I agree with that in principle, but: YC invests in companies at an absolutely enormous rate, they have relatively few 'rotten apples' when you take into account that they encourage companies to pivot post investment and that they couldn't change what a company actually does even if they wanted to (they own a very small minority of the stock after all).

If I were in YC/PGs shoes I would have dropped installmonetizer the second I found out what they did but then again, I don't run the most successful start-up accelerator on the planet for a good reason.

In fact, I wouldn't have invested in them in the first place. But on the whole if you select for hackers driven to make money at any cost you can expect to get a rotten apple every now and then.

Whether or not YC should have dropped installmonetizer once it became clear what they were up to (if that wasn't clear from the application alone) is something everybody has to decide for themselves, for me it is clear that they should have.

Also, to their credit I haven't seen them invest in anything as shady as installmonetizer after that point so maybe some lessons were learned.