Yes, but often much of this can happen largely as a consequence of your doing something else, and you may not realize it.
convince a market that it is good information
Which is just basic Marketing.
and then prevent your competitors and your clients from simply replicating your process
Which is also a common issue with startups in general. Good word of mouth can keep you ahead of competitors, and you can make it cheaper for clients to just pay you than it would be to do it themselves. All basic things.
Sounds like they are deeply in the red because they were chasing something else? What if they realized this much sooner and didn't get so deeply into the red? Then they'd just have a solid and profitable business. I wouldn't discount this kind of business model. That kind of "sorta ok" is only a disappointment if you were hoping to be the next Facebook. Isn't that just greed clouding people's vision? A goose that lays copper eggs is still pretty darn nifty.