I wholeheartedly agree with you, if the fact was as simple. As it stands, the paragraph should have read: "a startup [with $200,000 funding of other people's money] was probably the worst endeavor for them", as that more accurately represents the reality of the situation.
I don't think funding changes the situation either - if anything they could have used even more money so they could hire someone more senior that would help guide their development.
Perhaps the problems also lie in the expectations of those giving money. I assure you that few experienced angel investors would have been upset or surprised that the college kids they gave $200K to produced code that was messy or had some bad security problems in the early stages. They would be a lot more concerned with how the founders planned on getting adoption for their fledgling service, or whether they were iterating on the product quickly enough. It seems that many who have donated to Diaspora (or who are getting upset on behalf of other people who donated to Diaspora) have different expectations. '
Just today I was playing with the product of a company in the just-ended YC batch. I found I was able to delete someone else's posted content on the site trivially easily. While I'm sure PG wouldn't be exactly happy to hear about this, he sure as heck wouldn't think that the founders should have spent more time learning to code in industry before taking his money to build a startup. He'd just tell them to fix it (and it's probably fixed by now), and then move on to more important questions like whether they were getting more users and building the right features.
