The Talented Mr. Budnitz

The man behind the tech insurgent Ello is part pragmatist, part polymath—and all business

Paul Budnitz (Photo: Jamie Kripke/For New York Observer)
Paul Budnitz. (Photo: Jamie Kripke/For New York Observer)

When the social network Ello, one of the Observer’s Tech Insurgents 2015, became the fastest-growing social network in history overnight and dominated the tech media hype-cycle for the better part of a week last September, Paul Budnitz was born anew. He was “Paul Budnitz, founder.”

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Not “Paul Budnitz, who’d created one of the first computer-based dark markets as a teenager.” Or “Paul Budnitz, the first person to cut a feature film on a computer,” or “designed bicycles that are owned by people like Jay Z and VPs at Google” or “whose work is in the permanent collection of MoMA.”

Indeed, Mr. Budnitz’s past is littered with sold businesses, as well as artists, designers, diplomats and CEOs who will swear that the eccentric serial entrepreneur is part huckster, part market mastermind and part visionary.

“There’s a lot of Steve Jobs there,” Techstars managing partner Mark Solon told the Observer when Ello closed its latest round of $5 million in funding. “He’s brilliant and he’s crazy—a good kind of crazy. And people like Paul are crazy enough to change the world.”

The son of a UC professor/nuclear physicist father and social worker mother, Mr. Budnitz, 47, grew up in a kosher home in Berkeley, Calif., a part of the country where lefties and flower children held on well into the ’80s, and went to the kind of experimental schools that encourage independent thinking. When he was in junior high, Mr. Budnitz got his hands on an early Teletype machine and saw his first business opportunity. He and a friend started taking the train to Chinatown in San Francisco to buy fireworks and selling them in his neighborhood where they were illegal, and computerized the sales list to keep track. But the local supercomputer Berkeley used was on loan from the Department of Energy, and tied to its database.

It only took one day for someone in the government to detect a list of small munitions and explosives. In short order five policemen had arrived at his house.

“That was very clever,” his father later told him. “But do something legal next time, you know?”

That first business endeavor contained elements of what would characterize Mr. Budnitz’s future ones: a market opportunity, some involvement with computers and brazen cunning.

As he got older, Mr. Budnitz’s interest in computers grew to the point where he was sneaking into local computer labs and biking home at 2 a.m. During his senior year of high school, he was drafted by some older programmers working for Commodore to program games for the Commodore 64. He eventually went to Yale, where he’d study engineering while obsessing over art, and then pivoted, studying art while obsessing over computers and making films in his free time.

Paul’s really, really creative, and also understands all of the things to get money and make it work. He’s really savvy that way—he takes something that’s odd, and makes a business out of it. He takes the obscure and makes it beautiful.—Chad Phillips, former creative director of Kidrobot.

When he graduated in 1990, Mr. Budnitz was rambunctious, emotionally immature and uninterested in getting a job.

“The idea of having a boss and a job wasn’t something I felt like I could handle,” Mr. Budnitz told the Observer. “I ended up starting businesses on the side as a way to make money so I could do my art. I’m not saying this is particularly mature, but that was definitely my perspective.”

While selling art prints on T-shirts, he simultaneously began wandering American flea markets looking to buy early 20th-century pairs of jeans—in smaller sizes—and then would fly to Japan and flip them for $1,500 a pair. He expanded into other items of valuable Americana, like motorcycle jackets and shoes. At one point, he even had the idea of shipping entire Harley- Davidsons over before reconsidering.

Mr. Budnitz said that this is how it would go down: He would ship the goods to a hotel room in Tokyo, fly over, hire a local to help develop his business and get to selling. A pair of deadstock stilt-walker pants from Ringling Bros. Circus sold for $8,000. A pair of Air Jordans sold for $16,000. Anything that Mr. Budnitz couldn’t sell, he’d repurpose or modify into new clothes for his own personal fashion label called Big.

“It was a cash business,” Mr. Budnitz said. “I had like tens of thousands of dollars, sometimes a hundred thousand dollars cash in my freezer.”

And where was all of the money going? Movies.

All through college and his import/export years, Mr. Budnitz was making experimental 16mm films. He cut a film called 93 Million Miles from the Sun by building a custom computer that allowed him to edit the movie digitally, becoming the first person ever to edit a feature film on a home computer. (Wired wrote about it in a 1996 article called “Film Hacker.”)

While working on the films, he was using custom, hacked minidisc recorders for sound, and, naturally, started a business called Minidisco. He brought some more sophisticated recorders back from Japan, began making more of these custom players for other musicians and sound recorders, and hacking microphones to boot. In 1997, he opened a site that could now be considered an early precursor to what today we might call “ecommerce,” using a digital mail order system where you could print out an online form and have your custom minidisc shipped to you.

“Then the iPod came out and in 2002, I sold [the business] to my competitor, because I was like, ‘Minidisco is going to be dead in a year,’ ” Mr. Budnitz said.

Mr. Budnitz was still travelling back and forth between Japan, and became fascinated with the small art-toy movement in the Harajuku district of Tokyo. “They’d buy G.I. Joes and then chop the head off—they’d mold their heads and hands, mold new ones and sew their own clothes, and then they’d be these little art toys,” Mr. Budnitz recalled.

