Exactly. It's bizarre that this obviously dysfunctional, customer-harming model--building services that are designed from the start to die or be consumed--has become so accepted that no one even questions it.
No, but that's exactly what an "exit strategy" is, and an awful lot of startups are built around finding an exit. More often than not, that means building enormous hype and growth on a model that you know isn't sustainable, then selling it off just before it hits the apex and starts to fall, so the buyer can either dismantle it for parts or pare it down into something more realistic. Either way, you're leaving your users out in the cold.
Why is it obviously dysfunctional or consumer-harming?
Can you imagine Apple, Google, Facebook existing without the model? Because each needed large capital investments before turning a profit. Equity investment was the only obvious solution for that large upfront capital, as tech companies normally don't have collateral with which to secure debt. Such equity investments are high-risk by nature, so investors want high potential rewards.
Thus, it stands to reason that such companies wouldn't have succeeded if there weren't a mechanism for high-risk, high-reward equity financing. I'd argue that all of these companies are functional and also that they've made consumers' lives demonstrably better.
Maybe few question it because it's worked so well?
A company that can "make a profit and stand on its own" is of no interest to a venture capitalist.