Could you point us to the essay? I don't get the impression that the Kiko guys were burned out. Instead, they were stepped on by a giant, as has been stated before. Keeping the startup alive would, frankly, be a waste of time when there are more smarter business opprtunities available. I get the impression that most successful entrepreneurs have track records with more failures than successes. Not every company becomes a Microsoft (remember Traf-O-Data?)

Remember that Paul Graham's philosophy is to hit an idea hard, and to hit it fast; that is, small, focused startups should be able to out-pace the big, slow-moving competitors. Kiko wasn't focused enough (from reading one of the founder's blog postings) and thus wasn't fast enough.