The toys they were making were hard to find, and Mr. Budnitz saw his next market opportunity. He used what he had left over from selling Minidisco to start a boutique art-toy company called Kidrobot—a name that would soon become synonymous with the vinyl art-toy movement in America.

“Paul’s really, really creative, and also understands all of the things to get money and make it work,” Chad Phillips, creative director and Mr. Budnitz’s second in command at Kidrobot. “He’s really savvy that way—he takes something that’s odd, and makes a business out of it. He takes the obscure and makes it beautiful.”

(Photo: Jamie Kripke/For New York Observer)
(Photo: Jamie Kripke/For New York Observer)

But for the first few years, Mr. Budnitz’s small store in San Francisco was a bootstrapped nightmare that he couldn’t pull a salary from. He’d maxed out his credit cards and taken out mortgages until he had what he called his “discovery that perception is reality.” He noticed that many of his friends who were street artists were doing very comic-inspired, character-based work. So he had them design custom toys with an adult edge for Kidrobot.

“I would buy them and proclaim they were the most famous street artists in the world, and everyone would believe it,” Mr. Budnitz said. “Then, they would become the most famous street artists in the world.” The names eventually included Frank Kozik, Huck Gee, Dalek, Filth and Tara McPherson, who made toys for small, vinyl art objects that sold for anywhere between $60 to thousands of dollars each. And the business picked up steam, expanding to 60 employees and five retail locations. A collaboration with street artist Tristan Eaton led to a collection of a dozen Kidrobot toys being accepted into the permanent collection at the Museum of Modern Art.

“I ran into all my friends that I went to art school with and they were like, ‘You got into a museum?’ ” Mr. Budnitz said. “I was always the black sheep in school who wasn’t really the artist. I couldn’t even draw.”

In 2010, weary of the pressure to do mass-market collaborations with major brands, he sold Kidrobot to Charlie Rivkin, the former CEO of the Jim Henson Company who would go on to become the ambassador to France and is now the current U.S. assistant secretary of state for economic and business affairs.

What was next? Mr. Budnitz hadn’t, until that point, owned a car or had a license to drive in 18 years. Having relocated to New York in 2003, he’d been biking everywhere, notoriously showing up at clubs and runway shows on expensive bikes made for racing, but customized for street travel and transportation. He started designing bikes, hiring bike makers to put together prototypes, showing up at every bike shop in New York and learning as much as he could.

The result was a website called “Budnitz Bicycles,” a boutique bike company that sells handcrafted titanium bicycles for about $3,000 to $8,000 each. The site, when it opened, advertised two prototypes labeled “Sold Out.”

“It was an old Kidrobot tactic, actually,” Mr. Budnitz said. “When you don’t have very much money, and you don’t know if something’s going to sell, one of the things you can do is, you can just put it up and say, ‘Here’s this thing, but it’s sold out.’ ”

Pretty soon, they had a year’s worth of orders. Today, the company runs independently, with its own CEO. Jay Z owns four, Rosie O’Donnell owns one, and Google’s former senior vice president of mobile, Andy Rubin, just bought 11 for his team.

If all this repurposing, business-building and abandonment seems a bit manic, it makes perfect sense to Mr. Budnitz and anyone else who knows him. He builds products around what he wants desperately. When he’s interested in something, he zeroes in, absorbs everything from the ground up, and discards conventional wisdom that he deems unhelpful.

“He has this affinity for really holding two non-traditionally analogous ideas at once and merging them, like toys and adults,” Ello’s chief product officer and co-founder Todd Berger told the Observer.

That affinity is what led to Ello, the project that Mr. Budnitz is currently laser-focused on for the foreseeable future—the one he calls “the biggest ‘fuck you’ of the bunch.” Ello is a long way out from proving its business model—selling premium services against an otherwise-free social network—but already it has over a million users and a successful apparel line that might soon be in Urban Outfitters. It’s a business that banks on promoting privacy, security, anonymity and style against megalithic incumbents that insist people don’t actually care about any of those things in a social network.

Since 2012, Mr. Budnitz has split his time between Burlington, Vt., where his wife and daughter live and where the Ello’s offices are, and Colorado, where the design and tech team for Ello are. It’s a hard balance to strike since he left New York behind, at least for now.

“Paul believes in non-attachment,” noted John Young, Mr. Budnitz’s first partner and creative designer at Budnitz Bicycles, who met Mr. Budnitz for the first time while waiting to be let into a meditation center. “People view themselves as a product: ‘Here’s who I am, this is what I identify with now.’ Without attaching yourself to what’s happened in the past, you can easily wake up and say, ‘Yeah, fuck it, I’m going to design a bike.’ ”

When I met Mr. Budnitz for the first time this past December at the Standard Hotel—it turned out he was one of the first people to ever stay there when the place was opening up, of course—he projected a childlike openness, like he was hearing everything I told him for the first time. Later in the conversation, he admitted that was a tactic. Play dumb when you speak to someone, be willing to be totally fresh to every conversation, and people will tell you anything.

“One of the things I learned is a basic Buddhist teaching about the beginner’s mind: the willingness to show up as a beginner in all situations,” Mr. Budnitz said. “The beginner has a lot to learn, and that creates a ton of possibility.”

The Talented Mr. Budnitz