Kids are coming out of school thinking, I want to start the next YouTube or Facebook. If a restaurant served more food than everybody else but lost money on every diner, would it be successful? No.
– Jason Fried

Having lots of users wont automatically generate revenue but it does indicate that you’ve got a useful product.  If something is useful, then you can probably make some money from it.  (Though its probably not as easy as slapping some ads on it and waiting for the checks to come in.)

You have to think about what makes the product useful (either to the user or an advertiser or another party).  If you’re looking to run a business, its probably okay to turn away some users in favor of converting the rest to customers.