> ...I chickened out, nodded and smiled...
Nodding and smiling isn't chickening out, and short of keeping a poker face, it's actually the most appropriate reaction.
A job interview (which is what I'm assuming you are referring to) is an opportunity for you to evaluate a prospective employer just as much as it is an opportunity for a prospective employer to evaluate you. Generally-speaking, it should remain free of conflict regardless of what is said. After all, once the interview ends, neither party is under the obligation to continue the process so you have nothing to gain by injecting conflict.
There are a ton of startups out there today. Some are great and have real potential, but a lot of them are run by inexperienced folks with little to no real passion and even less domain expertise. Many of these startups will disappear in the next few years and in a funding environment less frothy, most of them wouldn't exist in the first place.
You are lucky that you were able to speak to the founder and that he was candid enough to reveal things that helped you make a decision. Not every candidate gets this opportunity and unlike you, many candidates don't take enough interest in evaluating the knowledge, experience and perspectives of the people who their employment would be dependent on.