Full disclosure, I'm a YC alum whose last start-up was acquired by Google, who applied to this batch and didn't get an interview.

YC is not the stamp of quality it once was, to be sure, though it still works as social proof, because investors (especially VCs) want to invest in companies other investors like (or failing that, companies they imagine other investors would like). YC would say that they aren't trying to be a stamp of quality or social proof, they are just trying to help start-ups.

If I had to take a stab at articulating how YC has changed, it's that it's become a VC, picking ideas to generate returns.

This rejection email from 2022 that someone posted online cements the idea for me (excerpted):

"Unfortunately, we've decided not to fund {Company} this batch. We enjoyed our conversation today and were impressed by you as founders building something they are passionate about bringing into being. However we weren't convinced that this product strategy is going to yield a big company in its current form. ...

Of course, things are very early and you are still figuring out the right way to build and structure your business. If you're able to make significant progress with it, we'd be very interested in hearing about it for a future batch."

Original YC would not reject founders over their current product strategy and because they haven't figured out the right way to structure their business--haven't put together the "proof" that they could be on track to be a unicorn, etc. That's a VC rejection. Of course, YC gets many thousands of applications and has to reject most of them. You could say they shouldn't be criticized for trying to give a little feedback.

It's just hard to convey the sense from the early days of YC that they really didn't care about the return, or the progress so far, or VCs, or fads, or anything. That said, I really was at the right place at the right time and got very lucky.

Finally, I want to call out the phenomenon in the world of VC where the ability to generate hype alone is enough to make you and your investors a lot of money, even if there isn't a lot of substance in your company (and even if things are morally or ethically questionable), through the mechanism of greater fools. Cryptocurrency is a whole exploration of this effect, turning hype into money by building a streamlined mechanism for bringing in greater fools, but we can also look at examples like Theranos. (There's actually a ton of money at the top of society looking for somewhere to go, which ideally would be routed to more worthy ventures than it is, but that's a whole topic in itself.) The point is, the greater fool "strat" works. In a moral vacuum, if you are trying to maximize returns, you lean into it.

If I were running a fund like YC with basically unlimited money at my disposal, balancing the goals (strategies?) of 1) make money for money's sake, 2) advance technology for technology's sake (let's go to Mars, etc), and 3) make the world a better place, I would focus on (3). Like can we at least try to build a unicorn that feeds people, and maybe fail, rather than trying to build FooBarBazCoin that eats the word, and failing? We mostly see a mix of (1) and (2).