[reso]

I'm not sure why this post focuses so much on the angel investment. There are probably 10 reasons why Ello failed, starting with the fact that bootstrapping social network userbases is hard, and ending with users won't pay for social networks. None of these are directly related to the fact they built the site with investor money and not volunteer hours.

[x0x0]

They are imo directly related. Seven people working on ello means it's hard to understand, even on ramen salaries, how that costs less than $1m a year once you fully burden those salaries, buy office space, buy hosting, etc.

So they've set themselves up from the beginning to spend more money than they make, and everything downstream flowed from that choice.

If they had to be cash-flow breakeven from the get, they would have to have charged users. ie built a completely different product, with a different audience.

[urbandw311er]

I think it’s fair critique for the post to focus on the VC (not angel) investment — the expectations of VCs and pressure to deliver a profit could easily have been a significant factor in the decision made by the CEO to focus on substantial revenue growth.

[reso]

But did they ever even cover their costs? If a business is stable for its current size, and then VCs push you to grow and that kills the company, then yes, that company was killed by VC pressures. However, AFAIK, ello never made much money at all, which is the most proximate reason they failed.