Pandora has been bent over by content owners. They're not powerful enough to dictate reasonable terms.
Groupon is waging all out war to dominate. They're hoping when the dust settles they'll own one of the richest markets in the world.
Supposing that the target is to attain the highest valuation, the right idea is to spend as much money as possible to show strong growth numbers. Then, when you hit the peak growth rate, sell it to the public!
When a more attractive professional network or daily discount site emerges, the value may dip. That being said, if the target is to make the most money, the easiest way is to ride the bubble
Many startups focus on getting acquired and moving on the next "big thing" rather than finding a steady revenue stream.
The problem with many web 2.0 companies is that they don't have a clear revenue stream.