Answer: When you are a pre-revenue company like Twitter.

Twitter is much maligned for not having a forseable way of generating revenue.  It’s easy to mistake this for a lack of effort or accumen on the part of the team.  In fact, I would argue that the apparent lack of a business model and lack of emphasis on revenues is not a short-coming but a strategic effort on the part of twitter’s investors and founders.  The reason being, it is a hell of a lot easier to justify an inflated valuation for a startup based on the amount of capital invested and not on revenues.

Twitter could flip the switch on one of many (but meek) revenue streams tomorrow, but the second that they do, their valuation would likely plummit.  As long as they still have VC’s pouring in cash, they can go without revenue’s indefinetly and will have a strong disensentive to make money.

The problem with this strategy is that they are now solely reliant on a big exit, and in this environment they might have to wait a very long time.