It's not necessarily a bad idea to charge money starting with the first customer. But if you have a network-oriented product, it won't get critical mass.

"The problem is, just about every startup is following this mantra [of free software], and that's exactly the reason why a lot of them fail."

Whereas, if startups just locked down their product, most of them would start to succeed? What are some examples where having a free version actually killed a project?