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Why Ello is just an overhyped anti-Facebook, social wannabe

Matt Kapko | Oct. 8, 2014
Ello, a new social network that's trying to make a name for itself as the latest alternative to Facebook, sure isn't much to look at. In fact, there really isn't much to do or see on Ello at all.

The trouble began when one Facebook user reported several hundred of these users' accounts as fake, and since 99 percent of the several hundred thousand fake name reports Facebook receives every week are "bad actors doing bad things" these accounts were asked to verify their names by submitting some form of ID, according to Cox.

Cox goes on to defend the 10-year-old policy as "part of what made Facebook special in the first place by differentiating the service from the rest of the Internet where pseudonymity, anonymity, or often random names were the social norm."

The policy remains unchanged, but Facebook's enforcement of fake account reports will be managed in a "less abrupt and more thoughtful way," Cox writes, adding that "this policy, on balance, and when applied carefully, is a very powerful force for good."

Facebook's reversal of course on this issue probably won't impact Ello's outlook much at this point, having already benefited from the subsequent buzz and widespread interest in spades.

Hard to Make Money With No Ads

Ello's more important and widely revered commitment to never sell advertising will always be the source of its greatest challenges.

There's plenty of startups with VC funding for an ads-based business model, but very few get cash from investors for a company that outright despises advertising. So one must imagine that most of Ello's anti-advertising users were content with the service right up until a fellow user discovered that the company had already accepted $435,000 in funding from the Vermont based venture capital firm FreshTracks Capital.

"VCs don't give money out of goodwill, and taking VC funding — even seed funding — creates outside pressures that shape the inevitable direction of a company" Ello user Andy Baio writes in his post.

"I think the intentions of the team are pure, and they genuinely believe in what they're building. But I'm not sure intentions matter unless they can wean themselves off outside funding," he adds.

Ello appears to have the support of its financiers for the time being, and is quick to point out that the founders still own more than 80 percent of the company. But unless Ello hits a home run with the premium, paid offering it envisions as its primary revenue stream, there won't be many options left for the company.

Advertising, for better or worse, continues to be the path of least resistance to revenue for any online destination or social network. Without it, the challenges are more profound. And the successes, if they happen at all, are usually characterized by acquisition offers or other generous exits determined by factors almost entirely unassociated with the company's revenue.


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