There's the amusing idea that you can invest millions of dollars in a Web 2.0 start-up with no revenues because if it takes off you'll find some way to make money. In reality, I expect the fact that Google lucked into a way of printing money is more likely to be a once-a-decade event, and the future for most Web 2.0 start-ups is to make money only by getting taken over (Flickr, YouTube etc). Until then, these companies are "living on borrowed money," as Valleywag puts it.
The topic is being much discussed in the blogosphere now because of an article in the Financial Times: Web 2.0 fails to produce cash, which argues:
The shortage of revenue among social networks, blogs and other "social media" sites that put user-generated content and communications at their core has persisted despite more than four years of experimentation aimed at turning such sites into money-makers.
Some are still getting money in spite of belt-tightening in the downturn. The FT says:
In one sign of the continued hopes for start-ups that have yet to alight on a solid business model, several financiers expressed support for the private fundraising being undertaken by Twitter, one of Silicon Valley's most talked-about companies. The "micro-blogging" service, whose users post messages no more than 140 characters long, has yet to find a way to make money, but its early adoption by a group of enthusiastic users is seen as a sign that it will eventually be successful.
Of course, Twitter (formerly Twittr) might get bought by Google or Yahoo, in which case, problem solved.
Indeed, probably two problems solved: it might work more of the time.
