First of all, it's the former. That is, it's an absurdly high price to pay for an idea and first customers given what is standard in the market. Second of all

First of all, it's the former. That is, it's an absurdly high price to pay for an idea and first customers given what is standard in the market. Second of all, it doesn't matter. The biggest hurdle to being successful is getting started. "Getting started" necessarily entails finding an idea you're motivated to work on and a vision to achieve your goals. This guy has found one way to get started. If losing 20% of the upside is what it takes to get started, it's not a big deal. Just remember you can't keep making decisions that give away 20% of your upside over and over, because you'll end up with nothing (barring extenuating circumstances).