Can Altly compete with Facebook?

Altly is approaching the modern day David vs. Goliath, an alternative to Facebook. Facebook has many detractors mostly complaining about privacy issues, over-sharing, and over-friending, but will it be possible to release the stranglehold that Facebook has on all of us? As reported by TechCrunch a few key people think so: a former MySpace executive has joined the ranks, and this start-up has also received funding from a venture capitalist.

Is This Substitute a Threat?

Let’s consider Porter’s Five Forces and put my MBA to work for a brief moment. Consider the market force of The Threat of Substitute Products or Services. Porter’s theory says that a customer’s potential to switch to a substitute product will increase under a number of circumstances such as relative price, low switching costs, and ease of substitution. However, the cost of switching from Facebook to Altly is high—you lose your entire network—and the ease of substitution is  well, not easy. How are you going to replace the kind of audience that is found on Facebook?

The Network Effect

Maybe some of your friends will jump the Facebook ship and join Altly, but it is not likely that they all will. So Facebook also has the power of the network, or the Network Effect. The larger Facebook grows, the stronger and more valuable the network, and the less likely the members of that network would leave. Our Facebook friends are objects at rest, and we know that objects at rest tend to remain at rest (as opposed to objects in motion which apparently join Altly). The reason Facebook is so great is because it is so great in numbers.

Altly’s Complaints

Altly brings up valid criticisms of Facebook, which is far from perfect. Their main beef with Facebook is about privacy. Altly explains that:

With it being so obvious that privacy is critically important in our lives, and the lack of it creating countless opportunities for catastrophe, why is Facebook continuing to erode our privacy, forcing us to live more and more public lives?

They are not the only ones to have issues with Facebook’s privacy. It is the most common complaint heard, and in many situations is a legitimate concern. However, the goal of the average 18-34 year old Facebook user is not to keep their life private. This does not seem like a great tactic to lure users away from Facebook; to insinuate that all of their exciting news about their weekend will be seen by fewer people.
Another issue Altly has with Facebook is that it seems to contain the largest pool of over-sharers. Facebook’s atmosphere is “friendly” which lends to people embarrassing themselves by posting too much personal information in addition to a lack of understanding of standard netiquitte. Similarly, the problem of over-friending is another Altly concern – that we all have too many “friends” who are not people we even know very well. However, we all have different standards of acceptability, so it is unclear how Altly would address this specific issue other than to suggest their network will be “realistic” and not include “meaningless” relationships.
The point I find the most interesting that Altly addresses is the lack of competition. Once again, from Altly’s manifesto:

There are NO serious alternatives at this time. For every Coke there is a Pepsi, for every Ford there is a Chevy, for every PC there is a Mac and for every Facebook there is…. a void!  Facebook has such overwhelming power that practically no one believes that trying to build an alternative is possible.

Healthy competition is always a good thing, so opening up the market for a new entrant may improve the offerings for all of us. Facebook has such a monopoly that Altly has even created a Facebook fan page to promote their site. Maybe the interest in this startup will encourage Facebook to consider new tactics, offer more security and control over their information, and give these Altly folks a few jobs.
There are plenty of skeptics of Altly (myself included) who question it’s potential. After all, there have been numerous other sites who have attempted something similar to Facebook – MySpace, Friendster, Google Buzz, etc. But it seems that the bigger question is how we can balance the technology that connects us with over-sharing, over-friending and also our need for privacy. So I have grabbed my Altly username and am curious to see how it all plays out.