premium features and future services, most likely. These will include fees for downloading widgets and modifications.
The anti-ad strategy also illustrates Ello is much more about customization, unlike Facebook's "one-size-fits-all" model.
It is unclear just how much money Ello will be able to make in the near future. From its start, Budnitz has said his company doesn't plan on making a lot of money any time soon. Despite this, the site is hitting new levels of popularity, receiving up to 45,000 invitation requests per hour at its peak. The website currently has over a million users and a waiting list of over 3 million.
The popularity increase has clearly caught the attention of investors. Some investors trying to woo the company have even offered to fly the Ello team around in private jets, according to news reports. Budnitz, however, says he instead turned to investors he could trust to back the mission of the company.
"I loved it. I was totally all in," continued Levine. "Ello isn't saying this isn't the only way a social network can monetize, but that this is the way they want to monetize."
