The moment everything changed
Founders are building in the middle of the biggest shift since the first industrial revolution.
I've been working with founders building SaaS companies for decades and something fundamental has shifted in how companies are being built. I helped develop frameworks for understanding this journey in the past, creating clarity and simplifying some of the complexity. I believe our founders found them useful.
[Please forgive the low fi video and me squinting. I was in the garden at the weekend, a beautiful day, and felt inspired so recorded this impromptu."]
But I'm not sure they're enough anymore. Or that they're right.
Because AI doesn't just accelerate startups. It may change the nature of company-building altogether.
Here's why this matters. Moments like this, rare shifts in the operating system of the world, let alone businesses, are incredible opportunities for value creation. The industrial revolutions reshaped the world, let alone industries. The internet, cloud computing and the mobile waves rewrote many rules. AI is doing both, at incredible speed.
If you're a founder, that means two things: You have a chance to grow something extraordinary, with less constraint on building and ambition, faster than any generation before you. And you'll need to question every assumption about how companies have been and will be built.
It's interesting to reflect that the first industrial revolution wasn't named as such until many years later. We know some of the winners from that period, but many more fell by the wayside who we will never know. Paradoxically, there is so much being written about scaling AI companies today that it would be easy to assume that the rules have already been written when we are still at the very beginning.
History tells us that is not the case. The rules have not been written. There will be far more losers than winners. We will not know how companies scale and endure and more importantly how they will be valued by acquirers and public markets for many years to come.
We know from the last twenty years of SaaS and Cloud startups that only 1% of all the companies founded in that period that raised more than $3m achieved $100m revenue or a billion-dollar outcome and less than 0.8% did so in less than ten years. I don’t imagine the odds were much better in the 19th Century, and I don’t imagine they will be much better in the 21st. AI is dramatically increasing the software market, in ways we are barely able to appreciate. Many more companies will be founded in the years to come but I do not imagine the odds of extraordinary success will improve.
What we do know is that great founders don't follow playbooks blindly. They start from first principles, deeply interrogate problems, and use the scientific method to create their own rules.
One reality has become impossible to ignore. Across the industry, companies are reaching higher revenues and growing faster than previous generations, but with much smaller teams.
This is not an isolated observation. Founders, operators, and investors alike are seeing the same pattern emerge.
When you look at companies today, they are growing faster with fewer people, burning less money, with higher revenues for the time period than previous generations by an order of magnitude.
The overall median team size has dropped significantly. As Michelle Cheng, Notion Capital’s Talent Director, observed: "In the world of startups, this is no small adjustment; it's a fundamental redefinition of the building blocks needed for growth."
A decoupling of growth from hiring is well underway and well overdue, paving the way for the rise of lean, outcome-driven organisations. The old benchmark of doubling headcount in line with revenue is outdated. Tomorrow's $100M companies won't need or want 1,000 employees to get there.
When I consider why companies are growing faster with smaller teams, it's easy to jump to conclusions. One answer would be more repeat founders, those with prior experience starting and building companies. Even if they hadn't scaled successfully before, they had learned the hard way. Their teams also include far more proven leaders, people who had seen success and failure before. This is a factor of course.
Across the board, every one of the companies performing well is using AI to accelerate product development, improve go-to-market performance and increase personal productivity. That is part of the answer.
But there's something deeper happening.
What strikes me hardest is that nearly every company moving at speed is using AI not just to move faster or operate more efficiently, but to solve problems that had previously been unsolvable.
This shift is driven by the unique combination of capabilities AI now offers: It can process vast volumes of unstructured data such as text, audio, images, and video, and make sense of it in real time. It can reason across multiple, often disconnected data types and datasets, identifying patterns and drawing conclusions that would once have required an army of analysts. It allows users to interface with these systems through natural language, collapsing the distance between intent and execution.
Founders are no longer constrained by traditional software constraints or paradigms. They are building systems that perceive, reason, and respond, unlocking problems that were once too complex, too dynamic, or too expensive to solve.
So the shift is not just one of speed; it is one of possibility.
In a way AI demonstrates what the human brain is capable of, if it had infinite capacity. Margaret Boden’s work frequently discusses related themes, specifically, how AI offers a lens for understanding the human mind's capabilities and limitations. She states: that the most important lesson from AI is appreciating the "enormous power and subtlety of the human mind.”
Founders, with unique insights, are the key component of this shift. These are not people stumbling into a problem space and figuring it out as they go. They have a deep, often hard-won, understanding of the problem they are solving and its value to the market.
As my colleague Jos White puts it so well, these founders are "insiders to the pain, outsiders to the market." They have lived the problem. They carry the scars. But they also bring fresh eyes, unconstrained by legacy assumptions or conventional solutions.
That combination of deep insight and outsider objectivity makes them uniquely equipped to appreciate what is possible and to undertake the necessary creative destruction. Their minds can imagine it and with AI, they finally have the tools to make it a reality.
At the heart of every company we choose to invest in is the same principle: they are doing something that is hard to do but incredibly valuable. Now, what was hard is becoming easier. And what was impossible is increasingly within reach.
This isn't just about building better products. These founders are creating fundamentally different kinds of companies.
If I'm right about this shift, it raises uncomfortable questions:
What does product-market fit look like when a product has no precedent?
How do we evaluate traction when the market is still forming around the solution?
How should we you consider value when products are being constantly reinvented?
For us as investors, this shift challenges our assumptions. We're being forced to revisit our strategies to invest in companies, the ways we measure their success and potential and our ability to support companies. All in real time.
This all points to the possibility of a business as a fundamentally different construct.
Or does it?
I don't have answers to these questions yet. But I'm starting to think that admitting we don't know is the first step toward figuring it out; what really changes and what is as true today as it has always been.
Because one thing is clear: AI is transforming the way companies are built: faster growth, smaller teams, new sources of advantage. The founders who succeed will be those who clearly see which rules have indeed changed, which remain and which are more important than ever.
The rest will be following playbooks for a game that does not exist.
Click here to read my Manifesto for AI Builders.
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This article reflects my observations from fifteen years in venture capital and hundreds of conversations with founders building in the AI era. I don't claim to have all the answers, and believe admitting we don't know and asking better questions is the first step toward finding them.
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No growth hacks. No generic advice. Just honest reflections from the frontier of the impossible.
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