You're leaving out an important part of the equation: the sheer number of deals that went through YC, and the data associated with them. When you know the compl

You're leaving out an important part of the equation: the sheer number of deals that went through YC, and the data associated with them. When you know the complete story on 500+ founders, and look at which ones were successful, patterns emerge. These patterns can be used to make better decisions and give better advice. Anybody who's talked to PG will tell you he is a walking database of startup patterns. "I've seen X and Y do this and they failed. Don't do it". I'm sure as YC scales, that database will be externalized to a medium other than PG's brain :) So, yes, there is a formula: it's called data.