Why waste time on frivolities like a "business model" when you can dupe investors out of $40M and spend it on a lavish office and developing a lame photo-sharing app that could have been done with $100K?
If anything makes me think we're in a bubble, it's companies like Color and the people who pump money into them.
But... with that budget how could possible afford to buy both color.com and colour.com! Withour colour.com dozens of people around in countries using British English won't be able to be confused by your app.
At least people could understand what pets.com was trying to do. Color was just some abstract idea that made sense because...color.com is a cool domain?
If anything makes me think we're in a bubble, it's companies like Color and the people who pump money into them.