[AmitinLA]

What I find interesting is how this is going to change the types of YC companies that will be funded, especially in the short term. One of the things I've noticed about past YC companies is how diverse they've been in terms of the markets/industries they're going after. This will largely change the focus of certain companies already funded as well as the types of applicants. Presumably YC has an upper limit of companies they can fund due to human capital restrictions, and if this means that they fund or focus more on companies focused on "transformative social experiences" this will mean that other incubators and angels that don't have the brand of YC may be able to market themselves/differentiate themselves from YC better.

[boredguy8]

Why would it change what's accepted? I could simply provide more access to those social applications that are already accepted/would have been accepted anyway.

[AmitinLA]

It's not just more access. This is a case where FB has, for some reason, signalled that they want to work with YC companies, and specifically YC companies. As some people pointed out already, maybe this is them outsourcing R&D. So let's accept that for a second, that this is a way to get them to outsource R&D b/c the FBfund isn't working. If that's the case, that means that they're looking to acquire companies. And not just any company, though that's always the case with any company anywhere with sufficient resources and an eye on growth, but specifically YC companies.

If we presume that the odds of an exit of a YC company before this interview were even across all industries (i.e., that no matter whether they were into working in travel or B2B or whatever a company's odds of being acquired/going public where the same) that is certainly not the case anymore. The odds of an exit for a YC/FB company probably just went up dramatically. In actuality, it seems like it went up dramatically; it's too early to tell if it actually did. And maybe not just b/c the YC company is not going to get acquired by FB, but b/c the YC company can get revenue quicker with preferential access to FB's revenue making methods.

But here's what the cynic in me thinks: based on the RFS[1], this seems really like a way for a cheap and easy way for FB, which has has major credibility issues with Connect, etc. to get good publicity for Facebook Instant Personalization. Since YC is super, super hot right now and just came off their demo day, the tech news was all about them. I don't know if money switched hands -- after all, if YC took a million (cheap for this buzz) that would be enough for them to invest in 66 companies at $15K a pop but with absolutely no risk to them since it's other people's money. If so, it probably wasn't enough.

In addition, YC's other RFS have been generic and in fields that have been buzzworthy enough that they didn't need YC entrants to attack the problem. In other ways, "The Future of Journalism," "Things Built on Twitter," and "iPad applications," -- these are not solving obscure but lucrative problems[2]. It's simply a way for YC to signal their interest in a hot space and that they want to work with the best of the breed in this space. Now, I presume, they're getting paid for it.

[1] http://ycombinator.com/rfs7.html

[2] I'm assuming that there was no similar deal announced with Twitter or Apple, which I feel like I would have heard about, but I could be wrong.