I did notice you said "helping". The reason I continued with the post is I still think what PG does, his money, influence, etc. has little if anything to do with the power shift, even in the context of helping it. VCs (and Angels to an extent) are primarily interested in doing things in their own best interest. It's probably true that many investors give YC companies more respect in terms of the deals they do, but, as PG points out, that's because it's in their own interest to not turn YC against them for future deals. That's not a shift of power, just a case of privileged treatment. Non-YC startups are still quite subject to getting screwed by VCs. Where the actual power shift occurs is in the leverage investors once had over founders for pushing any project forward. It used to be that for any given idea (which is accepted to be fairly valueless at that point) carrying it forward meant investors had to be involved. Why? Well, let's look at the things a startup has to have...

1. Development - this is often the biggest cost and challenge. Unless the founders themselves were developers one would have needed lots of investment capital many years ago to develop even what we consider standard applications today, like ecommerce sites. Today powerful, efficient open source platforms exist, like Magento. Publishing platforms like Wordpress have meant even hobby writers like Michael Arrington could create, publish, and build a blog reaching millions of readers, as he did with TechCrunch, by simply pointing and clicking. Development costs are much lower, and outsourced and/or collaborative development is now more viable than ever before. Nothing to do with PG here.

2. Servers/Hosting/Business Location - the further we look back, the more it cost to establish a business presence. In the old days startups were almost synonymous with brick-and-mortar buildings. Even when the products became software which could be sold virtually, rather than physically, early dot com startups were expected to have a real world base of operations, especially when adding in the need for comprehensive server capacity. This costs money. Nowadays, entrepreneurs can meet virtually, develop, blog and pretty much create value in their pajamas from anywhere in the world. Platforms like the iPod/iPad further provide reach, distribution and act as little money collection windows around the world.

3. Marketing - this is a big one, and probably the biggest reason investors played a key role early on. Reaching people costs money. In the early dot com days there were marketing budgets in the millions being thrown around at all manner of ideas. One needed significant money to even get noticed in such an environment. Today, social networks, publishing, and sharing platforms allow information to travel much more freely. Search engines have gotten better at identifying quality sites. Consider the Conan O'Brien anecdote where he explains that he sent out a single tweet directing people to a web page where they could buy tickets for his tour, which then sold out in a matter of hours. He couldn't believe he didn't have to go to a single radio show, or otherwise do any promotion.

I believe successfully traversing these three areas are crucial to any startup's success. As I've explained the further you go back in time, the more likely you were to need investment money to have any chance at playing the game seriously. All that has changed in the direction of favoring founders. PG, again, while great, really had nothing to do with this. Sorry I didn't elaborate all this the first time. ;)