1). "Proprietary deal flow" is another way to say "A given firms choices are to take my offer or forgoe investment." YC has scads of it, partially because it identifies entrepreneurs at a stage in the lifecycle where angels are not an option or where they might not be recognized as an option (subtle difference there). This has accelerated with YC's successful track record.
2). Mass production techniques in a market where everyone else thinks it is still the Italian Renaissance.
3). Super linear returns to just about everything they do, due to being able to take one firm's gains and reapply them to everyone else with the YC brand. If they coach a firm to get one piece of PR, for most angel's that is a one-off Yay, but YC essentially gets to keep a portion of the win. Ditto link juice, reputation in the hiring pool, discounts, access to nonpublic offerings, etc etc.
4). "Alma mater" levels of loyalty among startups, which means that for a fixed time-bounded investment they continue deriving network effects years down the line. It's comparable to Harvard giving scholarships: you only have to educate a poor kid once but he's crimson for the rest of his life.
There's an entire ice-cream sundae of win here, and it's hard to say it's the peanuts or the chocolate that makes it work. Peanuts taste great, chocolate tastes great, both taste even better together. And if they find a banana? N^2 flavor explosion.
I initially misread this as VCs and was going to blather about how VCs follow the herd like everyone else.
But YC is entirely a different kettle of fish. Anyone who can get in based on deal and team merits before there is any social proof obviously is defining that more than followinng it.
