Open source your software, generalize it, and push it so that anyone can set it up. Make it easy to install, and make it do what it says it can do really well.
Sure, it's not the best way to get rich. I've been working on the open source social networking software, Appleseed, for about 6 years now, and it's been a massive effort with very little financial gain. But your measure of success can change, you can subvert the typical questions of press and fame and fortune that have come to define success, and see success in other ways.
And it's not perfect. I had been working on Appleseed for half a decade when Diaspora managed to raise $200k on the same idea by having the connections and press I couldn't get. But in the world of open source, there is still a level of meritocracy that you don't see in the start-up world: Either your software works, or it doesn't, and they may have had $200k, but I had 13 years of professional experience, and a 6 year head start, and when you're measured in code, hype can only get you so far.
You may even see your open source software put the fear of God into that mediocre LA competitor with all the press and venture capital, which just personally would make me feel better.
The one thing my father always said that I had to relearn with life experience is "it's not about what you know, it's about who you know". It's a very frustrating truism, but there are ways to sidestep it. It just requires some creativity and willingness to play outside of the rules.
And of course, you never know, if your open source software gains traction, you might find it easier to start a company from there, since you'll have gained respect, notoriety, and social connections from that work.
If you want press, think about your story and make it a good one.
They definitely had connections, what with Eben Moglen of the EFF backing them, and them getting an article in the New York Times, that kind of thing doesn't happen without some kind of connections. A lot of that was probably just a result of being NYU students. I was working as a pizza delivery driver in Baltimore City (home of The Wire) when I started Appleseed, so I'm sure they have me one-upped in the social capital department.
At some point, a story may matter, but right now, I'm focusing on building the software out, and accomplishing what people are looking for. Appleseed has more features completed than they even have in their roadmap, it's way easier to install, it's extensible (a framework, not just an app), and I've got design documents and specs for the next year of development and beyond, including a mobile API, client-side apps, and distributed search (the holy grail of open social networking).
The great thing about open source is that the press can come later, I can take the time to focus on building the software first, and there isn't the same first-to-market requirement that startups have. I'm not necessarily trying to get users to sign up, I'm trying to get administrators to install it. And that requires a certain level of polish and feature-set.
Users don't have to care about Appleseed anymore than they care about what Joomla or Drupal is, so that's the advantage of being more mature than the competition.
Of course, at this point, I'm not really looking at Diaspora as my competition anyways, I'm looking towards Facebook.
Keep up the good work, I firmly believe that a framework for distributed social apps will be the future. I would love something like Google Latitude but without Google getting my location, and then I could choose who to update and in what manner...
Here's a test site for the latest code: