YC invested on the assumption that their business wasn't really working. Arena would have invested on the assumption that it was.[1] YC was right, and helped them get to a true product-market fit. It was the right money to take.
[1] Paige's post is actually very nuanced about how much product-market fit he saw in AirBnB, and how much he wanted to invest because of the market and team. But he clearly gave them more credit on "making something people want" than YC.
[1] Paige's post is actually very nuanced about how much product-market fit he saw in AirBnB, and how much he wanted to invest because of the market and team. But he clearly gave them more credit on "making something people want" than YC.