Everything in the article dealing with the problems of overcapitalization from the entrepreneurs end is pure speculation ("lavish salaries, expensive office chairs and generally a hunger killer for execution"). He has no knowledge that those things are true for FatDoor and nothing even anecdotal from other companies.

He does have a point that if they didn't execute well the first time, that doesn't bode well for the next try. However, that's not a problem with capitalization, that would be a problem with the team.

I was on the Odeo team that became Twitter. We were overcapitalized for a podcasting startup and that's exactly why we ended up with a bigger hit. We had the runway to experiment and the knowledge that we hadn't hit on anything big enough, so we kept trying new things.

In that case overcapitalization wasn't a problem in terms of being successful.