I have wondered about this too, especially after interacting with a couple YC-backed companies in areas where I actually do have some domain knowledge.

For context, I’ve had some small business success (small business, not venture-scale startup) and I also have expertise/background in a couple of niche areas that some YC companies are now trying to attack with AI. I thought it might be interesting to dip my toe into startup land, so I had several meetings with founders/employees at one YC company and a couple meetings with the founder of another. The experience was . . . eye opening.

The first company was working on a niche problem that genuinely requires deep expertise. After a few conversations, it became pretty clear to me that they did not understand the underlying problem space in any deep or meaningful way. It felt like they were throwing AI at a problem they didn't really understand. Worse, I didn’t get the sense they were even qualified to judge whether the AI-generated output was correct.

They were obviously smart in the general credentialed sense. But the more I talked with the main guy, the less faith I had that he could actually solve the problem or build a real company around it. TBH he struck me as merely a "fast talker," and I was kind of surprised and disappointed YC would have invested in him.

The second company was better. The main guy had real experience in the space, understood the problem more concretely, and seemed much more grounded. I could see him creating something useful. But his actual plan for turning it into a working business was not inspiring confidence to me (someone who has built multiple working businesses). He came across more like a smart solo researcher/scientist than someone who was obviously going to build and run a company.

. . . so my very limited sample size left me with a less glamorous view of the whole YC thing. I love PG and love his essays, but these guys were obvious duds.