It's possible to sell software and chase the dream of a big exit. But, it's a different mindset and a different model, and you cut off some of your possibilities when you choose one or the other. If you build software with the intention of making it profitable within, say, six months, you will make decisions that work counter to making a sale to Google or MS or Yahoo. First thing you'll do that makes a sale to a mass-market consumer Internet company less likely is you'll charge money for your software and thus cut your userbase by an order of magnitude, if not more. Free stuff has tens or hundreds or thousands of times the number of users. I know this to be true because our commercial offering has a little over 1000 paying customers. I know, that's awesome, right? Until you learn that our Open Source software has X million users . I have no clue exactly how many users 12 million verifiable downloads, plus countless downloads from mirrors and other sources, means in real living, breathing, users...but it's certainly more than one million and probably less than 12 million. Makes our 1000 paying customers look like a bad joke. But, when it comes to being acquired by the big guys, 1000 paying customers is nothing...X million users is more interesting to them, by far. And, of course, I should point out that not everyone with a startup has the option of following both paths--we were "lucky" enough to have been working on our Open Source products for the past 10 years or so before deciding to make a business and a commercial product out of it.
But there's more yet to the story. When you have revenue...at least, revenue of a certain level, say, $1 million annually, you are no longer at the mercy of investors or acquirers, and you're more likely to find that you can call the shots in raising money and in being acquired. You may not be acquired by the coolest company in the world, but there are an awful lot of companies out there that would like to acquire a software product that makes $1 million a year, even if it's only serving 1000 paying customers.
I don't think maxklein or I can tell you (the figurative "you" that is applying, or thinking of applying, to YC) what kind of business you ought to build. But being aware of the extremely wide range of possibilities for funding, growing, and making money from your business is absolutely mandatory if you want to come out the other end of the process happy and feeling like you got your time's worth.
It's also a bit dramatic to suggest that working on a startup = giving up your entire life. The hackers I've met who are working on startups generally seem happier than those who aren't. See for yourself:
For others, if you are able to, at least try for YC et al as there is much to be learnt from even the application/interview process.
All the unsuccessful people I have met said it was better to have tried and failed than not tried at all and all came away better from the experience.
Lastly, it seems YC is less a lottery (success soley based on pure random chance) and more like a stable where promising prospects are picked, trained, and groomed (via exposure to competitive environment and advice, insight, and mentoring from experts and alumni alike) before being sent out to race. Hence your chances of success is much greater with YC and if your idea is poor or has a high probability of failure (i.e. not making money/users) then at least you get a considered insight to this earlier rather than later. Either way, you benefit and the reasons to do it outweigh those not to.
If we lost our house, cars, etc on a gamble and had to rebuild, we'd still be alive and do what we have to do to rebuild. BFD.
Even if you "fail" in the financial sense, you'll have significantly more experience than others who list more "years experience" on their resumes.
I can attest that trying to hit a homerun and hitting only a single or double is still great.
I tried to prove Ferman's last theorem (years ago) for my senior project. I didn't:-) But I turned in what I had and got an A+ and 4 invitations to grad school based on that paper alone.
I entered my fraternity into a contest for Chapter of the Year. I didn't care about the trophy; I only cared about what would happen to us by doing all the things needed to try for it. It worked.
I have often tried to solve the biggest problem at some of my customers over the years, but didn't. But all the little things I had to do to make the attempt turned into pretty good products and services anyway.
Nothing wrong with trying to hit a homerun as long as you keep your wits about you and don't let it become and win or go home proposition.
"Shoot for the moon. Even if you miss, you'll land among the stars."- Les Brown
I used to think that I could become a millionare by having one big software hit that would get bought by Microsoft and I'd never have to work on it again.
After a series of disappointments, I decided to stop chasing this dream, and instead just sell software online. Now I work very little, and I work on things I enjoy doing, and I earn way more money monthly than I can spend.
I'm pointing out that you don't need to create a calender widget or some time monitoring software to become rich. You can also just make a normal product that people want (for example Tax entry software), and sell it for a price that people are willing to pay ($300), and you'll make good money.
Play the lottery, but don't give up your entire life in the hope of a better life.