The mistake isn't releasing something bad. The mistake is to launch it and get PR people involved. You don't want people to start amping up expectations for an early version of your product. The best entrepreneurship happens in low-stakes environments where no one is paying attention, like Mark Zuckerberg's dorm room at Harvard.
We live in such a noisy world that many of us have come to be afraid of silence. We think that if only we do a great deal, it does not much matter what we are.