I don't see the problem. They apparently believe in a low margin, high volume play with support being a volume driver. They might be right or wrong, but I wouldn't want it to be illegal as a business model. Investors and companies have to be free to lose money or else we've just got a centrally planned economy where every business has to offer the same product at the same price.
The problem is society is witnessing races between Tortoises and Hares, where the Hares are doped with venture backing.
A healthy society progresses slowly like a tortoise, encountering actual tradeoffs that aren't masked by mountains of cash only to ensure cancerous returns for already rich people at the expense of skilled business owners who are actually designing their businesses to handle endgame stressors.
In any healthy competition you have rules around the gear you can use, how many people are allowed in your pit crew, what dimensions your fencing saber can be etc. so that rich people cant buy their way to success to cover up lackluster execution and skill.
I also think this kind of VC puts some of the companies that take it to bad spots. Not all markets can support it. Look at Substack. They came in and bought out the newsletter/indie media whatever market. Unfortunately it’s not the kind of market that’s likely to make that investment back.
The problem is the stupidity of those who believe unprofitable businesses can work in the long term and be sold for lots of money, and the resulting self-fulfilling prophecy, because those businesses indeed can and DO get sold for lots of money.
And the aura of money extends to customers and blinds their judgment. Few people look at long-term sustainability when choosing a service/product. It's usually about how polished it is, how well it works today, how shiny it looks, how "big" the company behind is. Nobody thinks about whether the business will exist in two years. And few people consider that if they are a customer of a VC-funded business, there is literally no outcome that is good for them: either the company goes bankrupt, or it gets acqui-hired, or it gets strategically-acquired, or (best case but very rare) does an IPO. Even in the case of an IPO the customers generally lose, as the product gets bloated with new features they do not want or need (see Dropbox).
When you run a B2B SaaS, you realize all that with painful clarity.
