Fail. If the community isn't very active, like on Bay, it will gather enough money for hosting in a couple of days.
Fail. Neither Gorbik nor <whoever was at Bay> looked around (see: incompetence).
It's just that time took its toll; Balamut moved on to real life (2008 or 2009), and an alternative appeared – the VT website. Therefore, Bay simply lost its niche, and the Bay community migrated to VT and HW.
If the VT website hadn't existed, Bay would have simply been passed on to someone else who knew how to manage websites, and the center of the TE/VT movement would still be there.
~ self-willed management ~ dependence on the website owner. An entire paragraph of wordiness, fail. If a small community has bad admins, it cannot become a large community. On the other hand, a large community has the ability to weed out bad admins, see the story with Hacker.
I hope it's not necessary to explain the advantages of a large international community?