I don't know if the OP will read this comment but coming from India, I can very well understand the kind of circumstances you are in. When you talk about the expenditure they make on you and how you can pay your rent for 10 months, I can absolutely relate with it. Moreover, travelling across the globe and then being given only 10 minutes to understand what you actually do. You may actually have a better chance of getting funded in your own country without all this travel and hassles.
Someday, I would also start my own business and I understand that getting traction is of utmost importance. But, there is another aspect to it which is the fact that some people actually start a business or just run a simple idea for the sheer pleasure of solving a problem and to help others. I think you are on those lines and I wish you all the best to continue working in this direction.
I think your post was very well written and you have actually listed some of the possible issues with their selection process.
I think both you and the OP are missing the context of the $1500. I suppose it's "non-negligible" as he said, but it's barely enough to cover 2 founders flying from New York, plus a hotel and rental car. In Thailand $1500 may cover the cost of 10 months rent, but in SF or New York, it's closer to the cost of one month's rent. It's not an insignificant amount of money over the 300 teams they invite for interviews per batch, but it's certainly the cost of doing business.
I can understand when you say that $1500 x 300+ is a great amount they are investing at the cost of running their firm. While this is very important, we should not overlook the way the entire process is conducted (at least this is what I gather from the OP's post and personally believe too).
Thanks for your supporting comment and good luck with your business! Besides the money more of an issue was possible distraction for us. We are 3 co-founders. For us all going there would mean several hundred hours of flight and travelling. So we made the decision to only send one person (after consulting with Y Combinator).
However we should point out that Sven & Alex were on stand by via Skype during the interview to answer any possible questions that might have come up.
The decision you all made is very logical because it doesn't make sense if all of you leave your business for pitching to a fund. I am not saying that the pitching part is not important but you are already running your company for 2 years and all of your leaving your office for such a long time would make your business suffer in some way.
Someday, I would also start my own business and I understand that getting traction is of utmost importance. But, there is another aspect to it which is the fact that some people actually start a business or just run a simple idea for the sheer pleasure of solving a problem and to help others. I think you are on those lines and I wish you all the best to continue working in this direction.
I think your post was very well written and you have actually listed some of the possible issues with their selection process.