alt Hacker NewsMy sense is that it's context dependent. If you've got VC backing (or could soon) and are making deals in SF, the generosity path makes a lot of sense. Limited downside, infinite upside. You can afford generosity.
If you're starting with $2000 and bootstrapping a textiles business out of Kolkata, it's a terrible idea, you're likely going to immediately get burned and never recover.
(take with a grain of salt as I have no experience, just stating my observations)
Generosity is not "giving stuff away for free when it hurts you badly to do so." Neither the giver nor the receiver are comfortable when generosity hurts the giver, and the dignity of both may be compromised as well. Generosity that is disrespectful of comfort and dignity is worth very little.
A company with $2000 in its first few days need not give away $1000 to act generously.