Yeah. Nothing says a company like this can't work at all, just that it's risky and can easily fail when times change.
But it can succeed, if either:
1. The company buys you out and takes you inhouse instead of making a competitor from scratch (this seems to be a common business strategy for startups operating like this)
2. You can spin off the userbase into separate service (like mentioned by the commenter above).
3. Somehow you can exploit the situation to build a brand for a completely different business or industry. Kind of like how a lot of fan game developers use their temporary fame to market themselves to the industry or retrofit their work to be more original after the inevitable cease and desist notice.
But it can succeed, if either:
1. The company buys you out and takes you inhouse instead of making a competitor from scratch (this seems to be a common business strategy for startups operating like this)
2. You can spin off the userbase into separate service (like mentioned by the commenter above).
3. Somehow you can exploit the situation to build a brand for a completely different business or industry. Kind of like how a lot of fan game developers use their temporary fame to market themselves to the industry or retrofit their work to be more original after the inevitable cease and desist notice.