But there's absolutely no question that it involves working in America, and would require a business visa. I'm not sure how one could a) be smart enough to get into YC, and b) not realize that coming to SF for 3 months to work presumably as a C-level director for an American business requires a work visa.
EDIT: And neither B1 nor B2 is the right visa, so CBP was right to send him home. The OP needed a working visa.
Just to be precise here: it probably requires an employment visa, which is in a different category than business visas. You can come to the US and talk contracts with a company your company wants to do business with: that's (probably) B-1 (business). If you're doing work in the US, you need a work-capable visa. Some options would be TN-1 ("Hello Mr. Canadian professional"), L-1 (intracompany transferee), and J-1 (specialist).
I have some accidental knowledge about this because I used to help finangle things for Japanese folks affiliated with an employer of mine, but if you have any doubt about this sort of stuff, get a lawyer. The very fact of having a lawyer makes it less likely you will get tripped up because they know how the game is played and they will provide consequential bits of advice like "Give anyone asking questions the minimum information required and refer them to the stack of official documents you will carry with you." (Bureaucracies are state machines: you give them the minimum information necessary to get the state transition you desire.) They will also to be able to give advice such as "Given your circumstances, one way we could hypothetically do things is X but the on-the-ground reality would be exactly the same as if we classified it as Y and Y is orders-of-magnitude easier to pass scrutiny for."
I didn't mean to imply it wouldn't require a business visa (or employment visa and/or status, per patio11). When I said calling it "business training" was technically accurate, I meant just that. YC technically helps train you to create and run a business, but it's only part of the equation.
I certainly agree that he should have known better. How can you honestly say (or think) "I'm going to the states for a couple months to do business training, and yes those are documents to set up a US business, but no I'm not here on business."
The author noted why - he said as he wasn't financially benefiting [or acting as an agent to procure direct financial benefit presumably] he assumed it didn't count as business. TBH that's the measure most people use for "is this a business thing".
It could get quite tricky. For example part of what I do for money involves working with ceramics. I get inspiration in all sorts of places. If on a holiday to USA I happen to see a nice piece of ceramic art that inspires me then suddenly I've learnt something that benefits my business and one could argue it is in part a trip "for business". Perhaps that's too weak, but where's the cross-over ... if I go to visit a pottery? If I attend a seminar? If I go to a workshop [an event where one learns new techniques]? If I actively participate in a workshop?
Is the problem that USA don't want to let people learn things in the USA and leave the country with that knowledge just in case they give away some commercial advantage?
EDIT: And neither B1 nor B2 is the right visa, so CBP was right to send him home. The OP needed a working visa.