Yes, it is possible. It is perhaps a bit unlikely, though.
You would need some way to get money out of a product that is being given away. Selling advertising is one model. Charging for support is another.
> Do you know any examples of a project that became famous or most used and is hiring a team of devs to work on it.
Certainly. You probably know about them, too: Firefox, Red Hat, Ubuntu, ....
The code just shows ads. Users are free to get rid of them, but you hope they don't; perhaps you encourage them not to. (Note: webpages are often the same way; users can run AdBlock if they want.) If advertisers pay only for click-throughs to their site, then they know they're not getting ripped off.
> I know about ubuntu and firefox but was wondering if there are startups doing open source work and generating revenue.
Well, you said "famous". Once you're famous, you're often not a start-up any more. In any case, I can't think of any, but then I'm not really into the start-up scene.