Subscribe to Entrepreneur for $5

Fast-Growing Ello a Facebook Killer? Not So Fast.

This story originally appeared on CNBC

The extremely rapid growth of Ello, an ad- and data-collection-free social network, already has some in the press referring to the company as a Facebook killer.

And while there's no denying the network is growing fast (currently about 27,000 people are signing up per hour, founder Paul Budnitz told CNBC), or that the site was launched, at least partially, in reaction to all the data Facebook collects on its users, don't expect the nascent company to really threaten Facebook's dominance, said Jason Stein, founder of social media analytics firm Laundry Service.

Ello was first launched in July with little engagement. Part of the reason for the latest growth spurt is Facebook's recent suspension of accounts of drag performers who weren't using what's considered to be a "real name."

As of now, the network is free to join, boasts no ads, collects no data and is joinable only by invitation. (Invitations are being offered on eBay for anywhere between $5 and $100.)

"Ello is totally free, will always be free," Budnitz said. "But some people want special features—they will have to pay for that. You're a graphic designer and want to control your personal login and your business profile, we're going to charge $1.99 for that."

"We don't need to be a $30 billion company to be successful," he said. (The company is reportedly already attracting brand attention, as well.)

The lack of ads is what may actually hold back the company from going far, said Laundry Service's Stein. Contrary to widely accepted opinion, "there's no data that shows people have problems with ads," he said.

Even with publicly expressed outrage about the amount of data collected by Facebook, there's no evidence supporting any notion that its growth has tapped out or that people are leaving the network in substantial numbers, Stein said.

In fact, there's evidence that targeted ads are one of the features that users most like about the platform, Stein said.

Ello will most likely grow into a niche platform like Secret or Whisper, he said.

Budnitz would apparently be comfortable with that.

"We see [Facebook} as a utility, like Yellow Pages," Budnitz told CNBC. "They had to make it for everybody, to have everyone on earth on Facebook and build a virtual image of that person that they can sell and make money from. We're building a social network. I don't think [Facebook] is a social network, it's an advertising platform and data-collection tool."

Facebook declined to comment.

Matt Hunter

Written By

Contributor for CNBC