Ugliness Needed

When starting to make a new game, one must start with a prototype. And that prototype needs to be ugly. Why is that?

1. It means you don't need one of your precious 2 or 3 prototypers to be a good artist, capable of the particular type of art it demands.
2. It keeps the future game theme flexible. This is particularly helpful for more mechanics-driven games, but also is great for more marketing or research oriented folks to find a niche for it (eg, Candy Crush helped bring tired match-3 mechanics to massive new audience partially through the appeal of candy over abstract gems).
3. It allows you to get the first prototype done in 2 weeks or less. This speed is necessary to keep momentum on the idea, and to avoid beocming distracted or watered down.
4. It allows you to make following prototypes very quickly.
5. It allows you to pivot, both technically and emotionally. Nicer art tempts you to fall in love and start iterating to a local, lower, maximum than you could find if the art were left unconstrained.
6. Much like sketching wireframes when laying out interfaces, it communicates to stakeholders that it's early days and open to candid feedback.
7. Ugly art encourages exploration over refinement. You're still looking for the right hill to climb.
8. Nicer artwork can tempt the team to move towards production without throwing it away first, which can lead to terrible technical debt, performance problems and add years to your development time. We fell into this trap with Subnautica and it led to poor frame rates and streaming problems which took years to address.
9. With artwork this bad, everyone on the team can experiment, trying radical re-themes in an instant. Sci-fi can be changed to fantasy, from kitchen to ship galley. It might feel closer to a name change. This allows tonal and emotional shifts as well.
10. When there's no real look to maintain, anyone on the team can add content, leading to tons more content.This lets you prove out more of the game earlier, reducing design and project risk.
11. An ugly prototype helps allow players to see the core interactive promise of the game, instead of being swayed by aesthetics. If there is any positive emotional response or pull for a game that looks this bad, you know you're onto something.
12. Ugly artwork tends to be highly readable, which helps clarify early feedback. Early bugs and usability issues will obscure the core some, but the artwork won't.
13. Ugly artwork will discourage more people from joining your team. Who would want to work on something so bad? This means your core of 2 or 3 folks can stay focused and pivot constantly without causing whiplash and hurt feelers. I firmly believe that having more than 3 people on a prototype is fatal.
14. It sets the tone for all decisions at this stage - of which there are many. Tech trees, pacing, level design, audio and other decisions need to be made very quickly and brutally. The terrible visuals will be "contagious" in the best possible way, allowing everything else to be made in a spirit of "the simplest possible that could possibly work".
15. Your iteration rate will be insane. Ugliness means nimble.
16. Your team will gain incredible confidence working together, making magic from something so humble. It will feel like alchemy.

Finally, maybe the look will be so charming that your game stands out and players fall in love with it as-is?