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Ello legally bars itself from ever showing ads

The company has also raised $5.5 million in new funding to handle increased traffic demand

Financial trends and news by Steven Loeb
October 23, 2014
Short URL: http://vator.tv/n/39ef

When people on Facebook started going on and on about how great Ello was last month, I have to admit that I was skeptical. I mean, haven't we heard this all before? I seem to remember that, at one time, Google+ was going to be the thing that took Facebook down. We all know how well that went.

Plus its mission statement to never show ads seemed, frankly, pretty pie in the sky. "Of course that's what it says now," I thought to myself, "but once it has a billion people and shareholders to answer to, let's see what tune it is singing."

I'll admit it when I'm wrong though, and I have to say that Ello actually does seem to be the real deal. Color me surprised!

The company has made a very interesting, and forward thinking move, by reincorporatingitself as what is known as a "public benefit corporation" in Delaware, it has been confirmed to VatorNews. That means that the company has pledged itself to provide a benefit to society.

And, since the no ads policy is in the company's charter, which you can read below, the company is now legally forbidden to ever show ads on the network. It states that Ello must never make money from selling ads, nor can it ever make money from selling user data.

Not only that, but Ello is now legally forbidden from  ever changing that charter, even if it is purchased bt another company. The no-ads policy is here to stay. 

“This company will never have ads and will never sell user data,” Budnitz told ReCode, who first reported the news on Thursday. “We’ve basically enshrined, in the most powerful legal way possible, our mission into the company.”

In conjunction with this news, it was also announced that Ello has raised $5.5 million in Series A funding, ostensibly to build out its infrastructure in order to handle the explosion in demand that has occurred since last month.

Ello has over a million users right now, with an additional three million people on the waiting list. Demand became so high to get on the network that it actually had to stop people from signing up. This new funding, which came from Foundry Group and Bullet Time Ventures, with participation from FreshTracks Capital, will help the company build up its servers to handle the traffic.

Despite all of this, there will no doubt still be some that will remain skeptical of a social network pledging to never advertise. After all, that is how the two most successful social networks, Facebook and Twitter, make almost all of their money.

Seth Levine of Foundry Group addressed some of this doubt in a blog post announcing the new funding.

"It’s important that we state this clearly, since there are bound to be people who view this financing with skepticism. Foundry Group is completely supportive of the Ello mission. We’ll either build a business that doesn’t rely on third party advertising or the selling of user data or we won’t build a business," he wrote.

"Our belief is that there are products and features that Ello can develop that users will be willing to pay for. While the price points may be low, as part of a much larger ecosystem with millions of users, will provide an economic model for the company which supports the business and our investment."

I have to admit it: suddenly, for the first time, I'm legitimately interested in checking out Ello.

(Image source: ello.co)