Well it could work if the amount of stock is effectively fixed at creation time. Everyone I've ever talked to who doesn't already know how stock works is very surprised that more stock can be conjured out of nowhere. They always assume that new stock is formed by subdividing the existing stock (splitting) and that investors get shares that used to belong to the founders.
Before working on startups I worked on Wall Street so I can't look objectively at this statement. If that's really true, it's a failure in our education system. Isn't it crazy that to drive a car in this country we need to take a written and practical exam but to invest our life savings we just open an account. Everyone should be forced to study the series 7 material in high school.
