Paul's recent mentions about scaling Y Combinator have prompted me to give some thought to the matter myself, but the first thing I realized is that I don't really know what's preventing it from scaling. What's the current limiting factor?
Amount of money available to invest?
How much attention you can pay to the people you fund?
The number of applications that don't suck?
And given an unlimited supply of the current limiting factor, how much bigger could you get before running up against one of the other two?
In my mind there is no question that the limiting factor is Paul's time. The amount of time Paul spends with his portfolio of companies is the integral of the number of companies he funds with 50% decay to account for companies that quit. There is obviously a physical limit at 24 hrs/day.
Without seeing the work going into YC firsthand, I can only speculate on the limitations of that end.
However, looking further into the lack of quality applicants, I believe strongly that the failures of the public education system are a direct cause of this lack of applicants. In fact, I would be willing to wager that most applicants are some of the few that 'slipped through the cracks' of the public schooling experience with their minds and ambitions intact. To avoid infringement: this is all covered in Paul's oldie-but-goodie article, "Why Nerds are Unpopular."
And then you have the even higher end (less direct) influences. ie: the modern world diluting the American dream through the 'satisfaction' derived from a big screen TV and a dozen maxed out credit cards. (anyone feel the urge to reread Great Gatsby?). But thats more the realm of philosophers and sociologists.
The problem with scaling YC is geography. YC is in USA, and we are not. We cant or wont drag our co-founders and girlfriends to YC, so Paul will never get to speak to us or talk to us about our ideas, and we have to waste time funding our own ideas instead of letting YC do it.
I actually filled out a YC form once and never ended up submitting it because I knew deep down I didn't want to move to the USA.
The problem scaling YC is definately time, it sometime sucks that we only have 24hrs/day!...I had a few friends that were VCs and they worked like dogs. A few VCs shuffle you off to a Jr. Associate, which has some negatives, the biggest being that if you had any experience at all, you knew more about running a business than they did.
If I was in PG shoes and I had to scale the business, I'd definately recommend getting some Sr. Operational folks with a like-mind to work very closely with the portfolio companies.
I think PG's essays and YCN can be a huge boost to scaling YC itself. He wrote of attempting of Huffman coding in the "hardest lessons" essay, perhaps he could also reference comment IDs as well. Maybe something more forum-like is necessary though, where topics can be marked "sticky" forever.
If each group of founders leaves behind their answers in a permanent form it seems like that would help with most of the common questions, leaving only the tricky new questions to be answered.
So simply, in fact, that had I met the criteria, I'd ask Paul to sponsor me in setting up YC Israel.
YC can be scaled by both growing and duplication (creating copies that operate in different locations):
What do you need to run a YC "chapter"? Some of you might reply "Paul Graham". Well, I appreciate that, but it's wrong. The only resource needed to run a YC chapter that isn't abundant is people with the enthusiasm and experience needed to guide young entrepreneurs.
But what does YC produce? Exactly that.
Paul, you remarked lately that the reason you run YC is probably that you don't need money and do want to work with people you like. Well, take any hacker that has successfully sold a start up and he'd probably want the same.
So young hacker =} YC =} experienced entrepreneur {= YC
When I'll exit my business (or stabilize it and stay within), I'll call Paul and ask to found YC Israel. For now, I have other work to do :)
Amount of money available to invest?
How much attention you can pay to the people you fund?
The number of applications that don't suck?
And given an unlimited supply of the current limiting factor, how much bigger could you get before running up against one of the other two?