Y Combinator co-founder Paul Graham said AI could turn businesses upside down, but argued that startups may be better positioned than larger companies to navigate the disruption.

Graham Warns of AI Disruption

On Wednesday, Graham said many startup founders are increasingly concerned about AI’s impact, adding that he shares their concerns.

"A lot of founders I talk to are worried about what will happen with AI. So am I frankly," he said.

However, he argued that founders may have an advantage if AI causes widespread disruption.

"But they’re actually better off than anyone else," Graham said.

Graham said smaller companies can respond more quickly to technological changes because they are less constrained by bureaucracy and established business structures.

"If the world is going to get turned upside down, the safest place to be is in a small, fast-moving company that can easily change direction," he said.

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AI Disruption Reshapes Jobs, Lending

AI disruption is already affecting financing decisions and raising concerns about the future of work

PitchBook said software’s share of new syndicated loans fell from nearly 30% at the end of 2025 to about 9% in 2026, while healthcare, professional services and industrial sectors attracted more capital.

Bill Gates has warned that AI-driven automation could reduce demand for human labor in areas including software development, customer service and warehouse work, while potentially enabling shorter workweeks.

Mark Cuban similarly urged business leaders to develop AI expertise, warning that companies that fail to adapt could lose competitiveness as AI transforms hiring, productivity and competition.

AI Startup Boom

Jeff Bezos-led industrial AI startup Prometheus raised $12 billion at a $41 billion valuation to accelerate hardware development and manufacturing, with Bezos targeting up to 10 times faster engineering cycles.

Airbnb Inc. (NASDAQ:ABNB) CEO Brian Chesky was also reportedly preparing an AI lab focused on building models with stronger user interaction and design, arguing that AI products need richer interfaces than traditional chatbots.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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