Thanks for the link. Here's the full quote (see page 4):

"Thus the "people not projects" principle was the other cornerstone of ARPA/PARC’s success. Because of the normal distribution of talents and drive in the world, a depressingly large percentage of organizational processes have been designed to deal with people of moderate ability, motivation, and trust. We can easily see this in most walks of life today, but also astoundingly in corporate, university, and government research. ARPA/PARC had two main thresholds: self-motivation and ability. They cultivated people who "had to do, paid or not" and "whose doings were likely to be highly interesting and important". Thus conventional oversight was not only not needed, but was not really possible. "Peer review" wasn't easily done even with actual peers. The situation was "out of control", yet extremely productive and not at all anarchic."

Sounds remarkably like YC.

That's a big complaint in modern CS research funding as well; traditional NSF and DARPA funding came in bigger chunks, with longer timeframes and less strong micromanagement of projects it was to be used for (there even used to be completely non-specific "center of excellence" type block grants, which gave a huge pile of money for a group of researchers to use on good research in a given topic of interest to the funding body). Now it typically comes in small chunks with very narrow parameters that have to be pre-approved and checked up on on a yearly basis, which not everyone thinks has improved the quality of CS research.

You're definitely right to quote this, but I think it was the exception to the rule.