ZenPayroll was far from an obvious winner when we funded it. This job is so much easier with hindsight. If you can actually pick the winners better than we can, there's a giant fortune awaiting you :)
The companies that get into YC are often speculative in their ideas. Maybe it is devaluing the idea over the execution. Maybe it is the belief that getting in early to a growing trend is more valuable than reinventing an existing idea.
Regardless, the result is great teams of founders who think the key to success is a crazy idea. Sometimes crazy ideas work (AirBnB was kinda nuts at the time) but there seems to be a heavy weight in companies funded towards those types of investments versus the ZenPayrolls. Which tends to attract the same.
* They were Switchboard Labs at the time, doing something totally different.
Nevertheless, the fact that yc invested pre-pivot only reinforces my point, as ZP wouldn't even exist had YC not taken a chance on the team and then helped them find a more promising idea.
I see your point, that the team is the most important part and YC invested in that. My feeling is that YC can be more effective at funding those types of ideas and teams. That the hit rate can be higher by focusing on a different class of idea. Perhaps that means more pivots or different ideas accepted at the start. I'll try to flesh this out more.
P.S. Unrelated, but thank you for sharing your thoughts. I appreciate it
There's always room to improve, but it's likely they are making fewer mistakes than you think.
AirBnb was almost dead when they got into YC. Nobody would fund them, and Nate had moved to Boston to get a real job.
Airbnb is actually still nuts. They probably aren't even to the half-way point in terms of where they need to be to be actually mainstream.
http://www.paulgraham.com/airbnb.html
And that's just one public example. (Chris Sacca also turned them down.)
Empirically it would be shocking if they were the only 2 investors who had the opportunity to invest but didn't.