You appear to be suggesting that fun hobbies which don't make money are a 'failure' rather than a success. Not everything is judged by how much money it makes.
It's really not that deep: they're characterising the business, you're characterising the hobby. The owner having a good time doesn't make it a successful business. A failing business can be a successful hobby, sure, that's still a failing business.
This wasn't a hobby. At least the head engineer and sales persons were constantly stressed by flagging sales and lack of customer acceptance.
It wasn’t a hobby for them but it still may have been a hobby business for the founder. Rich dude LARPing tyrant CEO or Steve Jobs imitator is common.