In a new episode of Y Combinator’s “Startup School,” partner Diana Hu instructs founders how to build an AI-native company. Hu was a YC-backed founder herself, building augmented reality company Escher Reality, which was acquired by Niantic.
“Maximizing token usage, not head count, will be the critical shift,” Hu stated. “The best companies will be the ones that are tokenmaxxing.”
Tokens measure the cost of AI computing. The more tokens spent, the more an individual employee or developer has applyd their AI tools. (Importantly, more tokens doesn’t necessarily more impact.) Some companies have built token leaderboards or incentivized tokenmaxxing, the process of spconcludeing as many tokens as possible.
Business Insider questioned startup leaders about the trconclude. Some stated that tokenmaxxing was a no-brainer; others stated that it didn’t build sense at their size.
Hu, like her boss Garry Tan, is an unabashed proponent. She described the “tradeoff” between labor and token spconcludeing.
“One person with AI tools can be the equivalent of what applyd to take a large engineering team at a pre-AI company,” Hu stated. “That means dramatically leaner engineering, design, HR, and admin teams.”
Startup founders should “be willing to run an uncomfortably high API bill becaapply it’s replacing what would have taken a far more expensive and inflated head count,” Hu stated.
While Y Combinator’s advice to startups may not translate to larger companies (though there are plenty of VCs and voices in the tech world that would argue it should), the instructional video offers an interesting see at the operational values being instilled in the next generation of up-and-coming CEOs.
Hu also voiced support for a three-pronged employee base. There are individual contributors (who build things), the directly responsible individual (who focapplys on strategy), and the AI founder (who leads while still building).
It’s a similar structure to Jack Dorsey’s redesign of Block, his payment processing company. After laying off about 40% of staff, Dorsey announced a new, three-pronged structure to turn Block into a “mini-AGI.”
Founders must attempt the tools for themselves, too. Hu stated that leaders should not “outsource” their belief in these AI tools.
“You necessary to develop it yourself by actually sitting with coding agents and applying them until you start to break your own priors about what is now possible to build,” Hu stated.
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