[The Journal] Y Combinator CEO on How AI is Changing What Startups Build

Y Combinator is one of the most influential tech incubators

in Silicon Valley, having backed companies such as Airbnb, Dropbox, and Stripe during their earliest stages. Each year, the organization selects hundreds of early-stage companies and invests millions of dollars into them, offering not just capital but a dense network of advisors and alumni founders. Garry Tan, its President and CEO, has been at the center of this ecosystem for years — first as a founder himself, then as a partner, and now as the institution’s public face.

Tan describes himself as “AI-pilled,” a term that signals not just enthusiasm but deep conviction. Having watched hundreds of portfolio companies

experiment with AI tools firsthand, he argues that the technology is not a passing trend but a genuine structural shift in what small teams can accomplish.

Tan’s core argument is that AI is acting as a force multiplier

for early-stage companies. Tasks that previously required large engineering teams — writing code, drafting legal documents, conducting market research — can now be handled by a handful of people equipped with the right AI tools. This compression of costs and timelines is changing the very definition of what constitutes a viable startup.

Where it once took years and tens of millions of dollars to build a software product to market, AI-assisted development is shrinking that runway dramatically. Y Combinator is already seeing founders go to market

with leaner teams than at any prior point in the incubator’s history. Tan views this not as an exception but as the new baseline expectation for the cohorts Y Combinator will fund going forward.

The conversation inevitably turns to labor. Tan acknowledges that AI will displace certain categories of work, particularly roles centered on repetitive or predictable tasks. Yet he resists alarmism,

pointing to historical precedent: past waves of technological change — mechanization, the internet, mobile computing — ultimately created more jobs than they destroyed, even if the transition period was painful for many workers.

Tan’s prescription is not passivity but active preparation. He encourages founders and workers alike to treat AI fluency as a core professional skill, similar to how spreadsheet literacy became non-negotiable in the 1990s. On a lighter note, he also argues that the social infrastructure around innovation matters — human connection, networking, and even parties play a role in sustaining the entrepreneurial ecosystem

that makes places like Silicon Valley uniquely productive. Innovation, in his view, is as much a social phenomenon as a technical one.