AI Will Soon Enable "$100M Businesses Run By Just 10 People," Says Y Combinator CEO

Artificial intelligence is creating an unprecedented shift in startup economics, with Y Combinator CEO Garry Tan revealing that AI-powered teams of just 10 people can now build businesses generating $100 million in annual revenue — a feat previously requiring teams ten times that size.

This paradigm shift is already happening within Y Combinator's portfolio, writes End of Miles, with startups achieving million-dollar revenues with unusually small teams thanks to large language models handling tasks that once required entire engineering departments.

The small team revolution

Tan's revelation comes as the renowned startup accelerator marks its 20th anniversary, with the CEO identifying a fundamental shift in how modern startups operate compared to previous generations of tech companies.

"The wild thing is people are getting to a million dollar to $10 million a year revenue with under 10 people and that's really never happened before in early stage venture, "Tan explained during an interview at YC's Winter 2025 Demo Day

According to the YC leader, this efficiency isn't limited to small-scale operations. The accelerator is seeing a new category of startups emerging—lean organizations targeting specialized markets that were previously considered too niche to support substantial businesses.

"There are all these pieces of software that normally you could never write software for... industries that before people would say 'oh it's too small a market' but all of those things now can support hundred million dollar a year businesses that are run by 10 people." Tan said

The "vibe coding" transformation

At the heart of this shift is what Tan describes as "vibe coding" — a term coined by AI researcher Andrej Karpathy that refers to the practice of using conversational prompts with large language models to generate functional code without traditional programming.

The YC executive noted that approximately 25% of startups in the current batch have had 95% of their code written by AI, dramatically changing the economics of building technology companies.

"You don't need a team of 50 or 100 engineers... That team of 10 today when they are fully vibe coders... will literally do the work of 10 or 100 engineers in the course of a single day." Tan explained

New opportunities for displaced engineers

Rather than seeing AI as a threat to tech jobs, the startup veteran views this shift as an opportunity, particularly for software engineers who might be concerned about the tightening job market at major tech firms.

The accelerator chief suggests that engineers who might not land roles at companies like Meta or Google now have unprecedented leverage to build their own substantial businesses with minimal staffing needs.

"Maybe it's that engineer who couldn't get a job at Meta or Google who actually can build a standalone business making 10 or $100 million a year with 10 people. That's such a powerful moment in software and I think all of venture and startups are really going to change from here." Tan predicted

This efficiency is already translating into measurable growth. The Y Combinator CEO revealed that for about the last nine months, the entire batch of YC companies has averaged 10% week-over-week revenue growth in aggregate—a metric that previously only characterized the most successful companies like Airbnb during its early acceleration period.

Unlocking niche markets

Perhaps most significantly, Tan sees AI-powered development democratizing access to markets previously considered too specialized to warrant investment.

Industries that lacked software solutions due to their limited market size can now be served profitably by small teams leveraging AI to dramatically reduce development and operational costs, creating a new category of highly efficient, specialized software businesses.

For engineers entering the market in 2025, the YC CEO's advice is straightforward: embrace AI tools and look for underserved sectors where software hasn't yet made inroads.

"You should go find a product or area of GDP where there's no software and if you can go in there and understand what those people need, they're going to pay you." Tan advises