Instead, try to figure out a niche that they're failing at - either an activity or a population of users - and that can be expanded into a full social networking site as it grows. Twitter's attempting to do this with status messages, Zynga with casual games. There've got to be a bunch of other sub-activities that people do on FaceBook that aren't well supported...tie into one of those, then gradually expand your usage base until you're better than FaceBook at everything.
This is key. It's arguable that Facebook is successful because it was exclusive to a smaller niche (college students) when it was starting out.
I first got on FaceBook in the fall of 04, when they were still "elite colleges only", and first checked out MySpace around that time too (I did end up creating a MySpace profile, but abandoned it after like half a dozen visits). MySpace was better as a general social-networking site. It had all sorts of features that FaceBook didn't - you could put pictures and videos and music on your profile, it had messaging (FaceBook only had the Wall when it launched, which was everyone-to-everyone messaging and lost the thread of conversation), and it had all these features for bands and other local entertainment.
FaceBook was better at one, specific use case: you meet someone at a party, you want to remember their contact details so you can hang out with them again, you track them down on FaceBook. And it was a lot better than MySpace at this: your profiles were private to within the school so they wouldn't be exposed to the whole Internet, and you could easily search within schools, and you could find their contact info & interests at a glance without having to wade through all the crud people put on their profiles. And that one use case turned out to be very useful for very many college students.
Now that they've let the genie out of the bottle, there's no going back. With 500 million users, every feature they add is a monstrous engineering challenge and every change they make is an impossible political challenge, guaranteed to piss off a major portion of it's users.
How do you market to 500 million people? How do you govern a sytem with that many users in any meaningful way.. you can't. There's nothing you can offer that many people except for lowest common denominator stuff like advertising.
The biggest challenge in business is finding a market you can clearly define, that can be reached easily. Had Facebook stayed "closed" and only available to college students, that's exactly what they would have had.
Imagine the possibilities.. Facebook would have been a right of passage for freshman students.. you go to college, you get a facebook account. College students and their families are some of the richest people on the planet.. just imagine what you could have offered them?
If a college social network is the primary product.. what are the related products, information, services and media? Dating, food, moving, insurance, travel (spring break!), textbooks, banking, car rentals, housing, used goods, career counseling, job searching, recruiting, training, social events, clubs.. the list is endless.
But with a market of everyone.. which products do you offer? When you picture "everyone" do you have an image of a person in your head? Of course not.. but "college student".. ahh you know immediately what to offer them.
Imagine how many companies would beg to offer their services and products on a college-only facebook network?
That's how you compete.. find a specific niche you can clearly define and build deep relationships with your customers.
From a business stand point, I really can't see how you could say facebook made a colossal mistake by opening to the world. It made them rich and one of the most powerful websites on the Internet.
1. by giving us back control.
2. by giving us data portability.
Probably now many Facebook users think Facebook is the internet. Good luck!
What I mean is: they don't use Facebook because they think Facebook is so great, they use it because their friends use it (like email - it is just a way to send each other messages). They probably never questioned why they use it. Therefore it would likely be hard to make them switch to something else.
The Bad News: You'll almost certainly fail if you try to take on Facebook.
The Good News: If you succeed, you'll almost certainly be a billionaire.
If you wanted to do this, I'd recommend reading up on what the Diaspora guys are doing and beat them at their game rather than attacking Facebook head-on.
If your goal is money, just spend your money on powerball tickets since your chances are much, much greater.
If you do what you love because you're passionate about it, and you're exceptionally talented at what you're doing, rich is a natural byproduct.
I agree that his odds of winning the Powerball are probably higher.
Start with a facebook clon for hackers, then, like reddit, expand to all possible interests. Let people create their groups of interest and then grow, grow like weed.
People like (and find it convenient) to split into tribes they identify with. Look at Usenet, Reddit, Facebook, IRC, etc. What if you took this niche-based grouping and applied it to a social network?
