"They took VC money when they have paying customers and a working business model and it was time to grow the company."

Paypal had no idea what their business model was going to be when they took VC (they tried to fight off ebay sellers to begin with), their idea changed every week. They actually raised money so they could buy users (literally, they gave users money if they signed up).

"entrepreneurs should concentrate on building their company with their own money FIRST"

it's precisely because this isn't an option for young founders out of college that something like YC exists. we have no money of our own in the first place so taking external investment is our only option.