Guess this one looks like a post enthusiasm state but here is what I think is going on lately (Disclaimer: I am an entrepreneur, I feel this, so please take it all with a pinch of salt):

It seems that the race to get into a coveted program like YC has become crowded. Almost every other startup that I met during last one year (50 odd in two cycles) had applied to the YC program [premise-A], some gotten the interview [premise-B] and some gotten into the program [premise-C].

Role of premise - A: Crowded race makes way for best YC 'applications', and I have seen PG/YC liking the way the quality of applications have gone up. Sure. However, the quality of application does not necessarily reflect the quality of technology startup.

There are several areas where these two indices are not aligned perfectly:

For example, there are people who can write and tell really high quality stories, given the amount of time at hand, but they're the ones who should probably be doing literature and not technology startup (rant?). Then there are other have-nots: The statistical bias of past YC batches seem to be away from the relatively older entrepreneurs or heterogeneous teams. This leaves out a bunch of gems.

Long story short: A crowded race forces not-so-great start-ups to focus on getting into the program successfully and the great-ones to keep out/avoid/shy away and focus on building their business instead. And sometimes lose on what could have otherwise been a great partnership.

Then the process is in two batches. Great companies were not built in batches so there seems to be a process conflict. Someone who is feeling great about their startup in June-July would be depressed by December when winter applications reopen. Perhaps a rolling-in applications model [1]?

Role of premise - B: I know a couple of really awesome guys who went for their interviews and came back with a no. While there would have been genuine reasons, or simply bad luck, for these people getting rejected but I saw at least a few of them outgrowing their 'pariah' status and deciding to go for it and build it all by themselves. Cockroaches?

How should I put this? This situation is like a river flowing across the plains. The river-bed gives shape and path to the flowing water, but flowing water too, in the long run, gives shape to the river bed and alters its course.

Role of premise - C: There is role of who gets in, how many get in and how they do it. Given that the size of batches have gone up, I do believe that number of sentences exchanged with PG/partners per startup must have gone down. Or it is skewed between the white and black swans. And that could be a huge set-back for some. Make-or-break fluctuations are so tiny and yet so important. Even though this is a scalability challenge for an accelerator program like YC, but I guess there has to be a hard limit on how many are taken in. Which is bad because there is no limit on the number of applications though.

I guess writing more on this will take a lot of time. These are some of the thoughts which I am sure are well understood at the combinator. It's just an outside-in view from where I am coming from.

[1] http://techcrunch.com/2012/08/18/how-instacart-hacked-yc/
[writing in progress]