It depends on the person, plenty of children of rich people run actually successful businesses, but there are definitely “businesses” that are a kind of pomp around not actually doing anything.

I don’t think kids or parents necessarily see it as some kind of scheme, probably it’s more like the parents want their kids to be successful, but the kids don’t have any idea what to do and are super comfortable having their rent paid + a parent’s credit card + a salary paid for by their parent’s investments, so they don’t really try that hard because there are no consequences for failure. And the parents don’t care too much either because they’re proud their kid has a business and think it’ll be valuable experience even if it doesn’t do well.

One of my first jobs was for a man whose parents were quite wealthy. I found his business decisions to be incomprehensible until I understood that his business was basically something he could point at so his parents would give him more money. Something internal to their family, I guess. He would have been quite fine with doing nothing at all, but then his parents would have cut him off.

If they made this into a comedy series I'd probably watch it.

Have you seen Connor Roy in Succession? His “hobby business” is running for President.

Absolutely! Each episode could be a new bizarre business. A journey from idea, to creation, and to collapse. And of course each one starts with buying yet another new domain name.

This is literally Arrested Development.

I think the parents also see it as a good method to fill out the kids time as the parents are afraid that if the kids don't have anything to do, then the kids will end up doing drugs.

Kids doing drugs in rich families are very common as a way to handle the insane pressure. It's just that "Drugs Don't Work".

Some kids are really smart, others are just average joes with cash.

It’s hard for young people to just be rich.