• Fortune, Monday, August 11, 2008 11:01 AM

As talk in Silicon Valley turns to Facebook's diminishing valuation and suggestions that Google may one day be forced to write off its $1.65 billion purchase of YouTube, Fortune writer Adam Lashinsky notes a wave of déjà vu washing over him as he sits down to interview Twitter co-founder Jack Dorsey. Dorsey is another young full-of-swagger entrepreneur whose company has managed to raise millions in VC funding. Like Facebook and YouTube before it, Dorsey's Twitter is enjoying Next Big Thing status in the media. It also has no revenue model to speak of.

"We'll monetize when the time is right," Dorsey said, adding: "We raised enough money [$22 million] to get to that point through experimentation." Said Lashinsky: "Only in the tech business are companies born with neither a clear reason for being nor a clue as to how they'll produce profits." Indeed, even as the U.S. financial system implodes, Lashinsky notes that the Bay Area startup biz is alive and kicking.

Is Twitter a success in the eyes of VCs? Well, according to comScore, the microblogging service had 3 million monthly users in June, triple what it had in November of last year. And these figures are probably low, because they don't take into account mobile activity--a huge part of Twitter's service. But VCs like Fred Wilson, a partner at Union Square Ventures, see tremendous opportunity in being "at the forefront of the real-time Web." He says, "Blogs were the beginning of that, a progression from the static Web. Now with Twitter and other services there is this notion of smaller and ever more rapid bursts of information."

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