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Andrew 'Flip' Filipowski founder, Chairman and CEOindustry = Internet Incubator, enterprise software
Like many other "dot-com" companies, Divine had many tales of excess. The board of directors once had over forty members and included luminaries such as NBA star Michael Jordan. Divine was one of the last Internet companies of this era to go public. Their much-ballyhooed IPO in July, 2000 landed with a resounding thud and never closed more than a few percent above the initial offering price.
When the Internet stock bubble burst, Divine switched business models. Its management decided to become an enterprise software company offering an extensive array of products and services. Now dropping the InterVentures and calling itself just Divine, it took the most viable of its incubator businesses and purchased other companies with stock values deflated by the collapse in the stock market. Many of these businesses were unprofitable, leading to cash-flow problems.
The whole premise of the original Divine interVentures was a concept known as an "Internet Zaibatsu". The core concept was that the normal departments of a corporation such as: HR (Talent Divine), Marketing (Buzz Divine), Web development (Xqsite), Sales (Brandango), and other operational areas would become their own companies. These companies were called the greenfield companies.
These companies would then sell their services to the other greenfield companies, as well as to external companies that were funded by Divine interVentures, at a discounted rate from what they could receive if they outsourced those functions to external vendors. The whole premise was based on a Japanese business model called a keiretsu. Divine interVentures, which was the center of the circle, was the parent corporation and was essentially acting as a venture capital company funding both the greenfield companies, as well as the external companies that they invested in.
One of the companies that was acquired by Divine was RoweCom of Massachusetts, a library periodical subscription business. In late 2002, RoweCom was having trouble fulfilling its commitments to its paid subscribers. Divine attempted to sell the RoweCom subsidiary to competitors. When these deals fell through, RoweCom was forced into Chapter 11 bankruptcy. RoweCom immediately filed suit against Divine, alleging that Divine had improperly diverted RoweCom's operating cash to other parts of its struggling business. Divine subsequently filed for Chapter 11 on February 25, 2003. In April 2003, Divine's assets were sold at auction to Saratoga Partners, Golden Gate Private Equity, Little Bear Investment, and Outtask, for a total of $54 million.
- Hane, Paula J. (February 3, 2003). "RoweCom Files for Bankruptcy, Then Sues Divine for Fraud". Information Today. Retrieved April 30, 2012.
- Hane, Paula J. (February 27, 2003). "divine Seeks Bankruptcy Protection". Information Today. Retrieved April 30, 2012.
- Hane, Paula (June 2003). "The Latest on Google, Market Research, and More". Information Today. Retrieved April 30, 2012.