AI-Native Startups Hire Fewer Junior Workers and More Senior Talent, Harvard Study Finds
Researchers from Harvard Business School and INSEAD said in a working paper published in June that AI-native startups are building smaller, flatter organizations while hiring fewer entry-level workers and more experienced technical talent than traditional startups. The study, titled “AI-Native Firms,” analyzed Y Combinator startups from 2020 through 2024 and a broader group of U.S. venture-backed companies founded during the same period. The researchers defined AI-native firms as companies that use artificial intelligence both to improve employees’ productivity and to embed AI directly into the products they sell. The researchers found AI-native startups are about 25% smaller than comparable non-AI startups while employing roughly 13% more engineers. They also have about 15% fewer entry-level employees and managers, while the share of senior workers is about 20% high...
Researchers from Harvard Business School and INSEAD said in a working paper published in June that AI-native startups are building smaller, flatter organizations while hiring fewer entry-level workers and more experienced technical talent than traditional startups.
The study, titled “AI-Native Firms,” analyzed Y Combinator startups from 2020 through 2024 and a broader group of U.S. venture-backed companies founded during the same period.
The researchers defined AI-native firms as companies that use artificial intelligence both to improve employees’ productivity and to embed AI directly into the products they sell.
The researchers found AI-native startups are about 25% smaller than comparable non-AI startups while employing roughly 13% more engineers.
They also have about 15% fewer entry-level employees and managers, while the share of senior workers is about 20% higher.
Despite operating with smaller teams, the companies achieve valuations similar to non-AI peers, suggesting they generate more value with fewer employees.
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The authors found AI-native companies are more likely to hire graduates from elite universities, are concentrated in Silicon Valley and employ a workforce that skews male.
The researchers said AI is improving productivity in two ways.
Companies are using AI internally to help employees complete tasks such as coding, sales and design more efficiently, while also building AI directly into products so customers can perform work that previously required human teams.
The authors warned that if AI adoption continues to accelerate unevenly, it could widen performance gaps among workers and entrepreneurs rather than expanding access to opportunities.
The findings add to a growing debate over AI’s impact on employment.
Last month, Microsoft Corp. (NASDAQ: MSFT ) Vice Chair and President Brad Smith said entry-level jobs are already facing pressure from automation but argued AI would reshape work over decades rather than replace workers overnight.
International Monetary Fund Managing Director Kristalina Georgieva has also urged policymakers to ensure AI’s economic benefits are broadly shared as the technology transforms labor markets.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors.
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