A month is not 730.484 hours on your application, it's spending a lot of time thinking and musing about your application and your business.
Our application process helped hone and focus our business in ways that nothing else has. I would argue that working hard on your YC application is working hard on your company.
As you've pointed out twice (#2,#3), there are always exceptions to rules.
If a company does not make it past a YC interview, then there was something that YC didn't like... it can only help that company to try to extract that issue and deal with it early on.
"I would argue that working hard on your YC application is working hard on your company."
This is exactly wrong. There are two types of questions on the YC application:
1) the ones about you as founders, and
2) the ones about your business
Spending time thinking about the first type of question (e.g. "Please tell us about the time you most successfully hacked some (non-computer) system to your advantage.") does not help you build your business -- not in the least.
And if you spend time building your business (i.e. talking to customers and building your product), then you'll be well prepared to answer the second kind of question.
You have it backwards. Working on your YC app != working on your business. Working hard on your business, however, is the best thing you can do make your YC application successful.
I think we believe the same things here, and are talking around each other.
Spending time thinking about our business for us included talking to customers and asking hard questions. Only after understanding our customers could we build anything at all--for an enterprise product like ours, it's impossible to iterate in a vacuum.
Working on your company should always be the answer, but before we could ship code, we needed to know where we were going.
As PG points out, "The biggest mistake founders make when applying is to confuse us. Half the time when I'm reading an application I'm thinking 'I have no idea what this person is even talking about.' I suspect this often the writer's own confusion showing through."¹
Trying to explain our very-difficult model helped us to both understand it and define for ourselves.
Admittedly, it was a bit weird to just start making money without knowing where the future of the company was going. The YC app itself forced us to talk through these things; but maybe this problem is unique to our company.
One of the most valuable pieces of advice YC offers is that there are lots of things that are a waste of time, but feel like they're productive, and that these things are especially dangerous to spend time on.
Our application process helped hone and focus our business in ways that nothing else has. I would argue that working hard on your YC application is working hard on your company.
As you've pointed out twice (#2,#3), there are always exceptions to rules.
If a company does not make it past a YC interview, then there was something that YC didn't like... it can only help that company to try to extract that issue and deal with it early on.