This strikes me as terrible advice for startups.

"Microsoft" is an extremely well known brand name. Standing behind that name rather than diluting it with 10 other sub-brands makes a lot of sense.

But if Instagram called itself "Camera" or "Camera Filter" or "Social Camera" or something exceedingly simple, it would not likely have caught the same traction. The name Instragram has now come to mean something unique. The same way the word "Microsoft" is now loaded with all sorts of connotations.

I agree that forcing users into a new vocabulary doesn't make much sense, but startups need to differentiate themselves on branding. Throwing in a word like "tweet" to compliment "twitter" makes a lot of sense.