"That said, finding the next Google and buying a 1% stake is my current billion dollar plan :)"
Facebook, Google etc.. did not go through incubators and they were not started by "established entrepreneurs". If you are looking for a 1% stake in the next google do you think that your preference toward companies that go through incubators will cause you to miss the next big thing?
YC is not an incubator, and nothing like it existed when Google and Facebook were started. As I mentioned in the parent comment, I think the closest match is Sean Parker, and he owns a very nice chunk of Facebook :)
There's a very good chance that the next Google or FB will be part of YC, because YC is a smart deal for founders, and therefore it will attract the smart founders, and those are the people likely to start the next Google or FB.
paul - it sounds like you don't like to be the original investor going in with an unknown commodity -- that an accurate assessment? if not YC, what are other filters for you?
"Because YC is a smart deal for founders, and therefore it will attract the smart founders"
YC might be a good deal but that does not mean it will attract "the" smart founders. Yes it will and does attract some smart founders but just because you dont want to do YC does not mean you are not smart or that you are less likely to have the next big thing. If anything this "All smart founders will go to YC" attitude is one of the main reasons you are more likely to miss out on the next big thing.
Whoever is out there creating the next big thing might not even know that YC exists and if he does there are a plethora of other reasons (life and work related) which may cause him/her to not want to apply. Even if they do apply PG has said his strong suite is not picking who gets in and they pass on good people all the time so you are not only hoping that you see the next big thing but that YC sees them too. All these additional criteria make it less likely that you will find the next big thing IMHO.
Given that I have finite time and money, I need good heuristics for deciding who to talk to. YC is one very good signal, but obviously not the only one.
Facebook, Google etc.. did not go through incubators and they were not started by "established entrepreneurs". If you are looking for a 1% stake in the next google do you think that your preference toward companies that go through incubators will cause you to miss the next big thing?