I think whether or not you're able to subsist off of ad revenue depends on your situation and goals. A friend of mine can make $900 a week off of CPM revenues. While this wouldn't be enough money to run a 10 or even 5 person startup, it is plenty for him to cover his rent, car payment, and costs of living.
At the same time, I've been talking to a friend who is looking to start up a website that follows more in the footsteps of YouSendIt. We've had several conversations on whether its more valuable to offer a service for free to build market share and then suffer the pains of losing users when you switch to a paid model or charging from the beginning and seeing much slower growth. I appreciated that the article at least addressed the fear of switching to a paid model, but I would have been interested to hear how Kumaran thinks YouSendIt would have done if they would have launched with a freemium model already in place.
At the same time, I've been talking to a friend who is looking to start up a website that follows more in the footsteps of YouSendIt. We've had several conversations on whether its more valuable to offer a service for free to build market share and then suffer the pains of losing users when you switch to a paid model or charging from the beginning and seeing much slower growth. I appreciated that the article at least addressed the fear of switching to a paid model, but I would have been interested to hear how Kumaran thinks YouSendIt would have done if they would have launched with a freemium model already in place.