Actually I was surprised when I read: "Make something people want. [...] The idea is that if you build something truly awesome, you'll figure out a way to make money off of it." That sounds to me like he got it backwards. Instead of building something that people want, he built something that was truly awesome. And I think that's the problem. When all those people encouraged him, I think he misinterpreted their enthusiasm at his awesome idea for a "want".

Either way, I think for all the shortcomings and faults the VC and accelerator world has, this is a good example of a mistake that's much more easily avoided when following a proper development plan for your startup.