A somewhat common concept that has gripped the tech startup scene in recent years is the idea that you build a startup without any clear idea how you’re going to make money from it, then presuming you’re not acquired in the meantime you eventually work out how to monetize it after you’ve built up the user base.

It’s an insane model that, while may rarely work for some companies, goes against hundreds of years of capitalism where traditionally when you start a business you start that business with at least some solid idea of how you’re going to make money from it; sure, every business takes time to be established, but sane people would never start a business without having the how-to-make-money endgame in close sight.

Sanity, though, has nothing to do with many tech startups these days and there’s a new entry to the list: Everything.me (DoAT Media Ltd.), an Israeli startup that closed its doors late last week.

Founded in 2010 the company raised $35.3 million over three rounds from investors including Draper Fisher Jurvetson (DFJ), Horizons Ventures, SingTel Innov8., and Telefonica Ventures for a singular product, a launcher for Android devices that adds contextual capabilities to mobile phones.

According to Tech.eu the app itself was successful with over 15 million installs, and according to the product page for the app the company also received the prestigious “Google Top Developer” bag.

On paper it sounds great, but for its entire existence in lacked one vital ingredient: a business model.

At not one stage during its entire time did the company work out a way to make money off their installs.

Thirty-six employees are now without jobs, although they weren’t apparently the first to go, with the company having laid off 20 workers earlier this year in what Globes reported was the first sign that the company may be in trouble.

The only very slightly bright hope for investors is that there is said to be a small amount still in the bank that will be returned, but small is the important word, with Everything.me still have burned through the vast majority of funds raised without every working out how to make money even once.

Morons

Primarily the blame for this debacle has to lie with the founders of the company.

It’s one thing to have a company fail due to the product not being popular, and indeed failure is often a badge of honor in Silicon Valley, a learning experience or step along the way.

But failing when you’ve got a successful product that you never ever gave serious thought as to how you’re going to make money out of it is a completely different matter… well, it should be, but in this market no one will probably care.

The venture capitalists are not without some blame either, given they funded the company but never once over three rounds thought to at first even ask if Everything.me had any idea how to make money, then later pushed them into doing so; there’s so much money out there now that venture capitalists are fighting for the chance to get into these companies without checking, where as 10 or more years ago one of the first questions asked would have always been “what’s the business plan,” at least it was when I was a co-founder of a venture capital-backed online publishing company.

Everything.me may retrieve something out of the closure though as someone with half a brain, versus the morons currently running it may come in and acquire the assets (the app is still popular) and make a go of it.

Image credit: 9918311@N02/Flickr/CC by 2.0