It's easy to fund companies that have traction and make money, but hard when they have neither. If YC had some ability to predict companies that do well when they have only an idea and no code, I no longer see evidence of it.
Goodbye.
1) Maybe there actually was a problem with the approach we were taking to the problem we were trying to solve (there was).
2) We weren't far enough along for the YC program to actually work for us.
YC shouldn't the the solution to bootstrapping. If your team is solid and your solution is solid, then you're going to get to write an "I told you so" letter like you're prompted to in the rejection email. Not only that, but you won't be giving up any equity.
Not getting accepted sucks. Hopefully it doesn't discourage you from working on whatever it is that you're working on.