I think the answer is that they don't want a crappy-looking, buggy product/service that doesn't do much.

Keeping it simple is great, and suggested, but making it useful and nice looking is also very important. Are you sure that it failed because it wasn't simple enough? Maybe it just wasn't filling the right need?

Oh no, I'm not saying it failed because it wasn't simple enough. Not at all. It failed because we were unable to find a reliable revenue model for our users.

I'm also not saying that you shouldn't work for a nice looking site and a non-buggy service, just that those things can be continually improved as you go. You don't need them for launch.