You need a revenue model people!

After a weekend that involved too much alcohol and not enough iPrioritize, I sat down late last night to read the August 2006 issue of Inc. Magazine (it's a solid mag for YE's but the only reason I get it is because it comes free with my Fast Company subscription).

On page 30 there's an article entitled "Mash-up mania" that discusses the recent trend of venture capital that has been poured into "mash-up sites" (sites that combine easy to license tools with publicly available data sources). A great example is one of my favorite real estate sites, Zillow, that uses mapping software (like the free Google Earth) to present in-depth real estate information. The article states that they've raised $32 million from investors.

That's awesome...right? Well, it would be if they had a revenue model. According to the article, which talks about both Zillow and Trulia,

Both sites are well designed and attract hundreds of thousands of visitors per month, but it's not entirely clear how they intend to make money. Google prevents companies that use its technology from charging a subscription fee, which would seem to leave advertising as the only likely revenue stream for mash-ups that rely on its technology.

Now, I haven't seen Zillow's biz plan. Hopefully they do have a revenue plan that can get their investors their $32 million back plus a bunch more, but doesn't it bother anyone that a company can potentially get $32 million without a clear revenue plan? Isn't it business 101 that you need to actually MAKE MONEY to be considered a business? Crazy me, I always thought that if you approached an investor with an idea that didn't result in money being made that they'd throw your biz plan in the garbage and never talk to you again. I guess I was wrong...