This "salary cut" works only in this case: The employee is not just looking for money but something intangible from the job (Experience/network/etc.) This doesn't apply to most of you guys who have no intention to start a company or make a huge leap in life. That's why you think it's bullshit. But there are also a small number of people who are really not driven by just money but puts a lot of value on the intangibles I mentioned above.
Many startups look for these types of people, so to those of you who are hating on this idea: there's nothing wrong with you hating on them. It's by design, these companies don't want you either. I know from experience because I've hired people who just got in without any specific reason. These people tend to give up very soon because they simply don't care about what they're building. And again, there's nothing wrong with that. It's just that these startups can't afford to hire you.
Here's my horror story: I was working on a startup. We were fortunate to have a guy who's extremely talented and wrote the core part of our product. However he switched ship immediately when he realized it was a business that will take time to mature. I really hated that guy for a while because we had to basically abandon our core product the day he just left. Now I understand and also know that part of it was my fault too, but it was a very difficult experience for me. If you look at the world with this lens you'll notice so many "rockstar developers" jumping ship after another when things don't go well for the company (which is totally fine for them but bad for the company). That's why startup companies should care more about the "right match" than "rockstar developers". And hiring a rockstar developer by paying him tons of money when he's not so passionate about the company's vision is the worst thing you can do.
An analogy is most girls who don't want guys who are just in it for her looks. When you try to seduce a girl, complementing her looks rarely works unless your social status is extremely obviously high or if your looks are extremely great. In most cases you have to demonstrate that you like her not just for her looks but because of her personality. Most girls don't want a guy to just have fun for one night, never to see again, especially if they like them. I know many girls who gave up on a guy she really liked because she didn't want to be hurt. Startups are like that.