I think SW's stance on contracts is hugely short-sighted.

SW should require that teams sign a (written) contract laying out who owns what at the end of the weekend, and offer several templates to keep the process painless.

You could even just put something into the FAQ saying "if no contract is signed, then all team members acknowledge that each member owns all IP he or she produces, following United States copyright law."

But "don't think about equity and contracts, just code" is exactly the attitude that leads to lawsuits, hurt feelings, and people taking advantage of each other.

Contracts are not a red flag, they are a way to avoid assumptions and assure that everyone gets a fair deal. Avoidance of contracts on the other hand is a massive indicator of either ignorance or bad intentions.