I happened upon a Slashdot submission recently that smacked of advertising. The gent who submitted the story said:
K-Man asks: "A while ago, I spent a few months at a dying web startup, and, as I looked at the costs of running such an operation, I realized that a tremendous synergy could be achieved by consolidating multiple dying web startups into one umbrella organization. Many functions - bankruptcy filing, creditor evasion, even hiring contractors for fictitious compensation - could be combined under one roof. While the "web incubator" was invented in the 90's, why has no one adopted a similar model for the 00's?"
He seemed like a guy who was trying to pitch an idea, and get something started in a not-so-subtle way. Slashdot has been essentially taking ads recently, so the post was not surprising. I could tell from his idea that he had never done anything technical or successful. I could tell that he mostly "created" things, or was "an enabler". He used the word "synergy" seriously. I'm postive that he's used the word "paradigm" in conversation and felt he was being earnest. Maybe he's a solutioneer? I have no idea. But his ideas are wooly thinking electronically personified. I felt as though I had to say something. And I thought my response was pretty good, and I thought other people might like to see it too. Here it is...
A while ago, I spent a few months at a dying web startup, and, as I looked at the costs of running such an operation, I realized that a tremendous synergy could be achieved by consolidating multiple dying web startups into one umbrella organization.
I've worked for two failed start-ups since 1994, both of which did things relating to the Internet and hosting. In that time, I've also worked for a Fortune 500 company and a state government. I've known many people who have worked for various organizations, failed or otherwise. I've seen quite a range of workplaces. Your idea will not work.
First off, you assume safety in numbers. This is not the case. If you were CEO of a struggling dotcom, barely keeping afloat, would you like a pets.com to merge with you? A company that tries to make a profit shipping products which have margins so slim that double bagging erases profit? Would that help you or hurt you? There is no economy of scale in failed ideas.
Secondly, I've seen and had to deal with what happens when you try to bring different companies' technologies together under one roof. You want to set something up where everyone can use the same database servers, right? One company uses Windows 2000, one uses NT, one uses HP-UX, one uses Linux. You want them to use to the same web server? One uses IIS, one uses Websphere, one Apache, and so on and so on. You would need to have technical staff able to setup and administer these one-offs. In fact, you'd have a whole company with one-offs. Everything would be an emergency (I've seen this in action; it's not pretty), everything would be custom fit, nothing can be re-used. There's a reason Henry Ford became rich by employing standardized parts on an assembly line and his competitors who built each unit from scratch, by hand, have been completely forgotten. You might be able to get away with using the same physical Net connection(s) and rack hardware/floorspace, but that is about it.
The third reason why your idea won't work involves personalities. When a company starts dying, people leave (and get laid off) in pretty well defined stages. I can't quantify those stages, but I can say they exist as fact since I've seen and experienced them first- and second-hand many times.
The first to leave are the flighty ones that are always looking for greener pastures even in good times. These people never drank your koolaid and felt little loyalty. You were a paycheck and they'd have likely left even if your comapny hadn't tanked. The second group to leave are ones that would like to stick it out, but since they have families and such, they feel the need to protect their personal future. "No hard feelings, but I can't take IOUs two pay periods in a row..." Good, solid workers who make up the bulk of the company (and will might even remember it fondly). The third group to leave are those who thought they'd get rich off the company, or move up in the company once it got real big. These are the ones that take loans against their homes and advances on their credit cards for the company's sake. They bought into the company's dream, and had impressive titles to match their impressive hopes. The 25 year-old CTOs and VPs you heard a lot about a couple years back were in this group (but were not the sole members by any means).
Who does that leave? Founders, initial investors, and those that came in very early (and probably worked very hard early on). This is upper management, usually, and might even include one or two technical people. By and large, however, these are the folks who have made business plans and sold investors on ideas by using fanciful, meaningless graphs printed on glossy paper, not technical merits. They knew enough buzzwords to get them in the door, or fake technical acumen. They have insane amounts of stock options, and were all hoping to cash in. Depending on their proclivities they will either do anything to save "The Company" (moral, ethical or otherwise) or they will try to make things right by cutting a few corners or trying new things (moral, ethical or otherwise). These are the ones that wanted to get rich off the backs of others. It was their turn to make it big, and their "Vision" which was to succeed and make them rich and powerful. Their baby was going to grow up into Something Big.
Their baby has genetic defects, however, and is dying slowly of a wasting disease. This makes them angry, bitter, spiteful parents. They wanted their baby to be in the World Series, or win a Nobel Prize, but instead they get to watch it take the little bus to school all its short life. They gave birth to the runt of the litter. Their simple-minded and feeble offspring cannot survive on its own. It's not fair. They turn evil. It was not their idea that failed. It was not their mis-management that failed. It was 9/11, or market conditions, or a competitor's dirty tricks, or that one supplier who wouldn't extend them just a little more credit which they needed in order to "take it to the next level". It was something or someone else which failed, not them. Not their ideas or their personalities or the mishandling of the company, no.
These are the last people around when a company dies. They are not nice or happy people. They don't have good personality traits in the best of times and at the worst or times can turn on those around them like a rabid Rottweiler. These are people who will backstab and then fire their own family members if it means even getting one more chance at a small round of funding (I've personally seen this happen -- twice).
So your idea is that these people all get together, with the goals of making their ideas work by becoming a unit. By combining their strengths, they can overcome the redundancies that killed their businesses. They can all get together and learn from each other's mistakes. They can not repeat history together, and avoid the pitfalls others have encountered. Is that about right? It will never work.
There will be several people who feel they should run the show, decide direction, forge new alliances, etc. There will be several people who steal the ideas of other members of the co-op and use them to try to get rich. There will be people who see the successes of another unit and decide to move into their territory. There will be people who try to headhunt from within other units. There will be people who use the whole co-op to claim their unit is larger than it really is, or that it does more than it really does. Once one unit gets a taste of success, it'll do everything it can to shrug off the other members. There will be those who will lie, cheat and steal to get ahead. Business is, after all, business.
You may say that I have a cyincal view of the world, and I might indeed, but what I say is true. Ask someone who has been in a commune what they think of altruistic ideals. You'll find that nearly all of them discovered that the only person who really thought the commune was a good idea what the leader/founder of the commune. I know what you propose is completely different from a commune, but the point remains that there will always be people who seek to gain at the expense of others no matter what it takes. Getting these types together will not help any of them (or you), collectively or separately.