Underpants Gnomes Business Model

Is your company built on a business model similar to that of the Underpants Gnomes who introduced their innovative business model during the 2nd season of South Park?

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I worked for a couple (Rocketpipe, Petplace) of start-ups that were built on such a model. We were collecting users (we called it “building community) instead of underpants and were hoping to figure out how we could parlay that into profit. Yet we had NO IDEA what Phase 2 would entail. We had an idea and figured eventually it would lead to big profits so why bother bridging the idea to profit with a plan of any kind?

One would assume this type of business plan would have been shelved after the first internet bubble, but that doesn’t appear to be the case with hundreds of startups springing to life on an idea and a prayer. It’s that pesky phase 2 that’s the killer.

What companies come to mind when you think of this business model? Technorati? Twitter? Mahalo?

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