In some ways, entrepreneur Paul Budnitz has been living every business owner's sweetest dream. Literally overnight, his social network Ello became the "it" business, with people around the globe talking about it and rushing to join up. 

After Facebook found itself at the center of a controversy over its policy requiring real names in recent weeks--a policy it partially overturned Wednesday--disaffected users by the tens of thousands claim to have abandoned it in favor of Ello, whose ad-free policy and sleek design aesthetic new users say they favored. As of Tuesday, Budnitz claimed Ello was still seeing a signup rate of 45,000 an hour.  

But this is not Budnitz's first time at the rodeo. A serial entrepreneur as well as a skilled computer programmer, Budnitz also founded the hugely popular Kidrobot and Budnitz Bicycles. Budnitz recently spoke with me about Ello's sudden success, and whether Ello is the anti-Facebook, and his future plans.

Following is an edited excerpt of our conversation:

Why did Ello become the overnight sensation that it did?

It was good design, and luck and timing. The whole social network experience has become sort of a drag, for a lot of different reasons, one of them clearly being advertising. And that's clearly a big deal for us. But when you take away the ads, and the data mining, you are free to just do really good design. So I think it was a combination of things, that Ello is very simple and well-designed and well thought out. We used it privately as a social network for a year with 100 friends, and that was originally what it was designed to be. But then some things happened simultaneously. We got some really nice press in the "geek tech" press, and great German press which leaked over. And then Facebook started kicking people off the network aggressively who weren't using their real names. And there was a big reaction to this.

People wonder how you are going to make money from Ello, or if that's even the intention. Will you, and is it? 

We will make money, and we are a business, and we have been really open about that since the beginning. Our model is based on a very successful business model that has been applied to all kinds of other things except social networking, which is the iPhone model.  In its most basic form, Ello will be fun and free to use. But after that there are features that some groups want really badly--for example one of the most requested features is the ability to control multiple accounts from a single log in. We might charge a dollar for that. It would be like the App store.

You've taken $435,000 in venture capital money, which suggests to some an eventual exit strategy and possible change to how you want to run your business. What about that?

First of all, let's talk about FreshTracks Capital. It's a Vermont-based fund, and they are tiny and they only invest in Vermont-based companies. And Vermont is the only state without billboards, they're prohibited here. The partners running this, Lee Bouyea and Cairn Cross, well, Cairn cruises over on his motorcycle and brews maple beer in his backyard. Basically they are are my neighbors, and the vast majority of Ello stock is still owned by the seven founders. There is no exit strategy. We are building a profitable company, and that is our goal.

Some critics say you'll ultimately become more like Facebook as the company scales, and mine and sell customer data. What do you say to that? 

We're not collecting the data, so we can't monetize it. We are very clear about what we are doing. People are saying we are "Facebook-killers", but honestly we do not have a problem with Facebook in and of itself. We don’t think of them as competition. They are an advertising platform, and we are a social network. They are run for the customer, who is the advertiser. But we don’t have advertisers, and we are run for the people who run the network. We are going to make plenty of money doing things our own way. Given the number of people who have come over to Ello in droves, we are the future of how the best part of the Internet will be monetized. Our goal from the start has not been to take over the world, and that is to our advantage. We don’t need everyone in the world to be on Ello to be successful.

What's next after Ello, do you have another business in the works?

I'd like a vacation, I guess. I'd like a full day with my family riding my bike to the lake [here in Vermont] before it gets cold. But I am not looking too far ahead. These companies [Budnitz Bicycles and Ello] are a blast.

 

 

 

Published on: Oct 2, 2014