Two profound things are happening right now for entrepreneurs. First, AI is creating an entirely new set of capabilities for people to build new experiences and solve new problems. In the same way mobile and the cloud unlocked a new canvas for application developers, AI opens what is likely an even more vast universe of possibilities. Second, AI is changing how entrepreneurs build products and businesses. Both of these things combine to make this the most exciting moment in time to build things I've witnessed in my career.

Regarding the latter, I have been thinking a lot about what it means for a startup to be, for lack of better words, “AI-native.” AI-native startups are those that are born in the times when one can do more with meaningfully less people and resources, and embrace the cornucopia of AI tools that empower them to do this. From agents to co-pilots and automated workflows, the way we can build things today is vastly different than just several years ago.

I think of being ai-native as existing on a spectrum between automating everything possible with agents (eg we don’t have a marketer or customer support, we have agents that do those jobs and more) to everyone inside a company embracing tooling to make themselves more than twice as productive than they could have been just years ago.

Here is a good description of two ends of the spectrum as presented by two tweets:

I like these because they provide some explicit examples of what this can mean. I don't think there's one single definition for AI-native, it's a representative style of building companies. And it comes loaded with implications for the future of startups and innovation and the mindset founders assume when building things.

The mental shift is real amongst builders, and it is all about embracing doing more with less, faster.  It used to be that a sign of "success" was “blitzscaling,” or rapidly hiring people and growing the size of a company to tackle an opportunity in a hot market. Entrepreneurs were fed endless money to pursue opportunities and hire, hire, hire. There is a reframing happening where this is no longer the sign of success. The ability to stay lean as long as possible and focus on building and shipping instead of hiring big teams is leading to a new ai-native operating model. It’s exciting: do more with less capital and less people. This, of course, is a threat to most VC models, which depend on deploying as much capital as quickly as possible. But builders shouldn't care about VC models when solving problems - they should care about solving the thing as quickly, effectively, and capital-efficiently as possible.

Here's an example of this mentality as expressed by the co-founder of Bountycaster, a two-person team that has gone far and fast:

Founders are capable of doing all sorts of jobs now. I cannot tell you how many experienced entrepreneurs I have spoken with who are so excited to try to build new things and not have to deal with "company building" and people management. The idea that you can now go exponentially further than ever before with a team of 10 people or less used to be the stuff of dreams. This sentiment is burrowing itself in the founder's psyche, particularly those building at the application layer, and it's becoming pervasive. That's a very good thing.

Another great thing about ai-native startups is that they have a structural advantage relative to pre-existing competitors. They are unencumbered by the ways people used to build things and can embrace AI tooling to endow every member of the team with superpowers. In this sense, they are operationally counter-positioned to incumbents in many ways. Incumbents are riddled with layers of management. Managers manage people and get things done through them. That is their profession, and they have no incentive to relinquish those responsibilities and compromise their career. For this reason, large companies will struggle with adopting tools that make them meaningfully more efficient, and their startup competitors will be born with them. This will manifest in their economics and ability to ship and move fast. And that is what matters when building new things. 

Every day we are learning more about what it means to be AI-native, and entrepreneurs are unlocking new tools and ideas to push the envelope even further. We are particularly interested in this at USV and are hosting a demo day for founders to show how they build their companies in ai-native ways. If you have an insight you want to share or you want to attend you can reach out to us here on twitter or email me:

The Librarian

@usvlibrarian

AI is transforming how companies are built from the ground up. At "The New OS" (Feb 6 at @USV) 6 founders will demo the home built systems powering their organizations. Have you built novel AI infrastructure for your company? We're hosting an open call for the final spots.

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6:01 PM • Jan 10, 2025

It's a new day for founders, and it's incredibly exciting. Building a company will always be very hard, but building a product and a business has never been easier. A new golden age has commenced.