Salesforce.com revives a dot-com idea: the incubator

Back in the 1990s, Internet incubators were ultra cool and some of the highfliers were Idealab and CMGI (Nasdaq: CMGI). An incubator was usually in a stylish building and housed a variety of startups. The hope was that they would become tomorrow's IPOs and make everyone rich.

Of course, things didn't turn out so well and the concept got blacklisted.

Yet, incubators have merit. And can be a great way to help build new companies.

According to a recent piece in BusinessWeek, there are signs that incubators are making a comeback. One of the biggest proponents of the concept is Salesforce.com (NYSE: CRM).

The company has built a highly successful business by selling its customer relationship management (CRM) offerings using the Internet. However, to continue the heady growth, the company needs to expand its ecosystem.

So far, the Salesforce.com incubator has 32 companies – and I suspect the number will grow rapidly.

A key benefit of an incubator is that a startup does not have to spend too much time dealing with the headaches of administrative services, such as HR, legal, Internet infrastructure, and so on. These services are part of the package.

With the Salesforce.com approach, a company gets something much more important. That is, it has access to get advice from a highly successful business. That's something that can be priceless.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.