Imagine, for example, that I sign up with your site and join the "Lisp Hackers" group. I can private message other Lispers, I can pop open a chat window and talk live without having to open an IRC client, post code on our public discussion forum, view the profiles of the people in my group, look at their pictures, etc. The important thing would be to emphasize community-based subsites with a full suite of features for the members.
Facebook now works (to my understanding; I don't have an account) on the principle of "friending" everyone, and discovering some new people in "Groups" or "Fan Pages", which provide primitive utilities for talking with one another; at the end of the day, to get the full list of features, you have to add everyone to your giant "list o' friends." What would happen if you started with the idea of strict grouping instead?
I've taken some ideas from the Semantic Web community, but scaled them down so they're practical. I use a subset of RDF that maps cleanly to an SQL/ORM. Models are generative based on the ontologies you define. Types are hierarchical "Resources" that are uniquely identified (and sometimes dereferenceable) by URI and can be exchanged from the original source or via a p2p mechanism.
If this or any similar platform gains traction, Facebook is history. Blogs are history. Reddit, etc. -- it can all be emulated (and improved) on this platform and everyone can write code for it. No more data silos.
Personally, I'm not so interested in the social networking aspect, but social network tools can be built upon this. I'm more interested in creating a tool to route interesting information to and from relevant parties. I want an optimal web reading experience, and not even hacker news can provide this. (ie. I want to algorithmically find peers with similar skills/interests and fetch their highly-ranked stories/comments, data mine, personal interest profiling, etc. Can't do that without success/adoption of the platform though.)
If all you have is the desire, you might as well take on General Motors.
I think everyone at some point wants to create the next big thing in social networking, but honestly, it just isn't a realistic expectation. Look how much Google has failed to compete, even with MySpace, in the social arena.Do you think you can you do better than Google?
What there are are tons of communities, any of which a given user may or may not be a member of... and as long as people prefer to show a different face when interacting with a given community, or keep their interactions with the members of a given community separate - whether as a convenience, or for privacy reasons, whatever, there will be room for "social networks" around interests, geographic areas, etc.
So, yeah, a "social network" for Doctor Who fans, a "social network" for Mazda RX-8 enthusiasts, etc. This space is mostly filled by "forums" now, which don't necessarily have (or need, and this point is probably key) the same suite of features as a "full fledged social network."
But if there was a way to take advantage of all these discrete communities of interests, yet still give a user convenient access to their entire social-graph at all times, and a void "profile fatigue" and "password fatigue" then one could probably accomplish something.
Whether or not what Diaspora are building, or one of the other varied "decentralized social network" projects, remains to be seen. And how the hell you monetize it if you could build it also remains to be seen. But there point in all this rambling was really just to say that there are needs for "networking" that Facebook isn't filling at least not alone. Now the combination of Facebook, Gallifreybase.com and rx8forum.com may fill the needs of the hypothetical Doctor Who watching, RX-8 driving, social-networker. So would one really want to compete with Facebook or with rx8forum.com and gallifreybase.com?
Why do you feel the world needs an alternative?
What problem would your product solve (that facebook isn't already solving)?
If you goal is to make money, then ignore this comment.
If your goal is to make something better than facebook, you want to ask yourself, why you want to reinvent the wheel? Unless you have some great idea. Don't.
Check out Diaspora, maybe it's better for you to work on that when it comes out. They have some good ideas. You can also look around other open source SNS.
P.S. 1% of Facebook users care about privacy. The rest are not aware.
But without a great idea, excellent execution, a lot of technical talent and a pile of money, I'd choose the much smaller niche.
I think the advice about going at it obliquely is only necessary if you're creating a straight up clone, this targeting a niche thing is only about marketing, but if you can offer something better, I think you'll find many early adopters.
Presumptions: Facebook does not actually understand its own audience and why people use the site. Also, I presume you will figure out what "better" really means for your audience and not just over-engineer something.