This article makes a huge mistake that many entrepreneurs also fall victim to:

You and your friends are not the Internet.

There've been studies done on who clicks on ads (one was even linked here). It's midwestern housewives, the same people who watch daytime TV and enter magazine sweepstakes. I don't know a single person who watches Jerry Springer, enters sweepstakes, or uses MySpace over FaceBook, yet those people obviously exist. They're worth billions of dollars.

For that matter, my friends usually don't pay attention to TV or print ads either. They Tivo past the commercials or get their TV episodes off BitTorrent. They skim past the advertisements in magazines. They only look at the newspaper classifieds if they're actively looking to buy something.

A bigger problem for entrepreneurs is that roughly 99% of startups seem to target the same 10% of the market - the part that doesn't click on ads. If your users come from TechCrunch or Digg or news.YC, it's a pretty good bet that they've learned how to filter out ads. Most of the big consumer-web success stories - MySpace, PlentyOfFish, and lots that we don't hear about because they're not plugged into the Silicon Valley scene - succeed because they target a demographic that most of us can't identify with.