The most valuable startup employees ("10x joiners") leverage AI to execute at the level of a full team. Instead of looking to hire direct reports, they bring a suite of AI agents and workflows, enabling companies to achieve massive scale with tiny headcounts.

VCs traditionally advise against early product expansion. But with agentic AI, which leverages existing metadata to solve new problems without building new screens, startups can rapidly add capabilities to meet customer demand for a single, unified agent, accelerating the compound startup model.

Incumbent companies are slowed by the need to retrofit AI into existing processes and tribal knowledge. AI-native startups, however, can build their entire operational model around agent-based, prompt-driven workflows from day one, creating a structural advantage that is difficult for larger companies to copy.

Counter to the adage that "startups shouldn't buy startups," Cursor successfully uses M&A as a core recruiting strategy. They acquire small, talented teams working on complementary problems, viewing acquisitions as a way to onboard the best people who happen to already be working on their own companies.

While it's tempting to build custom AI sales agents, the rapid pace of innovation means any internal solution will likely become obsolete in months. Unless you are a company like Vercel with dedicated engineers passionate about the problem, it's far better to buy an off-the-shelf tool.

Amplitude's CEO acquired multiple founder-led companies as a deliberate strategy to counteract the inherent slowness of a large SaaS business. This injects a startup's pace and an AI-native mindset directly into the organization to accelerate its AI transformation.

A powerful go-to-market strategy is for an AI company to buy a legacy business (e.g., a debt collector) with existing clients but declining revenue. This allows the startup to bypass the difficult early sales process, immediately deploy and refine its AI, and use the acquired firm's client roster as a launchpad.

Google's entry into AI code understanding was accelerated by acquiring the team and technology behind startup Mutable.AI's "AutoWiki." This "acqui-hire" strategy allowed Google to quickly integrate a proven concept, highlighting how big tech leverages startups to innovate and enter fast-moving developer tool markets.

YC Partner Harsh Taggar notes a strategic shift where new AI companies are not just selling software to incumbents (e.g., an AI tool for insurance). Instead, they are building "AI-native full stack" businesses that operate as the incumbent themselves (e.g., an AI-powered insurance brokerage).