I'm not proposing that VCs or some company act as the acquirer. I'm proposing that these companies merge their teams and traffic and resources 'equitably' and keep working toward the goal but with greater momentum. Kind of a 'hackers co-op'.
Startups do too. The founders started their company precisely because they didn't want their product to be averaged together with a bunch of others.
I have never heard that as a reason someone started a company. People start companies because they want to have control and impact and work on interesting things and have more ownership.
I just wonder if it might be interesting to combine a team that's working on online collaboration, for instance, with another that's working on video sharing and a third that is building a community of some sort. Think 37Signals but from the bottom up.
That's true. If these are the founders' main goals, they'll be less averse to raising the acquisition price or working in bigger teams. They don't even need to be a startup -- they could also be happy as an autonomous research project under the wing of a big company.
I was talking about founders hoping to get rich by selling their companies after a few years. In this case, they want the company to be small, inexpensive, and have few strings attached, to attract as many acquirers as possible.
Occasionally, two startups might be a perfect match for each other -- their combined product is far greater than the sum of the parts. In these cases, it makes sense to merge. It sounds like this is what you mean.
The goal is to get acquired and have a relatively big payday. But I think it's possible that a group of small players could merge and grow big enough to go public and compete with the big players. Of course the biggest challenge would be deciding who was 'in charge'.
If your company has 200,000 users and you can join forces with a few other similarly sized projects the new company would have more thinking and more manpower and resources and could benefit from some overlap in function and might be able to grow beyond some theshold that increases valuation multiples because of the viability of the company as an independent entity, and maybe even profitability. I think those things could very well outweigh the ease of fit of a feature. I'm sure it would depend on the buyers but it just might open doors to buyers that wouldn't be interested otherwise.
Hmm, that might be one of the key skills of VCs..