OK before starting, I want to clarify that I really like and respect what PG and his team does with YC.<p>What I would like to mention is that after the latest development of funding every YC team (http://www.businessweek.com/magazine/content/11_10/b4218038672660.htm), YC has changed the business model that is following. I do not know if this is planned change or a result of trust and appreciation from Ron Conway. As a matter of fact I really like the vote of confidence from Mr Conway to all these prominent entrepreneurs.<p>Now lets break it down a bit.
==================================================<p>Period A<p>What it used to be. A home grown set of teams (8 teams), after a selection from relatively narrow sample (startups primarily focused to software ventures, with founders that can hack their way to prototype and which address a relatively big market).<p>The above was nurtured with close relationships, that beyond common interest had a sense of common dream (according to PG a team can change their initial model, based on advice given).<p>What is the new identity of YC? (is YC pivoting?)
==================================================<p>Period B<p>A batch of 43 teams. I am sure that the networking logistics are a big advantage (http://ycombinator.com/atyc.html ==> paragraph about size), but the intimacy level will probably change (I do not want to be pessimistic but this is a probable outcome of the growth). Now is this good of bad?<p>Positive
1) Bigger network
2) More traction
3) Even with same chances of succeeding, the financial outcome better.
e.g. with 2 (10 % chance) good exits in 20 teams(in a year), maybe a 5-10 million exit after 2-3 years, but with 8 (10%) good exits from 86 teams, the prospective outcome is 40-80 million exit.<p>Now if you can achieve this with the same structure (people-resources), then this is an amazing productivity boost.<p>However the differentiator of Period A was the close relationship with PG and teams. This is not going to be the main rule for Period B. Now if the skills-mentorship of PG are transferable or shared by new instructors in YC, then maybe we are talking about a franchise style mentoring. This is possible, but surely there will be imitators with probably similar success rates. This model seems a bit more like a “practical business MBA”. Maybe Universities will try this model as well.<p>What about the 150.000 for each team?<p>This is actually a tricky point. VCs or even Angel Investors work with the 1/10 rule. If you want to fund 10/10 then to keep the same rate of success you need to fund another 90 startups outside YC(I don't know if Mr Conway funds so many startups).<p>Moreover we have another shift. The YC looks no longer like an incubator, but rather like an Angel VC which has already invested from day-1 to all teams. Quite a bet to take, considering that most teams don't have the working prototype beforehand.<p>Hope that all goes well for YC, because we definitely want to see more success stories.