What probably happened is that they (on the basis of really, really, REALLY bad advice) started with something like 1,000 shares of the company, valued at $0.50 apiece. They did genuinely own 100% at that time. Then as they raised the 300k they issued additional shares, at valuations between $0.50 and $4, diluting the founders horribly, because the founders did not award themselves new shares.
The fundamental problem here is grossly misvaluing the company (i.e. the total value of 100% of the shares) at the time new shares were issued. For example, if you had hypothetically bought them a drafting table for $100 (an example used later), you ended up with a 0.5% stake in the company (implicitly valuing the company at $2k at that point). A tech company which only exists as a napkin held between two hungry young men with no asset other than a gleam in their eye gets a notional value of $250k+ on day one. If you attempt to invest in them later, after they have e.g. a product with customers for it, the value gets re-pegged SHARPLY north of that, perhaps in the single digit millions or higher if they're doing really well.
He mentions that a lot of the money men involved were annoyed by hordes of small investors making seemingly outsized returns on their initial investments. I don't think he quiiiiite understands that they're not wrong: their outsized returns were essentially large gifts of surplus value from the founders to them. (The money men, of course, seem a little put out that the founders didn't instead make a large gift of surplus value to them.)