Daniel easily could've packed it up when he lost his cofounder - Shai had to go back to Israel a week or two before Demo Day. Instead, he built a prototype of what would become Greplin (in a week), pitched it to investors at Demo Day, secured funding from Sequoia, and is riding a rocketship.
When PG and YC say that they invest first and foremost in founders, this is a perfect example of what they're talking about. Every startup hits a rough-patch, and some even look like they have no hope at all, but the best founders persevere against crazy odds and will themselves to succeed.