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so the arrows are for rating?

I guessed it, haha!

Look out when the bosses pretend to be coworkers.
A boss is a coworker. It's all anonymous, anyhow.
It's actually a lot of fun to use. I'd like to see a web chat client that works the same way.
This thing will be a victim of its own success. If it ever takes off, it will be blacklisted by every web-content filtering program. If gmail and vault.com are blocked, you'd better believe this will be, too.
and gmail is hardly a success at all.
I hardly think Gmail can be called a victim. Blocked? Use it elsewhere -- gossip doesn't run dry outside the workplace.
They thought of this. In that case people will use it from home. And if they're working for the kind of company that would block Overhear.Us, then there will probably be a lot they need to talk about.
People are lazy. And people at big companies, where web-blocking software is routinely deployed, are especially lazy. Standard Bayes.

Vault.com, despite not having nearly as nice a site as overhear.us, had reams of traffic and posts about individual employers, until it got blacklisted.

I can imagine this site having a good following with companies that are not strict about the web-filtering list [which I abhor, btw].

However, those companies are not likely to be large because large companies have burdensome regulations [SEC in financial industry, HIPAA in healthcare industry, SarbOx for all public companies] that generally require (or imply that) employee communication and web usage should be monitored.

And large companies are the interesting ones for overhear.us, because they have the most interesting networks and stories!

And also provide the least chance of getting caught. Yeah, I know it's anonymous, but at a small company "anonymous" doesn't mean much. It's not hard to figure out who's dissatisfied, who's the gossip queen/king, or even figure things out just by the way someone writes.
Management at big companies is good at beating the ambition out of their employees.
Is anyone else kind of dissapointed to hear that after what seems like a grueling application process (I didn't apply) this is the best YC can come up with?

Maybe there aren't that many areas on the web that are still ripe for innovation...

I think it's kinda clever.

It reminds me of my reaction when I saw Reddit. "Well, this is new, but I can't imagine anyone ever doing something useful with it." I was right about the first part, right about the second, but completely wrong about the implicit assumption that things have to be useful before they'll be used.

Agree with the first two parts, although I do think Reddit serves a useful purpose. I don't use it because news.YC and Digg provide me with more than enough to digest every day.

Back to the point, though: who do you see as the target demographic of overhear.us?

I suppose when I think about work, I think of my parents, and despite being technologically capable, 1) this site would get blacklisted where they work and 2) I can't see them sitting in front of a computer at home gossiping, although they do talk about work quite a bit

I figure it's made for the younger FaceBook generation who're just now entering the workplace and want a place to gripe about FaceBook being blocked at work.
I can certainly see this being more appealing to them (us) as a generation, but I still think the fear of getting caught will outweigh the desire to post one's thoughts online in many cases, especially when it isn't all that hard (and is actually more useful for one's social life) to talk to someone at the office, be it at the water cooler, in the hallway, in your own office with the door closed, or at lunch or dinner.
It remains to be seen whether it's the best YC can come up with. The bar has been set pretty high (Reddit, though some, including Paul, consider Loopt the best one so far...I think I disagree with him on that, though Sam is a damned impressive fellow).
I don't know. This has the potential to get under a lot of people's skin, and that's always a good thing from a VC point of view.

I can realistically envision people saying "they banned overhear.us at work" in a few months.

Question though: What stops this from being a platform for marketing - i.e. Is there a danger that the company floods the forum with bad info? What about insider information? Are you not liable if I post that my company is tanking this quarter?

This could turn into the non-nerd version of InklingMarkets.com. Or it could just be a place to bitch about your boss. I think it's great!
I don't think people are paranoid enough to use this.
That depends strongly on the company, doesn't it? A list of companies represented here after they get some usage would read like a "don't apply to" list.
That shouldn't be a problem. You have to already have a company email to view that company's comments.
But you can view the fact that people are commenting on a company. If a whole bunch of one liners suddenly appear as soon as the work day is over, you could guess that it's been banned at work and everybody's griping over it.
Wow. I guess this explains why they weren't interested in our http://dontrentfrom.com , since it's a variant on the same idea. It would be trivial to spin off various topical forums.
Guy Kawaski just invested in something similar to this didn't he?
i don't think its similar. kinda like a papparazzi thing.
edit nm... didn't see the FAQ at first.
Guys, watch out for lawsuits and subpoenas! Some employers are gonna go nuts over this... trade secrets, harassment charges etc. Make sure you remove logs, IPs, etc.
Are you serious? This is the idea? That you had 10 slides or whatever to present it to investors? Wholy cow. The end is near...

Soon dressed up "hello world" implementations will pass by as "startup ideas".

Why bother going to college and paying for CS degree if after 10 days with a RoR book you can start your company!

"Why bother going to college and paying for CS degree if after 10 days with a RoR book you can start your company!"

I think that's kinda the point of YCombinator...

YC folks: I sure hope you told this crew about password hashing.
This has to be weakest idea I have seen come out of Ycombinator.
I like the idea, anonymity but based on verified identity, facebook could do a similar spin on it for university gossip, or in fact you could do a similar spin on it for universities with a little fb integration. No one should be using it from there work though because if they post anything offensive up quite a lot of companies monitor all traffic and it wouldn't be hard to find out who it is. Txt-in method would help with that, trcky but not impossible.