I agree with #2 and #5, but I've seen plenty of examples that violate all the others. The first millionaire I came two degrees of separation from (friend of a friend) got rich in the first dot-com bubble by essentially selling a list of links to Yahoo. He had compiled a small website of about 5 static HTML pages, that was just a list of links to "resources in [niche]". It got popular and got a lot of traffic, so Yahoo bought it for multiple millions of dollars. He was not a genius, not hugely passionate about it, and not particularly well networked; I mean, it was just a list of links on a website that he occasionally updated.
I'm always surprised when I hear people comment about facebook needing to a find a way to be profitable. It is like they are on cruise control and haven't bothered to check their assumptions.
It even applies to twitter. Twitter is likely making less than facebook, but is still likely profitable from search deals. Jokes about revenue don't really cut it.
Neither Facebook nor Twitter make the kind of money that's eventually expected of them. No one really knows if they ever will. No one doubts they can make the kind of money MySpace does, but can they ever make the kind of money Google does?
Also, Google didn't make the kind of money that Google does when it IPO'd. Companies' revenue numbers don't stay static forever. (Or if they do, the company is likely dying.)
Not the current $6b+ yearly profits, sure, but they were still hugely profitable. Google IPOd towards the end of 2004, a year in which they made $400m profit on $3.2b in revenue: http://investor.google.com/fin_data2004.html
(But I agree that you don't need $400m profit to IPO.)
As a former investment banker who has worked on numerous IPOs and follow-on offerings, there is only one thing you need to have a successful IPO:
Institutional buyers who want to buy the stock at a price acceptable to the company.
Back in 1999, they'd buy anything with .com in the name; nowadays, they want to see a pretty clear path to sustainable profitability. That doesn't mean you actually have to be wildly profitable; just that you're of a sufficient size and have implemented a clear business model. Facebook, LinkedIn, Zynga, and countless others could IPO tomorrow if they wanted. Twitter's issue isn't profitability; it's size. $25 million in revenue just isn't big enough to get out just yet.
