AI Startups Favor Experts, Overlooking Beginners

AI Startups and Their Impact on Entry-Level Employment

A recent study conducted by researchers at Harvard Business School examined the workings of so-called "AI-native" startups. These companies, which integrate artificial intelligence into their processes and products, seem to favor experts over entry-level workers. This trend results in a flatter management structure and a reduction in the number of employees.

Harvard researchers, in collaboration with INSEAD, published a working paper that highlights the differences between AI-native startups and those that are not. By analyzing companies backed by Y Combinator between 2020 and 2024, as well as a broader sample of U.S. startups funded by venture capital, the study titled "AI-Native Firms" revealed significant trends in team composition.

A New Category of Companies

"AI-native startups" are distinguished by two main channels of innovation. The first, the process channel, involves using AI to enhance employee productivity. This includes tasks such as coding, sales, design, or coordination, which can be performed more efficiently with the help of AI. The second, the product channel, integrates AI directly into the products sold, enabling customers to perform tasks that previously required human intervention.

Smaller and More Specialized Teams

AI startups are characterized by teams that are approximately 25% smaller than their non-AI counterparts, but with a 13% higher proportion of technicians. The share of entry-level workers and managers is reduced by about 15%. These figures challenge the notion that AI could facilitate access to higher responsibilities for beginners by automating routine tasks. In reality, "vibecoding" has allowed non-engineers to turn ideas into prototypes, but this does not seem sufficient to offset the increased demand for technical talent.

Increased Demand for Experts

The study shows that AI startups attract more senior workers, with a 20% higher proportion than in non-AI startups. These companies tend to recruit individuals who graduated from prestigious institutions, often based in Silicon Valley and predominantly male. This raises questions about the democratization of opportunities in the tech sector.

Consequences for Demographic Gaps

The authors of the study express concern about the implications of these trends on demographic gaps. While AI accelerates learning for those who adopt it, uneven adoption rates could widen performance gaps, both at the individual level and among entrepreneurs. By concentrating opportunities among already qualified workers, AI startups could contribute to increasing inequalities in the sector.