Facebook may be the biggest--if mature--social network around, but that doesn't mean the competition isn't giving it hot flashes.

In what's been termed the "Great Gay Facebook Exodus," thousands of consumers--gay and otherwise--fed up with Facebook's "real name" policy and endless advertising have been ditching the social network for a relatively unknown startup social network called Ello in recent days.

It's a lesson that small businesses must keep paramount: Alienate your customers at your own risk. They have other choices and they are in control of what they consume, especially in a day and age when messages are transmitted with lightning speed. As you get bigger, what made you interesting as a small company can easily disappear. Look no further than the Occupy Wall Street movement and you'll see that a chunk of consumers are tired of big companies, and are willing to support smaller ones with edgier ideals. That's your cachet. 

"The consumer is in control now," says Howard Buford, managing director of Quorum Consulting, which focuses on marketing and communications to diverse consumer audiences.

As it turns out, Ello was founded by entrepreneur iconoclast Paul Budnitz, founder of online retailer Kidrobot and Budnitz Bicycles. Although Ello rolled out just this summer, and is open to new users on an invitation-only basis, the New York Observer's BetaBeat blog reported today that it was experiencing sign-up requests of about 31,000 an hour.

For the past couple of weeks, Facebook has gotten a lot of flack from members of the LGBT community whose pages have been shut down because some, particularly those in the transgender community, use invented or chosen names. Some do this to avoid persecution in their communities, others do it because they are artists and peformers who have reinvented themselves. (We're thinking Ru Paul's Drag Race here.)

Facebook says it insists on real names to prevent fraud and abuse and other types of bad behavior on the network. It's unclear, however, why drag queens and transgender people have been singled out in recent weeks. 

In contrast to Facebook, Ello is ad-free, and it has no real name policy. While its look is pretty minimal, Ello's blackened out smiley face logo is somehow reminiscent of the hacker group Anonymous, and it reads quite differently from the innocuous look of Facebook's interface.

Ello's manifesto also tries to burnish its non-mainstream cred. Here's what it says:

Your social network is owned by advertisers.

Every post you share, every friend you make and every link you follow is tracked, recorded and converted into data. Advertisers buy your data so they can show you more ads. You are the product that’s bought and sold.

We believe there is a better way. We believe in audacity. We believe in beauty, simplicity and transparency. We believe that the people who make things and the people who use them should be in partnership.

We believe a social network can be a tool for empowerment. Not a tool to deceive, coerce and manipulate--but a place to connect, create and celebrate life.

You are not a product.

The manifesto is very consistent with Budnitz's persona. Although he did not return a request for comment, Budnitz is a serial entrepreneur, as well as a hacker, who's been running companies since he was 15, according to a profile in Inc. from 2011. The son of a nuclear physicist, and a graduate of Yale, where he studied film and fine art, Budnitz developed a passionate customer base who fell in love with his artful choices at Kidrobot. 

“We built [Ello] specifically with creative people in mind, people who value content, with a good bit of discussion and dialog happening around that content,” Budnitz told Vice's Motherboard blog in March

It's no wonder then, that Budnitz's network seems to resonate with the LGBT community, as opposed to the much larger Google Plus, which overturned its real name policy this summer in response to complaints from activists.

While Google missed an important opportunity to get that message out and convert some new users, it appears Ello landed its own message squarely with just the right user group ready for a change. 

"LGBT people are not followers of the mainstream," Buford says. "LGBT is all about bucking authority and flying in the face of authority, and if you try to crack down on this group, it is not going to work, because that is not their orientation in life."

Published on: Sep 25, 2014