Earlier quoted context omitted.
Say you're not profitable, and raise money on the expectation that you can eventually lower costs and only then become profitable. If you then find out you can't lower costs (i.e. you can't automate something you could, and keep having to rely on more costly labor), then you eventually collapse.
Uber
This is a new take on the "value added reseller" business model. (I don't know what else to call it. Multi-level marketing?)
For instance, Autodesk's dealer channel covered the costs of marketing, sales, technical support, training, etc. While they kept the sweet nectar of profits for themselves.