A long time ago in a galaxy far away, my cousin Janet was visiting me in Houston. During her stay, we spent a lot of time with a friend of mine (who, incidentally, is one of the characters in my long forgotten and half written novel that became the Mr. Happy stories). Anyway, one night my friend was trying to convince Janet to go home with him. He was getting nowhere and finally she blurted out “Look, I just met you,” to which my friend responded without missing a beat, “Oh, that time thing again.”
That’s sort of the way a lot of these Web 2.0 companies seem to approach their business plans and the obvious, at least to some of us, need to actually turn their nifty science projects into some cash. I have talked until I’m blue in the face about the faulty logic inherent in the ad dollars as a sole revenue source approach. Yet every day we read about another social bookmarking service and another social networking service who plan to take over the world, one ad click at a time.
The lawyers are about the do some damage to those who believe they can toss up a system, let the inmates run wild and sit back and get rich and famous.
Joe over at Techdirt posts today about a new MySpace angle designed to disguise the fact that it’s just more advertising and a new Facebook angle designed to disguise more ad sales as some sort of a joint venture by giving the advertiser some equity.
If I were a VC, I would ask only one question to every startup that I came across:
What is your revenue model, exclusive of selling ads and getting bought by Yahoo.
If I got an unsatisfactory answer, I would thank them and tell them I’m not interested.
It’s that money thing again. In the business world, you simply have to make it. Otherwise, you’re not a business, you’re a hobby.
On a related note, I still want to know, exactly, who clicks on online ads. I have never once (never, not even one time) clicked on an ad on a web site I didn’t own. If you regularly click on online ads, please leave a comment and tell me about it. I’ll devote an entire post or two to this if I get enough takers.