Tongue-in-cheek: In the image below I propose a simple (simplistic) business model health check for web2.0 business models. While I find the web2.0 movement exciting and I personally use a lot of the useful online tools coming out of it, I sometimes really wonder how so many extremely similar services can proliferate. I'm simply amazed when I have a look at Aref JDey's web2.0 services mind map or this looooong list of web2.0 products and services (they're claiming it's a complete list of web2.0 products and services...). Don't you wonder where the differentiator and revenue model is for all these tools?
How many of these web2.0 tools would pass the "how", "what", "who", "how much" test? If I'd want to launch a web2.0 tool I'd ask myself some extremely basic questions before spending a minute on such a project...
"what": Does my tool offer real value for potential users? Whate need does it address? Is it unique? Who else offers similar value? What's the (sustainable) differentiator?
"who": Who do I want to offer value to? Will I actually be able to reach these people? If I reach them, how can I hook them?
"how": Once I really know what I want to offer and to whom I will spend some serious thinking on the "how". What infrastructure will I need? How many people will I have to hire ot assure the activities of running my services? With which partners and through which third party sources (e.g. mashups etc.) can I leverage my own service?
"how much": Finally, after understanding the above, I would make the simple calculation of "expected revenues - expected cost burden" to assess the likelihood of every achieving a profit...
I'm not quite sure how many of these web2.0 hot groups have ever really done such a simple business model check. I don't entirely understand how/why these (quite smart) venture capital guys through money after some "me too" services. However, I admire this entrepreneurial and innovative drive. I like the idea of playing the "google lotto" of trying to hit an unexpected jackpot by combining smart software engineering with an unexpected revenue windfall (targeted micro-advertising in the case of google.com). All you risk is failing... and when you fail you (usually) learn :-)