Saw one recently that literally forked VSCode and Cursor and called it a company with some really shady practices. Not even sure what YC was thinking with that one, but it indeed falls into the category of comical vaporware.
How did something like this get funded? They must think there will be a follow through to liquidity event, but no clue how. Maybe YC is playing into the bigger fool theory that someone else will come along and pay more so YC can extricate their equity.
Sure, that would be a theoretical failure mode. But that's not really what's happening right now, is it?
YC doesn't look to have a problem of people joining just to get the stamp on the resume and then "half-assing" it after they get into YC. I think that's something that YC is still quite actively selecting against. As long as they are selecting companies that make it to a series ~C (which most founders will stick around for as long as they are on an good-enough upward-presenting) YC can (partially) liquidate at good enough fund performance.
A high-quality early stage team that self-selects out of follow-up rounds may be a decent outcome for some VCs. This means early liquidity in all of the "positive" events. If the founders were high quality, spinning an acquihire out can still recoup some of the loss.
The challenge would come where the founders are not serious, and instead are viewing YC as a stepping stone to a level up position in a big tech/large firm. While I'm sure everyone has this idea to some extent as a fallback, you need people to be committed to making their business work.
