The startup playbook has always assumed growth means hiring. More customers, more employees, bigger org chart. A new working paper from researchers at Harvard Business School and INSEAD suggests that for AI-native companies, that equation is breaking down.
The study, released June 9, 2026, finds that startups embedding AI directly into their products employ roughly 25% fewer workers than comparable non-AI startups, while maintaining similar company valuations. In plain terms: same value, fewer people on payroll.
What the research actually found
Researchers Hyunjin Kim of INSEAD and Rembrand Koning of Harvard Business School analyzed Y Combinator batches from Winter 2020 through Fall 2024, alongside U.S. venture-backed startups that received their first funding between 2020 and 2024.
The workforce gap is significant. Using log specifications, the coefficients land around -0.28, translating to approximately 25% fewer employees at AI-native firms relative to peers in the same industry cohort.
