A decade ago, Mark Zuckerberg and a team of computer developers set up shop in Palo Alto to start the next big thing. Since then, Facebook has dominated the social media sphere and enjoyed one of the largest ever technology IPOs in 2012. Now say hello to Ello, a simplified social media site with no ads and complete privacy protection. Suddenly thrust into the spotlight, can Ello rival Facebook?
Ello, dubbed the ‘anti-Facebook,’ promises users the privacy and social conscience that the world’s largest social network can’t provide. Ello also pledges the site will remain free of advertising and personal data will never be disseminated to third party users. According to the company’s website, “collecting and selling your personal data, reading your posts to your friends, and mapping your social connections for profit is both creepy and unethical. Under the guise of offering a “free” service, users pay a high price in intrusive advertising and lack of privacy.”
The newcomer is still in beta testing phase. Members must receive an invite, or can apply for one via the website. “Simple, beautiful, and ad-free” reads the sign-up bar. Functions like categorizing your connections into ‘friends’ or ‘noise’ aim to reduce cluster in much more efficient ways than Facebook’s restrictive options.
A myriad of bugs still plague the system and users have complained about various features that may actually inhibit privacy, like the inability to block other users or customize who can follow you. But high early growth rates suggest Ello has struck a chord with at least a small disgruntled portion of Facebook’s 1.3 billion users.
Ello emerges from nothing
Last week, CEO Paul Budnitz told Bloomberg Businessweek the site attracts 40,000-50,000 new users per hour, many of whom were previous Facebook stalwarts. Budnitz, a bicycle store owner in Burlington, Vermont, admits the growth is unexpected, given he designed the site for just 90 of his family members and close friends to connect in a private, ad-free social environment.
Should a Facebook exodus occur, the LGBTQ community could well be one of the major groups that trigger it. The tech giant removed the profiles of thousands of drag performers who refused to use their authentic names in place of their stage names. Ello has condemned the way Facebook tries to control users’ identities and asserts itself that it has no plans to breach privacy rights. Facebook’s Chief Product Officer Chris Cox offered an apology, but Ello’s message is bound to have resonated amongst many.
The company reiterates its core values in its manifesto: “We believe a social network can be a tool for empowerment. Not a tool to deceive, coerce and manipulate — but a place to connect, create and celebrate life. You are not a product.”
Budnitz has not shied from delivering direct jabs to his much larger opponent. “We see Facebook as an advertising platform, not a social network,” he said. “Users are products at Facebook. They want to know as much as possible to advertise to you.”
Can Ello commercialize?
The question then becomes whether Ello’s more “ethical” methods can lead to sustainable business growth. Without monetization from ad revenue and the value created from tracking user data, Ello will rely on a “freemium” model where users will pay a small additional cost to add premium features (for example, managing two profiles with one login) to their account.
Shiv Putcha, an analyst in consumer mobility for IDC, suggests that privacy concerns, at least in the short term, will not be enough to convert users from Facebook to Ello. Most people “just don’t care enough” or are “unaware” about the implications of privacy intrusion. The issue has come to the forefront thanks to dissent against Facebook’s “real-name” policy, but Ello will still need a stand-out feature to convince people to switch social networks.
“It’s a catch-22,” Putcha said. “People would switch if the network was big and you had enough friends on it, that is the primary trigger. Minus that, there has to be one compelling use-case that everyone likes. What is Ello’s killer feature going to be?”
It is unclear whether the promises of privacy, the simplification of social media functions, and the rejection of ads will be enough of an incentive for users to join Ello and pay for premium services. The majority of Facebook’s users will be entrenched in what they know – even if they want to move, it will be difficult to detach themselves from the all too familiar platform.
The company also has investors to appease. Vermont-based VC firm, FreshTracks Capital, provided an initial seed round of $435,000 in January. Ello will hope a business model adhering to its core philosophies can generate the monetary returns its investors demand. Incumbents like Facebook and Twitter only became profitable in 2010 and early 2014 respectively, while Snapchat has yet to turn a profit. So it might be a while before we see the fruits of Ello’s model.
Perhaps if privacy concerns continue to grow, in the long-run Ello could capitalize on Facebook’s misstep. But no one is toppling the social media behemoth anytime soon, says Putcha; its tremendous scale and expansion into mobile and other sectors make it untouchable in the near future.
Ello entered beta on August 7 and is just two months old. Only time will tell whether the company can mount a serious threat to Facebook and the social media status quo. At the moment, it would seem Ello’s success is more to do with the shortcomings of Facebook and other social media incumbents than anything else. Whether or not Ello is the real deal, however, history has taught that the only constant in life is change and Facebook’s reign cannot be forever.
Facebook’s $22 billion acquisition strategy highlights Mark Zuckerberg’s worries over the volatility of the social media market. The company has already endured one investor panic after a perceived disinterest in the website from teen users and the purchases of companies outside that market such as Oculus and WhatsApp have sought to diversify the company’s offerings.
Other social networks have risen to the top only to fail spectacularly, such as MySpace and Bebo, but none had the grip on the market that Facebook does. Ello will hope the privacy question is enough to make it a genuine contender to emerge from Facebook’s giant shadow.