The Problem With Businesses That Have A Clear Revenue Model

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Joe Essenfeld is the founder of social recruiting startup, Jibe. His business and revenue models are clear.  Jibe makes money by posting job listings for companies; it charges them $5-$10 for every application received. 

Jibe launched last September and is on track to make $1MM in revenue in 2011.

“That’s great,” we told him. “Investors love to see startups with instant cash flow.”

Essenfeld’s response was surprising. A model with instant cash flow, he says, can actually be a hindrance.

‘When you start a company with an clear revenue model, investors begin asking questions like, When do you think you’ll make X amount?” he says.  “Then you’re really just selling them on the financials, rather than the dream for the business.”

Money can easily become the only concern, and that makes building a vision and growing a really great business more difficult.

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