Given the PayPal story, which started with the company being encryption software to beam money between Palm Pilots, that couldn't possibly be what Max meant. They definitely didn't "know whether [they were] going in the right direction."
What he means, I think, is that at an early stage startup the cost of coordination is very high. When you have 5 people working together you almost want a hive mind. If part of everyone's mutual understanding includes how, when, and why to change course then the cost of potentially sticking with the wrong thing for too long is far outweighed by the cost of coordination.
Your example is the opposite of what I take him to mean, viz., in a small team where everyone understands how to operate independently and has a deep, mutual understanding then nobody's going to introduce a breaking change that leaves the other 4 people flat footed at a critical time.
He's putting his own cognitive narrative on a singular event. A few things change (they dont connect with elon, they dont give up on the palm pilot as a focus, etc) and the story ends radically different, to negative effect. Truth is, sometimes, if you bust your ass in the right place at the right time, shit goes marvelously to your favor. Or not. Either way.
What he means, I think, is that at an early stage startup the cost of coordination is very high. When you have 5 people working together you almost want a hive mind. If part of everyone's mutual understanding includes how, when, and why to change course then the cost of potentially sticking with the wrong thing for too long is far outweighed by the cost of coordination.
Your example is the opposite of what I take him to mean, viz., in a small team where everyone understands how to operate independently and has a deep, mutual understanding then nobody's going to introduce a breaking change that leaves the other 4 people flat footed at a critical time.