Sorry, why is this crap? People ask me all the time what it takes to attract angel investors, and this is my most succinct answer.
That said, I have also seen a number of cases where early customer sign-ups ultimately led to little once the initial excitement faded. Startups targeting the enterprise market are particularly vulnerable to this, where they may get all sorts of customers signing up for trials of a product but then are ultimately unable to convert them into large, paying customers owing to the small and untested nature of the startup involved. In such cases, if traction does not reach a critical level, the early gains may sputter. But this doesn't change the basic point, which is that investors will often want to scramble to sign on once they see the initial signs of such traction (even if it later proves illusory).
This is a nice piece highlighting this important point.
I can vouch for the Hacker Angels' willingness to help just for the sake of it, though. I pinged them when their announcement first hit HN, and while I am sure they were deluged, and my business is "pre-traction", they still took the time to respond in detail to my questions. This type of advice is difficult to get, especially from angels themselves. It's a great service to the community, and personally I don't mind them extracting a little value of out it!
The classic programmer with a sketch on a napkin has a Lot of risk. There may be assumptions that never pan out, and he may never be able to write what he's said he would.
Once there's a prototype, it moves the slider further to the "Less Risk" category. Things are moving, it CAN be written, now the risk lies more in growth and marketing.
Traction solves that problem as well- Now it shows that the code works, the marketing works, and the team really can pull things off. The slider is firmly over on the "Rather safe, as things go" category.
Here's the problem- Entrepreneurs see the slider too. By the time I'm over in the "Hey, this thing is actually gonna work" category, the need for angels, particularly the micro angels like Gabriel, has diminished.
At that point in the process you're actually making money, and you can look at the slider, see that things look likely to succeed. This is in part, what is responsible for the increasing number of startups bootstrapping. By the time they get a working version, decent marketing, and some traction, they start to realize that they have a good shot at being able to do this on their own, and keep the equity.