Ello converts to Public Benefit Corporation to safeguard no ad promise

by: Charlotte McEleny on 24 October 2014

Ello has converted into a Public Benefit Corporation (PBC) in a bid to safeguard its privacy commitments

Ello has converted to become a Public Benefit Corporation (PBC), legally binding it to its commitment to not serve ads or make money off people’s data.

New social network Ello has gained notoriety and significant funding in a short amount of time thanks to a commitment to not monetise the website from ads or selling data. The business has strengthened this legally by converting to a Public Benefit Corporation (PBC).

The social network has been slowly building up hype, helped by a ‘slowly, slowly’ approach to new members – it will only honour new member requests that came from invites from people that are already members. The latest numbers estimate that it had 40,000 member requests per hour during its September peak.

But with hype comes cynicism, and eventually criticisms, not least around people doubting that it would be able to stay true to its pledge to not have ads or sell data. It has just raised $5.5m and many commentators believed that the social network would have to backtrack in order to satiate its investors.

To counter these claims the business has converted to a State of Delaware Public Benefit Corporation (PBC). A PBC is a new kind of for-profit business which legally binds the company to create a business model that benefits society as a whole. A copy of the pledge has been posted by Ello online.

The pledge ensures that the company now has to take into account this societal commitment for every decision it now makes. The pledge specifically ties the company into the following promise:

  • Ello’s PBC’s charter states that Ello shall not for pecuniary gain:
  • 1. Sell user-specific data to a third party;
  • 2. Enter into an agreement to display paid advertising on behalf of a third party; and
  • 3. In the event of an acquisition or asset transfer, the Company shall require any acquiring entity to adopt these requirements with respect to the operation of Ello or its assets.