How does "as users lost money, they just dropped off." followed by "filed for bankruptcy", mean "Smart? Definitely yes."?
I guess they did make money for a while, so it's wasn't terrible, but having a business model that makes your customers leave? I'll pass on calling that 'Smart'.
You are thinking in terms of the corporation, or the investors. However, it's a fair guess that some "smart" people personally did very well from this model.
(If you think about it, a practical definition of "scam" is something that is profitable but doesn't generate repeat customers.)
In hindsight, it is easy to see and understand how their business model didn't work out. But when they launched, it seemed to be a nice idea.
Even in casinos, the odds are stacked heavily against the player. Still, people do keep playing. Swoopo was similar. I guess it's hard to get new users when every blog calls you a scam.
