Everyone needs to grow up some time. And it’s high time that some web companies grow up and begin to embrace the fundamentals of business. If they don’t they will be gone. Their many URLs will find their way to the junkyard along with the thousands that visited the old 404 in the sky after the first dot-com (or was that dot-bomb?) bust.

The first step to getting help is to admit that a problem exists. Listen to CEOs and venture capitalists today and you’ll hear the same stubborn tones that you heard in the pre-collapse days of web 1.0 busts like WebVan and Kozmo.com. 

Fred Wilson dishes spin about Twitter, ““It’s like the stupidest question in the world: How’s Twitter going to make money?,” said Union Square Ventures’ Fred Wilson, another investor. “It’s like ‘How was Google going to make money?’” Comparing Twitter to Google, even early days Google, may be the stupidest statement in the world.

Jason Calacanis professes on his mailing list, “”We can now operate past 2012 even if we never make any advertising revenue, and truth be told, building advertising-based companies is my specialty…” All of a sudden past performance is a guarantee of future results?

The CEO of Break.com walks the tightrope when he tells CNET, “”Essentially, we are profitable…” after announcing layoffs. Not to web company CEOs everywhere. There’s no “essentially” in the profitable equation. You either generate more revenue than you spend or you don’t.

It’s time for a reality check folks. Web businesses need to find other ways to earn revenue besides advertising, loans and venture capital. Over the past several years many companies heralded their traffic as evidence of success. Traffic to a site may be worth something to advertisers but as times get tougher display ads are worth less and less every day. These days advertisers will value converted customers much higher than they will clicks from a particular site. So in order for a web business to have a successful advertising based business model they need to have tons of traffic and very low overhead. Rarely do revenue poor web startups meet both of those criteria.

I don’t know that the established web properties who’ve already spent millions in venture capital money can be saved. People at these companies get accustomed to having plenty of money available and when they start cutting staff and other budget items those who are left end up pretty demoralized. That demoralization usually ends up affecting the business in a way that dooms prospects for the future.

A new generation of web startups needs to embrace the following fundamentals if they want to have a chance at success during any market conditions.

• Start very small. Most web based business ideas can benefit from a pilot period where the business is rolled out quietly and with limited features. Such an approach provides runway for a company to assess the reaction of the marketplace and make adjustments before building a much larger product.
• Spend very little money to start. There’s an inverse relationship between the amount of capital available and the amount of creativity in just about any business. If you start with $5,000 or less you will challenge yourself to find creative solutions that you would otherwise pay big money to discover. 
• Grow the business organically. Start by reaching out to friends and family. Then reach out to personal contacts that you’ve made online. Use blogs, podcasts, social networks, Flickr and YouTube to build a legion of loyal followers. Your other option is to pay a public relations company to help get you attention in the press and the mainstream blogosphere. The fact is that if your idea is a good one that’s well executed you can probably get the same kind of attention doing it for yourself.
• Give the business time to grow. Patience is a virtue even in web startups. If you don’t have patience then perhaps you should join a company that’s already doing well. Of course, the rewards will be much less gratifying and you’ll have less control over your own destiny.
• Have something to sell on day one. I’m all for free versions of a service. Giving away free samples is a technique as old as the idea of selling. Your business will be much more attractive to potential investors if you have something you can charge money for. Your ability to sell whatever that something is will tell you much about either the value of the product or your selling abilities. 
• Profit is a good thing. A million web companies have tried the approach of taking a loss on every sale while trying to make it up via volume. Hint: When you take a loss on every sale a larger volume of sales pushes the company closer to extinction.