"I just don't believe that PG & co are capable of separating the potential winners from the losers based on a short application and a 10 minute interview"
In poker, if a pot is very large, calling a bet (ie investing some money) can have positive expectation even if the probability of winning the pot is quite low.
Similarly, YC's filtering ability only needs to be "good enough" to generate positive expectation, which can happen even if their predictive ability for selecting winners is quite low. Picking winners at a slightly better rate than the competition gives them an edge, even if they're not actually good at it. ie being "barely competent" at something extraordinarily difficult can often be enough to achieve considerable success.
Of course, I don't see any reason to believe that they aren't actually quite good at choosing winning startup teams -- it would certainly be interesting to be able to measure that. It will also be interesting to see if their hit-rate goes up over time.
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"I just don't believe that PG & co are capable of separating the potential winners from the losers based on a short application and a 10 minute interview"
In poker, if a pot is very large, calling a bet (ie investing some money) can have positive expectation even if the probability of winning the pot is quite low.
Similarly, YC's filtering ability only needs to be "good enough" to generate positive expectation, which can happen even if their predictive ability for selecting winners is quite low. Picking winners at a slightly better rate than the competition gives them an edge, even if they're not actually good at it. ie being "barely competent" at something extraordinarily difficult can often be enough to achieve considerable success.
Of course, I don't see any reason to believe that they aren't actually quite good at choosing winning startup teams -- it would certainly be interesting to be able to measure that. It will also be interesting to see if their hit-rate goes up over time.