If any angel(s) are looking for a niche in the incubator "market", this would be a pretty good one. Real value can be created if someone can increase the chances of success for single founders.
There are benefits to targeting a niche, common problems through the group, easier to market the incubator to a group, differentiation to other incubators.
From my point of view I would love to see a go-to place for single founders, if there's one thing we could use it's others to talk to where friends/family just don't cut it!
Jeff Bezos was a solo founder when he started Amazon in 1994. Employee #1 (Shel Kaphan) was brought on before incorporation, but says Jeff was the founder (http://www.geekwire.com/2011/meet-shel-kaphan-amazoncom-empl...)
Andrew Mason was a solo founder of Groupon, started with $1 million seed money from a former employer.
Lots of people like to point out Drew Houston of Dropbox as another single-founder success story (and it is!), but he did have a co-founder by the time they presented at Demo Day (if not before YC started, I can't remember which).
However, he did apply as a single-founder. Here is his YC S07 application: http://dl.dropbox.com/u/27532820/app.html
The single founder was Philip Kaplan (although he's not you're average single founder).
But then how would the VCs play the founders off one another?
You're either a VC or under 30.
Edit: There is clearly not a lot of gray hair on this site.
In a startup, the founders, and their relationship with each other and the company, is probably the biggest asset. If an investor doesn't like the team, he just won't invest at all.
9 times out of 10 you've come up with this idea on the crapper, in the shower, or at the bar with your friends - spend more time thinking at a high level, who will use this (target market), how much money could i make (market size), and what will it need (design, development[mobile, web], advertising, sales team, support, infrastructure), and how long it will take. After running through these things, the result is not likely to be you deciding to apply to YC as a single founder. [see last paragraph of comment if you just can't find a co-founder, it happens]
People who are capable of executing as a single founder will do so, and people like pg can see this by looking at the individuals history, and talking with them about their new idea.
Single founders that fail are founders who are overly confident, execute badly, or are scared of 'big scary investors' and negative feedback (yea there are more, these are just examples). Folks like pg can see these things in people, and will deny your application, rightfully so.
If you have an idea, and you think that YOU as an individual are the perfect 'team' then apply to YC that way, if pg agrees you'll get in. I can't imagine it happens very often that people who are humble and grounded think to themselves "I don't need anyone else, I am a baus!", if you do, step back and rethink things.
If its a matter of you just not being able to find a co-founder, why not just disclose it, and ask for help rather than trying to manipulate your app, or your idea to appear as though you don't need help?
IMO the question is more nuanced than "how many founders is best", e.g. at the Google IO funding panel, it was stated 4 is statistically optimal (http://www.youtube.com/watch?v=15iWltPLuPY). But really, we should be asking what is right for a given type of industry/business, and what is right for different types of people.
I particularly loved the part where you asked pg why he let you in. If nothing else, I understand my startup backwards, forewards, inside out and upside down, and I'm getting closer to conveying all that in the app.
Life keeps getting crazier and crazier, but I wouldn't have it any other way.
"But, if you want to do something big in the tech sector, you absolutely must be in SV for the connections, money, talent, etc."
Really? You "absolutely must" be in SV? Seems like Groupon, Foursquare, Groupme, Bitly, Grubhub, Gawker, Gilt, Kickstarter, Amazon, Tumblr etc etc etc are doing just fine not in SV.
Great companies can be started in many places. A critical mass is helpful, as is money. You can get money from anywhere. I'm from Pittsburgh. A company there (Dynamics) just raised a $35 million series B. They are doing great on "connections, money, talent, etc" in Pittsburgh. Several of your YC batchmates will leave SV for other places. They will be just fine on all those things too. You might not have been fine in NC, but there are many places you would be able to raise money, find talent, etc. We ended up rejecting some VC's that wanted us to be in Cali but ended up with terms we liked from investors we like. (We're in Chicago) I have occasionally given thought to going back to SF/SV but for our business there wouldn't be any impact other than we'd have to pay higher salaries and rent.
Startups are pretty dicey. I don't know what a founder's chances are, but I'm pretty sure that they are better in the Valley. Depending on your market, your personal network, etc., they might not be THAT much better... But it's pretty hard to argue that, on average, the Valley doesn't help your chances in StartupLand.
Sidebar: Of course, if you're going to go for a different type of startup than YC's particular brand, you can do it from anywhere (central Japan, for instance). The article refers to such startups as a "lifestyle businesses". I find this terminology hilarious considering the most prominent example of a "lifestyle business" in our field has funded a racecar build by advanced beings for one of its founders.
"you should be in the valley if you want big VC relatively straightforward and uncontroversial."
The guy just gave you scores of examples of companies not in the valley that raised big VC - controversy