By what metric was his decision wrong?
If he’s trying to maximize expected total wages over his career, staying in academia isn’t a good way to do that. Although he’d probably be better off at a larger, more established company than at a startup.
If he’s trying to maximize his career satisfaction, and he wasn’t happy in academia but was excited about startups, he made a good decision. And I think that was the case here.
Some other confounding factors about his situation at the time:
He’d just been accepted to YCombinator, which is a guarantee of mentoring and venture capital
Since he already had funding, it’s not like he was dumping his life savings into a startup expecting a return
He has an open invitation to come back to his PHD program whenever he wants
If you still really want to blame someone for his decision, I think Paul Graham had a much bigger impact on him than anyone associated with LessWrong did.
I know this isn’t the point, but I object to the quote at the beginning of your post. Maybe it’s just because I’m one of “those who don’t live in that place,” but what about people who are optimizing for something other than their career? Is that really such a big “exception?” Or am I taking the quote out of context, or does he think those people are optimizing for the wrong things, or what?
Some examples of alternative things one may be optimizing for when selecting where to live:
A significant other’s career (or an area compatible with both people’s careers)
Being near family or friends
Convenient access to specific hobbies
The weather