It would, if it would work. 90% of the technology is already there, in the form of email, videoconferencing, shared docs, DVCS, etc. The problem is that the remaining 10% will probably mean the difference between the success or failure of your organization, and so until somebody can make brilliant chance creative ideas happen between people on different continents as easily as they happen over dinner, people will still have to colocate.
Yea, I've worked at plenty of SV startups. I hear a lot about this "chance brilliance" phenomenon as the reason for stuffing people into the same open space. Usually it just means lots of noise and interruptions where you can't concentrate on anything you are doing.
I can see this argument work when the team is like 4-5 people, but the moment you are at 15 and above, it all breaks.
