They only had funding for about a year or so. And with a problem of the scale they were tackling there was simply no way it would've been successful. Everyone could see what was going to happen a mile away. They'd work on some flimsy FB clone, nobody would use it, and they'd move onto real jobs or start something else.
Yeah, this needs to be made entirely clear. App.net is a change in degree, trying to make another twitter, but better. Diaspora and identi.ca are changes in kind, trying to make something different to replace fb/twitter.
Regardless of how different Diaspora is from Facebook, they still tried to do the "social network" better. I'm pretty sure every startup wants to make stuff less suck.
By the way I remember last time when Diaspora first surfaced as the real alternative of Facebook and I was kinda excited with it. For the first time I can customized everything I want from my social network. But then the project run out of any traction and suddenly just disappeared. So I guess, while we can dream big and aim big, the big stuff would come up eventually and not just boom in the first place (as Google comes out from home garage and Facebook comes out from college dorm). It's a big disturbing how App.net just really booming in its first release but I wish them the best and hope they will succeed.
makr actually came out of D... we started by trying some completely different features, but figured it was best for both to try them as separate things. Lots of people like D the way it is, so we spun it out into it's own thing.
Lot's of people feel that D* is unpolished and lacks advertised features like moving from pod to pod, real solid federation and so on. D* developers said they didn't abandon those, but they surely look distracted with too much UI stuff in Mark.