Yes. Whenever we discover that we missed a good startup, we go back and try to figure out why. We've changed the selection process several times because of such mistakes.

We're not so systematic about looking at the applications of groups we fund that don't do well. Partly because when we mistakenly accept a startup, the mistake is at the interview stage, and partly because we don't worry nearly as much about mistakes in that direction.

Interesting. Are there any lessons you learned upon going back that are particularly memorable?

Don't panic if we're funding a lot of groups on the first day of interviews; have someone take a second look at the applications Rtm gives Cs to; pay more attention to the founders than the idea.

"have someone take a second look at the applications Rtm gives Cs"

lol I am sure that can become quite a chore

Would be interesting to see what success YC would have if more emphasis was placed on the idea and less so on the founders...as an experiment. I agree that founders are important. But has there been an instance where the idea sounded great but YC was really not comfortable with the founders - resulting in a missed opportunity. History has shown us that you can go from a non-entrepreneur/tech to a great CEO suggesting that the idea is a not a real factor. Yet, YC admits to choosing 'lemons'. Thus, the criteria for emphasizing on the founders is certainly not without its faults and, thus, could use a revamp.

It makes sense to focus on founders over ideas because the idea frequently changes as MVP's a launched and lessons are learned. The people stay the same. YC is not stuck with the business plans that are pitched, they are stuck with the founders they accept.

Plans can change, people rarely do.

I agree with your points. But what if the idea is sound on paper? The fact that people change is a variable in itself and that is my argument. No one can truly predict that this person or that will turn out to be a good entrepreneur. The 'lemons' that are picked may well be correlated not to the idea but the founders. A weighted balance on both parts (idea and entrepreneur) is required. Or is that too rare or difficult to achieve?

pg answered a question similar to this a couple weeks ago during Startup School. In general, his answer was that there have been some applicants that have slipped through over the years. He went on to say that since there's now a number of similar organizations like YC, a lot of the good ones that YC passes on end up getting picked up by other funds. YC is able to use that as a metric to measure their own processes and modify them over time.