Garry Tan, CEO at Y Combinator, on the current state of AI startups, taken from his fireside chat at the Bridge Forum Summit 2025:

The Role of Y Combinator

Y Combinator has become the accelerator of choice for ambitious founders around the world, receiving around 80,000 applications annually. Our accept rate is 0.8%, so the selectivity and bar for quality and talent is extremely high. Today, Y Combinator serves as a “Schelling point” (the focal point) for the most talented entrepreneurs, and strives hard to concentrate on diverse talent and ideas.

Key Ingredients for Startup Success

There are several crucial elements that contribute to the success of startups in the AI era: Clear Communication: In brief, ten-minute interviews, founders must convey their ideas effectively. If they can’t articulate their vision, it indicates a lack of understanding. They are not accepted. Execution Over Ideas: The real moat for startups is their ability to execute quickly and effectively. The best startups today are leaner and more efficient, capable of achieving significant growth with smaller teams.

The Impact of AI on Startups

The current wave of AI is leading to unprecedented growth rates among startups. Many companies are now experiencing revenue growth of 10% week-on-week, a remarkable shift from previous years where few had ever achieved this rate of growth. The ability to leverage AI effectively is becoming a defining characteristic of successful founders.

The Importance of Prompt Engineering

As AI becomes integral to business operations, prompt engineering has become a critical skill. Founders must master the art of crafting effective prompts to fully harness AI’s capabilities. This skill is now as valuable as traditional coding, and can be the differentiator in enabling startups to innovate rapidly.

Navigating the Challenges of Big Tech

I remain concerned about the concentration of power among big tech companies and the potential for these platforms to stifle competition. I believe equally in the power of “little tech”—the ability for anyone to create alternatives to existing solutions. The startup ecosystem must remain vibrant and competitive to ensure that innovation continues to thrive.