Its all fun and games until Google decides they own your startup since you were working on it during "their time."
There's a process where you declare this work. And if it gets approved, you have ammunition to back you in a court case if it ends up going to such lengths.
I have had projects approved - questions that get asked are about e.g. conflict of interest or actual competition.
Google actually doesn't want to own your fruit-stand-in-the-park business.
This is intended to prevent situations like the zuck/winklevoss case (just to name 1 publicly well known example).
But when someone is spending the time Google pays for to work on a startup, I would THINK they would care about that. Or maybe Google's internal processes is okay with them doing 1 hr/day of work "as long as they're getting done whats expected of them."
The decision is not made based on whether the work is a "startup" or not. It's not even clear what a startup is - some companies that are worth more than $1 Billion are still somehow "startup".
It's based on conflict of interest, legitimate business competition, leaking/selling sensitive information, and other concrete criteria, in my opinion, are quite fair.
It does not depend on whether it is a "startup" or not
Those agreement are often scarecrows. They aren’t valid in california afaik, and surely they aren’t valid in most of european nations.
He's effectively banking that Google will be so big they won't notice - just like only working 1 hour per day.