How did he get into a position where he has his choice of founders? He built the empire by offering mentorship, money, and community (which is peer-to-peer mentorship). In the beginning, the draw wasn't money because they didn't offer much of it.
In his essay, he says that most people ignore his advice, so it's unclear how value there is in the mentorship. The money though, is pretty important when your young - it pays for travel, 2-3 months of food and rent. Another very important element these days is the opportunity to pitch at demo day, as well as having the YC cachet associated with you.
I would argue (and I'm sure that a lot of people would disagree), that one of the most important things that YC does is give budding entrepreneurs a chance to just get away from everything else in their life and completely focus on their startup.
He also caveats a lot of his points by saying that honestly, he really is never particularly certain which startups or set of founders is really going to take off.
