FCFF = EBIT(1-t)-Reinvestment. The operating expenses of the model business are much higher - so lower EBIT.
The larger the reinvestment the larger the hole. And the longer it continues (without clear steep barriers to entry to exclude competitors in the long run) it becomes harder to justify a high valuation.
I really dislike comparisons like this - it glosses over a lot of details.
In the 90's and early 2000s, but people laughed at businesses like Amazon & Google for years. These types of people highly focused on the free cash flow of a business in it's early years are just dumb. Sometimes a business takes a lot of investment in the early stages - whether it's capex for data centers or S&M for enterprise software businesses, or R&D for pharma businesses or whatever.
As for "clear steep barriers" - again, just clueless stuff. There weren't clear steep barriers to search when Google started, there were dozens of search engines. Google created them. Creating barriers to entry is expensive and the "FCFF people" imagine they arrive out of thin air. It takes a lot of time and or money to create them.
It's unclear if "the model business" is going to be high or low margin. It's unclear how high the barriers to entry for making models will be in practice. It's unclear what the reinvestment required will be. We are a few years into it. About the only thing that is clear is this: if you try to run a positive free cashflow business in this space over the next few years, you'll be crushed. If you want a shot at a large, high return on capital business come 2035, you better be willing to spend up now.