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Ello becomes a public-benefit corporation with mandate to not sell ads

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Ello exploded in popularity last month partly on the grounds that it would remain ad-free and never sell users' data, and today it's putting those promises down in legal writing. Ello says that it has converted to a public-benefit corporation, with its charter prohibiting it in "the strongest legal terms possible" from making money by selling ads or user data. It also requires that any company that might purchase Ello in the future follow these same rules. "In other words," the company writes, "Ello exists for your benefit, and will never show ads or sell user data."

Ello is also raising $5.5 million in funding

While Ello doesn't publish the exact language used, the idea is that as a public-benefit corporation it has to serve both investors and non-investors alike — that way, it won't always be thinking about money. The move comes in response to vocal concerns that Ello will eventually be forced to give up on its promise as it answers to investors, who had already put $435,000 into the company by the time it received a flood of new users. "Before they opened their doors, Ello became hooked on an unsustainable funding model — taking cash from VCs — and will almost certainly take a much larger Series A round once that $435,000 dries up," blogger and developer Andy Baio wrote at the time. He added, "(Which, at their current burn rate, should be in a couple months.)"

It turns out that Baio was spot on, with Ello also announcing today that it's taken an additional $5.5 million in funding, according to The New York Times. It apparently needed the money after its sudden surge of popularity to make sure that the site wouldn't go down and to see that it can continue to expand.

Even with its status as a public-benefit corporation, Ello still intends to make money. The Times reports that Ello plans to work on an App Store of sorts that'll let users buy widgets and other modifications to their profiles for a few dollars each. It remains to be seen how effectively Ello or anyone else can create a new model for making a social network profitable, but at least users should be able to rest more easily about the network sticking to its principles.