VCs may be frustrated, but they should be happy about having to wait longer. Going public requires a lot of time and focus and energy on things that don’t involve growing a business. And companies that wait longer to go public tend to perform much better once they do. The market is much more finicky, but that means the folks who are planning for an IPO in 2008 have rock-solid finances. The balance sheets are stronger this year than last year because they have to be. Public investors just don’t have the appetite for risk. They’re saying: don’t take these off the grill until they’re well done.

So how's a startup to know it's not still pink in the middle?

It’s double-digit revenue growth. You need to be profitable. You need to be able to convince investors that you’re at the beginning of a very large opportunity, and that whatever advantage you have is sustainable. I don’t think it’s a matter of having $100 million in revenue. That could be the case with many companies, but you also have to show that your business can grow meaningfully in the next couple of years.

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I think it’ll be fascinating because like Google, they like to do things their own way. And that’s been tremendously successful so far. I think that clearly Facebook’s business model needs to be well-proven before anything happens, and that they’ve been smart to put off the process until they put all the pieces into place. Also, though it’s terrific to have Microsoft as an investor, Facebook’s valuation may or may not turn out to be right valuation for public equity investors. But I do think that what they’ve built is tremendous and enduring and that they’ll find a way to turn theirs into a steadily growing, highly profitable business.