People like Steve Jobs or Lyndon Johnson were legendary for being charming to people they needed but abusive to people who were under their thumb. Zuck can be a nice person to many people, but also can be an asshole to people who he thinks are not useful to him and who are wasting his time.
It goes the other way too. Paul Graham compares founders to internet trolls. I know someone in real life, who got banned from this forum and real life events due to trolling and hurling insults. That person is quite nice in real life (or, at least he is nice around me). In many cases the troll on the internet is the person who in real life has to always bite their tongue and say the nice thing, trolling on the internet is the one place where they can be the Steve Jobs asshole and not suffer consequences.
PG is a millionaire investor. I can readily believe that any founder who cannot shield their mean and ruthless streak from PG, would not be a good founder. Successful people are very adept at knowing when to work the charm, and when to be ruthless, knowing when they have to hold their tongue, and when they can speak their mind without consequences.
I'm trying to think of what evidence would convince me that founders were actually less mean than your average high-level person in some other industry. I think you would need to do a series of private interviews with their subordinates and ask questions about how often they get berated or screwed over.
I'd also be interested in hearing the experience of anyone who has switched from being mid-level in finance to mid-level in tech. Is there really a difference in "meanness"? PG cites Jessica's experience, but she was switching to a position in tech where she had the position of dominance over the founders, so she always seeing their good side.
It has been my experience that the people at the top in tech generally have a ruthless streak. Tech founders and execs are more ruthless/situationally mean than the people at the bottom. The founders have the ability to turn a switch and treat employees as tools, rather than people. This may be necessary if you have to fire people and make other hard decisions. I do not think that this ruthless streak is necessarily a bad thing.
"There is also a complementary force at work: if you want to build great things, it helps to be driven by a spirit of benevolence...They may not say so explicitly, but they're usually trying to improve the world."
Keep in mind that a desire "to improve world" is a synonym for a "lust for power." The first is a positive way of putting it, the second is a pejorative, but it is the same thing. A neutral phrasing is that founders "desire influence". Founders hold on to their startup rather than selling because they like being in the thick of things, having attention, being able to shape and move a service that millions of people use, and have an impact on tens of millions of people. This desire for influence is not at all incompatible with being an asshole to people who are not useful or who are in the way.
"Another reason mean founders lose is that they can't get the best people to work for them."
Anyone who is mean all the time will certainly fail. Who are these people though? Most people who are indiscriminately cruel are probably also low IQ (they are not even smart enough to manipulate) and max out at being a sales manager for Dundler-Mifflin.
All things being equal, an employee would rather work for a nice boss than a mean boss. But employees also want to work for a winner, and will often accept a boss with a mean streak as a trade-off in order to work for a winner.
"Increasingly you win not by fighting to get control of a scarce resource, but by having new ideas and building new things."
The "but" should be an "and". The "scarce resources" are market opportunities for capturing a lucrative monopoly with only minimal upfront costs. Based on the underlying state of technology, there are only so many opportunities for a small team of hackers to build simple apps that can gain traction and turn into wildly successful products.
Startups also require a large amount of hustling. You have to convince a lot of people to bet on you before there is solid evidence that you have a great product. The amount of hustling, salesmanship, confidence games, self-promotion, "naughtiness", that can be required would make a lot of us hackers feel very uncomfortable. So while there is a selection for makers, there is also a selection for people who have a fair amount of narcissism and who are comfortable pushing ethical boundaries.
It might be that YC is particularly good at picking and accelerating startups based on having founders who are great makers rather than great sellers. This really would generate a better class of founder, and would make their startups more ethical and less mean than the typical VC backed startup. If this is the case, then kudos to YC.