It's easier to do this in some places than others, but it's a good idea. Ricardo Semler [1] is famous for backing the startup ideas of his employees. If they're going to leave anyways to start something, better to fund them on their way out. [1] http://en.wikipedia.org/wiki/Ricardo_Semler
Thanks for the tip on Semler. I am not sure how many CEO's will see the world this way (hence the HN question).
Very few. He's enlightened enough that it's hard to know if it's for real.