I have no idea what they want to do, but I've been reading long enough to take a stab at guessing.
I didn't question the quality of the startups, nor state that there aren't good ones outside of YC, just that anything from outside their program that they present to investors is likely to be a risk for them in that they know less about the quality, and they risk taking attention away from 'their' businesses.
Maybe I should indicate some scenarios I had in mind when I posted this:
In every YC funding cycle there will be those that will fail to get accepted. Of those, some will pursue their dream.
There is more risk in choosing potentially good founders, than a startup that you failed to recognize early that may had potential but now is in the process of proofing concept and on good track.
Applications are every six months. If you think your progress since you were rejected may change their mind, and if you still want to get into YC, why don't you just re-apply with the updated info?
I didn't question the quality of the startups, nor state that there aren't good ones outside of YC, just that anything from outside their program that they present to investors is likely to be a risk for them in that they know less about the quality, and they risk taking attention away from 'their' businesses.