I just don't get it. If people are going to make YC clones, why don't they do it in the Valley? There's a large enough market here, that I think it could handle 4 or 5 YC clones and still not saturate the market. The only competition that YC has in the early, early stage funding market are angel investors and credit card companies/savings accounts. Charles River Ventures program doesn't really count because it's a loan with strings attached based on Series A funding.
Granted, there's a lot more angel capital floating around in the Valley, but you have to be here, and know people before you can have access to Angel funding. It's hard for people hoping to move here and start a business right away. That's one of the things that YC has going for it. It attracts applicants from all over because of PG's writings and this here site, and it helps them hit the ground running.
Paul and Jessica are always saying how they regret that they have to turn down so many great groups of founders. They get roughly 600 applications per round, and they are only able to fund 10-20 every 6 months. If another YC clone came around, and tried to sort through the 580 applicants left out of each batch, I still think that they'd probably do pretty well.
And, if it was based here, they could run groups twice a year here in the Valley and they wouldn't have to be Bi-Coastal. YC's roots on the East Coast has got to complicate things a bit for them.
So, there you have it. Someone take the idea and run with it, but if someone picks the idea up they owe me a few shares of common stock.