Why Ello Needs Craig Newmark(?)

There has been surprising interest in a minimalist new social network named ello whose model and feature set is reminiscent of the early days of Twitter. Ello has seen signups of late hit the 35,000 per hour mark. The reason? The founders claim thatr unlike Twitter and Facebook, their users don’t pay a “high price in intrusive advertising and lack of privacy.”

Way back when (2009) we were launching the world’s first Twitter Conference Jason and I used to meet with various staffers/founders at Twitter HQ in downtown SF. At that time, Twitter’s headcount was a miserly 35 people. We were surprised to see 3 dozen people managing a network of 13 million users. Today, they have 100 times the number of employees, and 20x the user base.

In those early days, there was a lot of commentary regarding how the service would make money. As a founder who is fond of the much-maligned “lifestyle business” model, I thought if I were the lone Twitter shareholder, I’d take a good look at applying the philosophy Craig Newmark used with Craigslist. This would mean keeping expenses/headcount low, focus on what the network members valued, minimize enhancement/augmentation/bloating of the platform, and taking a minimalist approach toward to achieving sustainable revenues.

With display ad rates running $2.80 CPM, the math more than supports the notion that an occasional/infrequent ad tweet thrown into the global stream would likely be more than enough to fund the enterprise, keep the users happy, and provide the founders with an enviable income stream. No need for an army of engineers to develop a fancy targeting or auction system, or to hire hundreds of salespeople. In addition, the founders might actually get to stay around.

I also knew this was a pipe dream. The reason was simple. VC money. As early as 2007, Twitter had taken on $5 million in funding and with that (and the 1.2 Billion to come later) It was an inescapable conclusion that Twitter was joining Facebook in the chase for serious monetization.

So far the approach of the VC investors is looking like the right move. Although my plan provided immediate profitability (Twitter Inc. has not reported a profit yet) there is no way that a Craigslist approach would have provided the immediate returns to the shareholders that we’ve seen post IPO.

What has dampened the interest in Ello is this post from Aral Balkan. Balkan reports that when he discovered Ello was venture backed, he decided it was game-over. In his words, “taking venture capital…for a project like this….is the nail in its coffin.” Many have agreed with this sentiment.

Given the interest in a minimalist, user-focused network, and the desire by many of the digerati to be in a community that is not venture-backed, is there a place for a Newmark-style business model in this space? Could Craig make a “dent” here?