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A look at the company behind Ello

As you will now be well aware, over the past few weeks, the ad-free social network Ello has blown up. Members of the tech media have clambered over each other to proclaim Ello as either a Facebook killer or just another social network that will soon be consigned to the digital dustbin of history.

While the rest of the world decides whether to embrace Ello or laugh at it, we thought we’d take a look at three striking aspects of the company behind the latest social network gone viral.

1. Location

Ello is not based in San Francisco, or Silicon Valley, or Los Angeles or New York, or Stockholm, or Tel Aviv, or London. In fact, Ello isn’t from any of the recognisable “startup hubs” of the world. Rather, this plucky little upstart hails from Burlington, Vermont.

Here are some facts about Vermont and Burlington, courtesy of Wikipedia:

  • Burlington is the largest city in Vermont. It has a whopping total population of around 42,000 people (2010 figure). This makes it the least populous city in the US to be the most populous city of a state;
  • Burlington is a college town, home to The University of Vermont, Burlington College and Champlain College;
  • Until recently, Vermont’s largest employer was IBM, at times employing up to 5,000 people at its Essex Junction chip manufacturing plant;
  • Vermont, way up against the Canadian border, is the leading producer of maple syrup in the US. Yep;
  • Vermont has the highest dairy cow to people ratio in the US.

In short, Burlington is way, way outside the startup echo chamber. In 2014, you can start a tech company anywhere.

2. Founder

Social networks don’t need to be founded by young college dropouts. Ello’s founding CEO, Paul Budnitz, turned 47 this September, and he’s been around the block a few times. In fact, he’s been around several blocks a bunch of times. He’s written and directed two movies (both of which won awards at the Berlin Film Festival), authored several books, and has started a number of companies, including Kidrobot (toys and apparel) and Budnitz Bicycles (high-end titanium bicycles).

Budnitz was, however, born in that most famous of liberal college towns, Berkeley, California, and he did graduate from Yale. According to his (presumably autobiographical) Amazon Profile, he held a job writing safety analysis code for nuclear power plants before he reached high school. The guy is clearly smart.

He seems like the sort of person who cycles a few miles, writes a hundred lines of code and feeds the chickens all before breakfast.

3. Product

Ello is yet another social network. You know, one of those things that is supposed to have been done to death already, which is dominated by a company with $201 billion market cap, and which no venture capitalist in their right mind would want to fund?

Apparently Ello missed that memo.

It goes to show that courageous (crazy?) investors can be found in unlikely places. Ello accepted a $435,000 investment from Vermont-based firm FreshTracks Capital several months prior to its March 2014 launch. In a recent interview with GigaOm, FreshTracks Capital partner Cairn Cross said:

We practice venture capital in a way that very few people practice it. We’re really small-town venture. We’re patient, we have long exit horizons, we’ve had some successes, we’ve been around for awhile. This is not Kleiner Perkins.

Au contraire

Right now, Ello is a bit like one of those Chinese ghost cities: lots of apartments being built, but nobody really moving in. Ello needs to convince its early signups to, you know, actually start creating and sharing some content on the site. That might move Ello from being a short-lived bright star to a permanent fixture in the universe of social networks.

Whether Ello lives or dies, we love that they’re trying to do things differently, to buck the trend, to just do things the way they want and not pay much attention to the tech media circus that’s engulfed them these last few weeks.

The makers of Ello built it for themselves and used it privately for a year before deciding to make it more widely available. It’s amazing that so much of the tech press completely fails to understand the motivations of founders like Budnitz and Co. “We want an ad-free social network where we can hang out together. Where is it? Screw it, let’s make it ourselves, and if other folks want to use it, that’s cool, too.” They’re not trying to engineer the overthrow of Facebook, and they are not oblivious to the fact that Ello isn’t for everyone.

In our book, FreshTracks Capital deserves huge kudos regardless of whether Ello succeeds or fails. It takes either guts or immense stupidity to drop near half-a-million dollars into a pre-launch startup outside of a major tech hub that has no clear business model and whose product is bound to be seen as competing with Facebook, regardless of what its founders say. Hats off to you, FreshTracks. If you don’t win on Ello, we hope you win big on one of your other companies.

While Queensland is sorely missing a homegrown VC firm of any real significance (and certainly none with the courage of FreshTracks), the brief history of Ello so far should inspire hope in those humble creators and founders of all ages daring to build something from our little corner of the world.

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