As I eat here in this Subway for the second time today while our apartment is going through mold remediation, I find myself repeatedly checking my inbox for that f*****’ Ello.co invite.
Update, 2014/09/26 9:50am PDT: I’m in. A big, “Thank You,” goes out to Douglas Karr for the invite.
What the Hell-o is Ello?
Ello is, at least till the end of this sentence, the new, exclusive invite-only social network that is blaspheming big exhalations of puffery by claiming to be the only online social network to remain ad-free.
It even has an equally ballsy manifesto.
“Your social network is owned by advertisers.
“Every post you share, every friend you make and every link you follow is tracked, recorded and converted into data. Advertisers buy your data so they can show you more ads. You are the product that’s bought and sold.
“We believe there is a better way. We believe in audacity. We believe in beauty, simplicity and transparency. We believe that the people who make things and the people who use them should be in partnership.
“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.”
Who can afford that?
Typically, no one can. Either it goes nowhere and the server costs, assuming you don’t pay yourself or anyone else for labor, are nil. Or, it blows up and you have to sell your car to afford to pay hosting through the end of the month.
Given Re/Code’s last report stating that Ello.co was picking up 34,000 sign-ups an hour – so much so that they capped the invites for awhile before letting more in as capacity allows – let’s assume the monthly server costs have quickly become higher than the annual family phone plan.
Who can afford such startup social network platform costs without ads?
For starters, it’s a good problem to have. Collecting that many user accounts so quickly attracts investing. A 1st round of funding, if not already procured, wouldn’t be out of the question. Most startups have a plan for such success. Rainy day funds, day job financial contributions, family & friends plan, or the Visa / Master Card emergency float plan.
How do platforms sustain such costs?
Good question. Especially since they’ve claimed they’ll never run ads or sell your data, the two publicized ways social networks have been know to sustain growth.
But the Ello.co Manifesto didn’t say they wouldn’t make money!
So, how does Ello.co make money?
As of right now there are four ways I can think of that they can sustain the platform and make money without gaudy ads or re-data:
1 – Sell
Build a big buzz, sell for a quick buck. If they continue at their aforementioned pace an can register 1mm, 10mm, 100 million addresses, someone will want that data. Now, the manifesto said they won’t resell it, but nobody said anything about sending email offers to the inbox. Cheap though, with better ones coming, but that big of a community is ripe for anything from a commenting system, social share plugin, and other products to be sold. Once again, it depends on who buys it.
At worst, it’s a Google Plus clone that isn’t forced on folks, giving the platform a chance for acceptance.
2 – Merchandising a Lifestyle Brand
This would be my first guess on their plan. One of he best success stories out there is that of TheChive.com. They had all this traffic for bikini and random pics, but their online ad space couldn’t cover their $16k a month hosting bill. Then this happened…
Source: TheChivery.com. The shirt that started the revolution.
Those Chive and KCCO shirts changed everything. They went from the red to the black faster than they could print the shirts. Not only that, but folks WANTED to know when the shirts were available. There’s still an exclusive buzz when the next sale is announced. For those who get one today, it’s still like winning the lottery.
From there they tapped into the heartbeat of their community and created a line of merchandise – shirts, hoodies, posters… – that their community clamor over.
Who the Hell wouldn’t want a Bill F*****’ Murray shirt?
Source: TheChivery.com. It’s an awesome shirt (opinion is my own).
Other online brands such as Anglotopia.net are having the same type of success, building a lifestyle brand to go with their online content.
I suspect many #Ellovution shirts are coming.
3 – Non-Profit event marketing & payment processing
If they haven’t done so already, I would guess that Ello.co is about to have a non-profit wing. They’ll promote feel-good stories and uplifting stories. They’ll start doing fundraiser events. Their fans will flock. They’ll accept payments at an acceptable rate via either a payment processor they partner with or start their own. Own the pipeline. Then they’ll probably start having conventions. You know, engagement like how God intended.
That’s somewhat out of TheChive.com’s playbook, as well as many others. I love TheChive.com.
4 – eCommerce: move over Alibaba & Amazon
This would require a little self-loopholing but if they entered the eCommerce game, they could go to town on selling. How they would introduce the goods to their users without offending them would involve a lot of apologies and even more shoehorning, but it’s possible. Is it advertising if you’re announcing your own stuff?
It’s a different world from when Facebook started
The Harvard boys in Menlo Park had quite a bit of funding to limp them along till they were cool enough to survive advertising. If Ello.co can survive the newness hangover, there are more revenue options available to them than there were when Google & Facebook had to learn how to stand on their own feet. It’s plausible that through merchandising, payment processing and even eCommerce, they can build a juggernaut by selling the anti-ad platform on each shirt.
Time will tell if Ello will know what to do.
Anyone else have a guess?