I think that with self-styled 'disruptive start-ups' profitability is seen as a goal quite a long way down the line.

The first stage is to become popular and recognised, get enough people using your service so that you 'own' the space and become essential, absorb a few smaller rivals, copycats or less aggressively/successfully marketed pioneers whose idea you in fact copied.

You do this (like a neighbourhood drug dealer) by offering enough product for free to get people hooked, then start charging for more and more of that content. The proportion of the freemium pie that is free gets smaller, while the premium, paid part, expands and becomes more expensive.

At that point you achieve profitability, and a stranglehold over your user base.

That remains the end goal - those investors expect a return on their cash eventually, so either they, or the greater fools they offload their equity to, have to believe the profits will come.

That's the theory, I think.