They're not really a startup since they only accept donations, but I loved the idea so much I made my own version which does not randomly assign a string but instead allows users to pick their own phrase:
http://www.oneryng.com
Disallowing reassignment would leave a finite amount of (useful) keyphrases; my business model is to charge for people who wanted to keep their keyphrases for a duration of time.
Maybe I should make that more clear...
Detecting circular assignments is a great idea though, thanks!