A growing number of AI startups are redefining Silicon Valley’s traditional growth model by operating with minimal staff while achieving significant revenue and user numbers. According to an article by Erin Griffith in The New York Times, these companies are leveraging AI tools to maximize employee productivity across all business functions. Gamma, an AI startup founded in 2020, exemplifies this trend with just 28 employees serving nearly 50 million users and generating “tens of millions” in annual recurring revenue.
The company’s co-founder Grant Lee reports that traditional startups would typically require around 200 employees to achieve similar results. Gamma uses approximately ten AI tools to enhance efficiency in areas like customer service, marketing, coding, and research. These include Intercom for customer support, Midjourney for image generation, and Anthropic’s Claude for data analysis.
Other examples include Anysphere’s Cursor, which achieved $100 million in annual recurring revenue with just 20 employees, and ElevenLabs, which reached similar numbers with approximately 50 workers. Industry analysts are noting a significant shift in startup metrics. Venture capital firm Afore Capital’s analysis of 200 startups reveals that reaching $1 million in revenue now costs only one-fifth of what it did before the AI boom.
Some startups are now setting explicit limits on their growth. Runway Financial and Agency have both announced plans to cap their workforce at 100 employees, believing AI tools will allow each worker to perform the equivalent of 1.5 traditional roles.
This efficiency-focused approach is creating new challenges for venture capital investors. With startups requiring less capital to achieve profitability, traditional investment models may need adjustment. Terrence Rohan from Otherwise Fund questions how venture capital will adapt when successful companies require significantly less funding.
The trend has been further accelerated by DeepSeek’s demonstration that AI tools can be built at a fraction of traditional costs using open-source technology. This development has sparked a wave of new companies adopting similar cost-efficient approaches.