As long as the founders get to borrow lots of other people's money to use this strategy, they have won. Even if the company goes bankrupt or is bought at a low valuation, they collected big wages and benefits for years and get to put their startup experience on their pitches for their next project.

Subsidizing a project to make it grow and drive competitors out of the market has been fundamental to the US 'tech sector' since 2008 (eg. YouTube).