Perils of the web roll-up strategy

Here’s something that I suspect is happening at a number of bigcorps across the U.S.:

o Bigcorp decides that it wants to be in a whole bunch of Web2.0-ish consumer businesses.

o Bigcorp knows itself and decides, intelligently, that it doesn’t have the technical bench strength to build Web2.0-ish products in all these niches (or, truth be told, probably in even one of these niches).

o Bigcorp decides to build-rather-than-buy, and assembles war chest and M&A experts to begin hoovering up small innovative web startups. The synergies after integration are going to be fantabulous.

[This is the present time.]

o Bigcorp now has acquired 8 startups – the LAMP dating service, the Windows/IIS/Coldfusion travel site, the Ruby-on-Rails karaoke hot-or-not smackdown …

o Bigcorp decrees that all sites will be rewritten in Java, with Bigcorp single sign-on.

o Bigcorp begins to discover that integration requires almost as much technical bench strength as building from scratch.

o Bigcorp remains a balkanized set of web properties, with unified P&L and disjoint userbases.

[Believe it or not, in this post I am not talking trash about the particular bigcorp I work for (even though I talk trash about it in most of my other posts. 🙂 Although there have been successes (like Inktomi (IMHO), the acquisition that brought me in) and failures (which I won’t list), in general my bigcorp has done a good job with acquired companies and (some would even argue) has made acquisition-integration its forte (it has certainly had enough experience to get good at it).]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s