I was going to post on this article in today's WSJ, but Paul beat me to it. The WSJ doesn't call out the underlying problem, but points to a surface problem in today's web companies...at least, for the VCs that invest in them.
Namely, what happens when you invest in Company X to do Service/Product A, and it shifts to do Service/Product B? And that change conflicts with one of your other portfolio companies?:
hen venture capitalist Peter Rip put money into two young Internet companies, he thought he was buying into two entirely different businesses. Riya Inc. was a digital-photo-sharing site while Vast.com Inc. was an online classified-ad site that made money by generating leads for online advertisers.
