If you want to launch a compelling startup, look to disrupt industries by replacing incumbent companies – not by selling to them. It’s the “full-stack” approach that provides an entirely new dimension to delivering products and services. In addition, venture capitalists are seeking business ideas formulated by designers, versus technology experts with utilitarian approaches.
These are the top two items cited in the latest wish list of Y Combinator, the Silicon Valley-based startup incubator and accelerator. These items also provide clues to those in established enterprises that seek to launch new ventures or approaches.
For example, “you could build an AI agent and sell it to law firms,” said Yaniv Bernstein, a startup advisor and venture capitalist. “That’s what most people do. Or you could start your own law firm, staff it with AI agents, and compete with the existing law firms. That, my friends, is going full stack.”
Bernstein was joined in a recent podcast by fellow venture capitalists and advisors Chris Saad and Amir Shevat to explore the Y Combinator wish list. They agreed that disruptors will own the day, but differ on who should lead these disruptive companies.
“If your dream is to make the legal system, the legal process, just magically better. you’re not going to do that with existing law firms,” Saad added. “If you believe that you can materially impact the end-user experience, the business model, the cost waste, the inefficiency of an industry, stop trying to sell it to the industry.”
This approach has been advanced successfully already in relatively staid industries such as insurance, Shevat pointed out. For example, Lemonade took the insurance industry, took prediction models to look at actuary and risk, and IPOed based on that. Instead of selling software to insurance companies, they became a very very popular insurance company.”
Shevat added that he “asks every startup that tells me that they’re using AI to make enterprise software in an industry: ‘why are you selling to that industry and not really disrupting that industry by going native?’”
Another compelling item on the Y Combinator wish list is for more companies started by designers and non-technical founders. “The concept here is that designers actually have a lot of the most important skills it takes to be founders,” said Bernstein. “But perhaps because they’ve lacked certain technical skills, that’s limited their ability to actually take a leading role as founders, again with AI, which is sitting underneath everything in this request for startups.”
AI makes execution cheaper, he continued. “Execution used to be the thing sitting in the critical path that determined your cycle length. And with AI that is getting shorter right? The execution is moving from idea to implementation becomes faster.”
What that means, Bernstein said, “is everything else on either side of the execution – the design and product on one end, go to market on the other end – are elevated in importance,” said Bernstein. “That is where a lot of the competitive advantage will be.”
“I think design is special because design is close to product and product scales,” said Saad. “I really believe that brilliant design can create real real differentiation. and real differentiation is the same as innovation.”
With this line of thinking, there is “a massive opportunity for incredibly beautifully designed products that are both aesthetically beautiful and functionally effective,” he added. “I think that the world is just far too utilitarian. And I think there’s a huge opportunity there.”
Go-to-market specialists are also in demand for their startup ideas, Shevat added. “The ability to acquire users, the ability to get more people to see your user, the ability to grab attention is very important,” he said. “Okay, maybe two engineers in a garage, but the designer is welcome as well, as is the GTM, and maybe the revenue founder.”
Saad disagreed, noting that “a lot of GTM or growth or sales leaders don’t know how to scale. They don’t know how to build products, they don’t understand prioritization, they don’t understand craft. “If you get a sales guy running a startup with some vibe coding, I would be really afraid to see what they build and who they build it for. It would be a complete disaster.”
While there is a shift toward non-technical founders,” I still think that like technical-heavy companies will prevail,” said Shevat. “A lot of non-technical founders will be more valuable. But technical founders are going to be super valuable for the foreseeable future.”
Still, good design, coupled with good go to market, along with the “raw intellectual horsepower of being able to iterate quickly, and actually ideate and move meaningfully with what you’ve learned” is the key to startup success, Bernstein pointed out. At the same time, it’s important to point out that good design “is not about making it look pretty. It’s about making it work really well. That requires many iterations, and it requires taste and a really deep understanding of how humans interact with things.”
