Most of the startups that are making money are the ones you've never heard of. This is a pointless exercise...however, here are some that I believe are making money that you may have heard of (happy to be corrected as I don't know for sure that they're all making money):
Although I have no idea if it's even classed as a 'startup'.
I wonder if some of the reason for the recent backlash against advertising supported models is that some techie types install adblock, and perhaps assume everyone does? In my measurements only 6% had adblock installed, and that's for a very techie early adopter crowd.
The truth is, there are millions of websites out there, making millions from advertising. It's so much more scalable than charging users.
If facebook+digg etc cut back spending, they'd be making millions in profit from advertising. I expect they have bigger plans though.
A ton of SaaS apps are, I think. Like Lighthouse, the 37signals apps, Freshbooks... SlideRocket probably will in the near(ish) future, if they're not already, etc. Then there's the micro ISVs like Balsamiq.
Plenty of startups are making money.
(Quick caveat: I haven't actually read the article yet... so it might be talking about a totally different kind of startup.)
All of the businesses you mention solve real problems that other business people are willing to pay to have solved.
The way I see it social sites need to climb a very steep peak before they have any chance of making money from ads - how many facebooks (which is still a long way from profitable) can the web ecosystem support? - If you do reach the top of that peak which only has room for 2-3 big players you have a chance of banking millions.
B2B services on the other hand are much safer. Business people understand that products and services cost money - and they are used to paying for the services they use.
My advice to developers looking for a product is to forget about the 1 in a million chance that they will develop the next great social app and cash out rich. By focusing on customers that are willing to pay, your venture has a much greater chance of becoming profitable and sustaining itself.
I think that, fundamentally, a lot of startup founders don't charge money because they lack the confidence to ask people for it. Which is crazy, because the people who would be your customers spend tens of thousands of dollars a year on things they care about less than your software.
I know I was TERRIFIED of charging money 2.5 years ago. What if it breaks?! What if there is a bug?! What if no one cares about what I'm doing?! But charging money is the BEST MEDICINE for this fear because people will pay you money. And after that happens a few thousand times, you start to lose the sense of "zomg, I am totally unworthy of being compensated for improving people's lives, perhaps I could put out a tip jar in a suitably discrete location and hope some money falls into it."
Dude, not all startups are in the software business. I know a few startups in the hardware business which are growing spectacularly. Contrary to popular belief, not every startup wants to be the "next Facebook" ;-)
