Do you have examples of companies in this space that actually reached break-even? Heroku never hit profitability as far as I remember and with the Salesforce acquisition the question of profitability is moot. AWS is a counter-example to using a free tier as a GTM strategy. AWS did not start with a free-tier offering for S3 or EC2, that only came years later. By then they already had significant traction in the market.
I don't know if they have reached break-even. I know that they are in business for a long time and are clearly getting investments based on the usage and the potential. Usage that would not be there were it not for the Free time contributed to test-drive their offering and the free "evangelizing" done by those "free-loaders". AWS/Google/Microsoft are in a different league because they can afford the waiting game for actual Enterprise Evaluations or can afford massive sale forces (Azure case). Smaller players can not afford it and have to rely on "recommendations" based on past experiences.
