I see your points but I think this is overly harsh. You aren't experiencing this first hand - you are reading a summation after the fact and making a quick judgement. This possibly is all happening like a slow motion car wreck.

There are a number of dynamics at play in a situation like this and it can get very confusing, very quickly. The new guy is both an investor whose money they are currently spending and also an employee which blurs the lines on how to manage a relationship like this.

I have seen these kinds of relationships blow up before and when you are a young and inexperienced entrepreneur you don't know whether to engage him, disengage and get attorneys involved or just go crazy. Sometimes it looks like the other guy is holding all the cards.

This doesn't scream clueless, it screams confused and not sure whether to spend scarce resources on attorneys. Next time they will have an attorney standing by.