Before Matt Welch got hired at the famously defunct Digital Entertainment Network (DEN), he really thought that broadcasting custom-made, TV-like programs over the Web for Generation Y could work. After his first day on the job, however, he started to wonder. It wasn't just the parking lot filled with expensive cars, scores of new hires, bloated expense accounts, exaggerated six-figure salaries for staff and multimillion-dollar salaries for upper management, expensive production, and lavish studios built yet barely used. There was also the daily mass confusion over direction and content, constant management shuffles, and a sexual-harassment lawsuit against the company's co-founder. "On a broader level, it was clear that this was a company with one hell of an elevator pitch―revolutionary, original broadband entertainment and news for Generation Y―and a big stack of money, but no firm idea on how to get from A to B, let alone Z," Welch says. The company burned through $60 million and ended up in bankruptcy court. The spectacular failure caused the industry to ask how companies like DEN―pumped with loads of venture capital and top talent―could go so wrong.
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