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I know this from a few startups and it really is not that bad. You really triage what should wake you up and what's ok until morning. It works well as long as the technical founder is ok playing a goalie and essentially being always on call (even though others catch a lot of alarms).

It stops working when the company grows and no one understands the whole system and you need on-calls from several teams. Then the company does some formal on call rotation and it's fine again. It hurts during the transition only.

dguoOP

Good point about the technical founder. That was certainly the case for us, as our CTO handled many issues himself.

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