It gives you a future market share via so many people using your software for free. They won't pay if it weren't free anyway, but would use a competing piece of software. That is, without the free (as in freedom) version, few would even consider paying for a commercial license.
Did you ever think why Microsoft is so lazy about enforcing the end-user Windows licenses on non-business customers? Maybe they want kids get used to to running Windows at home, and expect it in a work environment, and value this higher than the lost revenue from "pirates"?
Note how many people still happily run Win 7, and before that happily ran XP, and before that happily ran win2k — while being very reluctant to upgrade.
It's corporations that need upgrades and support. With corporations, I'm sure, MS is not lax and enforces the licensing policy.
Which is all fine and good when you have VC funding and can run at a loss for years, or are growing at a rate where you don't care about a few cheats using your product. But, for all those bootstrapped business' your argument falls flat.
~20 years ago Oracle handed out a stripped-down "personal edition" of Oracle Server, their then crown jewel, with basically no strings attached, just to get people on the bandwagon.
Did you ever think why Microsoft is so lazy about enforcing the end-user Windows licenses on non-business customers? Maybe they want kids get used to to running Windows at home, and expect it in a work environment, and value this higher than the lost revenue from "pirates"?