throwaway833
So this guy bought stock on margin he shouldn't have been able to, because certain on-line trading systems at the time didn't check margin account balances in real-time. In effect, he borrowed assets with collateral he purported to have but in fact did not. This seems ethically questionable, at the very least, and possibly even fraudulent. But it's probably exactly the kind of "naughtiness" that YC prises in its founders:
4. Naughtiness
Though the most successful founders are usually good people, they tend to have a piratical gleam in their eye. They're not Goody Two-Shoes type good. Morally, they care about getting the big questions right, but not about observing proprieties. That's why I'd use the word naughty rather than evil. They delight in breaking rules, but not rules that matter. This quality may be redundant though; it may be implied by imagination.
Sam Altman of Loopt is one of the most successful alumni, so we asked him what question we could put on the Y Combinator application that would help us discover more people like him. He said to ask about a time when they'd hacked something to their advantage—hacked in the sense of beating the system, not breaking into computers. It has become one of the questions we pay most attention to when judging applications.