Only a silly little web service that asks What are you doing? can prove to be an unforeseeable hit that has taken the early adopter crowd by storm and is now finding its way through; slowly but surely, to mainstream Internet users. Through all the ups and downs of the service experienced by its users through the year two things have remained constant with Twitter. Once you start using it it almost becomes second nature to be telling the world and your friends what you are doing, reading and thinking. Along with that is the obvious fact that Twitter is a business without a business model.

It is the second item that has taken up much of the post holiday discussion around the tech blogosphere; which is a great way to tell that basically nothing else of any substance is going on, with the post by Allen Stern being the apparent ignition point. Shortly after it got posted it was answered in quick succession by Dave Winer and Jason Calacanis. It was the post by Dave that got me started earlier but it was Jason’s post that puzzled me the most.

Besides the fact that he thinks that the Valley is the only place to be in order to really understand how to run a successful web startup he thinks that having a business model for any web startup is out of date. Instead of revenue being the key to startup success he believes that critical mass of users trumps money in the bank; or at least a reasonable facsimile of being able to make money from day one. As he puts it:

That’s what I learned at AOL: Once you have critical mass you can’t help but make a fortune. An absolute idiot with 10-20M users can make a ton of money. So, get to tens of millions of users and forget about money.

I guess that explains why either he is no longer at AOL or why AOL is a company in search of a sustainable revenue stream even with its millions of users. the fact is web 2.0 startup only owe their existence to the cash glut of the VCs in the Valley rather than the hard nose business sense of the rest of the real world. So while Jason extols the virtues of mass over sensibility to Twitter’s Evan Williams Mathew Ingram suggests that Evan take the advice with a grain of salt

If I were Ev Williams, I would pay a little less attention to Jason, and a little more attention to Don. In other words, focus at least part of your energy on building a sustainable revenue model — or even the seeds of one — now. Don’t put it aside and hope that it will magically appear later. And don’t listen to your Uncle Jason when he tells you that you’re a “player” now, and so you don’t need a business model.

With that all said an done though Jason totally contradicts himself at the end of his post by saying

* Note: if you’re not a player like Ev, and you don’t have unlimited access to capital do not take this advice and focus on building revenue streams.

Jeez Jason - which is it now? Would you please make up your mind.

Listening to: Runestone - Stonehenge - Ancient Stones

Conversation Tags: Twitter, web 2.0, venture capital, business model