I think too many people have fallen into the trap of thinking "If we build it, they will come (with money)."

This simply isn't the case. You must build something valuable, and capitalize on the value. Unfortunately, traffic isn't quite as valuable anymore.

Think about it, there are a lot more startups now, each with their own eyeballs. The supply of eyeballs has gone way up, which in turn means that with a static demand the value of the traffic has gone down.

Many startups begin with the thinking "We'll build something a lot of people like, and sell advertising from all of this traffic we'll receive." As I've just explained, the value of traffic is much lower with the increased supply. Startups capitalizing on traffic are entering a very competitive market.

Sure, a few companies will gain a massive amount of traffic and do very well (think digg, reddit, etc...), but the majority will need to find another way to be profitable.