This article is part of our The Org Age of AI series and is co-written by Will Schenk (TheFocus.AI) and Ksenia Se. You can read the episode #1 AI Feels Powerful. So Why Is the ROI Still Missing? here. And #2 The Unsexy Truth of AI Adoption here.

You can schedule a 1-on-1 consultation here.

Before we jump into the next episode, here is Ksenia’s take on what happened with Mythos. There are few things to consider →

Episode #3: How to Build an AI-Native Startup from Day One

AI-native has become one of those terms that can mean almost anything and, therefore, very little. Everyone now is trying to build something “AI-native.” Is it a startup with an AI feature? Or a company built on frontier models that burn thousands of tokens? Sometimes it simply means a team that uses ChatGPT a lot and feels great about it.

A better approach is to start with a definition. For us, an AI-native startup is a company designed so that machine intelligence can participate in the ordinary work of the business from the beginning.

That definition also captures what feels genuinely new right now: the boundaries between employees, workflows, and formal procedures are starting to break down, and some of the biggest gains are coming from reexamining the deep assumptions behind how work has long been siloed. Job definitions are shifting, and many people are understandably worried about what their role will look like in five years, or whether it will exist at all.

At the same time, evidence from the broader market offers a useful reality check. McKinsey’s 2025 survey found that workflow redesign is one of the strongest contributors to EBIT impact from generative AI, yet only a minority of organizations have fundamentally redesigned even part of how they operate. In other words, value is emerging where companies actually reshape work itself, rather than simply layering models onto old routines.

There is also an important transformation underway in the ecosystem: it is moving away from costly, brittle, one-off integrations toward shared interfaces such as skills, MCP, and AGENTS.md. We recommend the same thing over and over again while advising and helping build AI companies: keep agent systems simple, make context legible, and add complexity only when there is evidence that it helps. And the tools? Current tools are powerful, but they do not perform equally well everywhere. Startups are uniquely well positioned because they do not carry all the baggage of legacy systems. Greenfield environments usually give them a much cleaner runway than brownfield environments do. A new startup is one of the few places where you can still design the runway itself.

That changes the question from “Where do we use AI?” to something much more foundational: “What parts of the business should be built under the assumption that intelligence is abundant, uneven, unreliable, improvable, and deeply tied to data and feedback?” Let’s unfold all of it and look at building an AI-native startup through five principles we find important.

What’s in today’s episode?

How we got here

To see what is new, it helps to remember what previous organizational eras optimized for. Industrial firms were designed to coordinate labor, capital, and managerial oversight when information moved slowly and was expensive to gather. Later, the software era digitized the record of the firm, but it also formalized it into systems of record, schemas, suites, permissions, and departmental handoffs. Research on organizations has long treated information flow as central to structure, because communication frictions shape authority, hierarchy, and decision quality. That older logic still holds up – due to the habit. Companies are built partly out of who knows what, who can see what, and who is allowed to act on it.

In the last software cycle, much of that organizational logic disappeared into tools. A business became a stack of reports, databases, spreadsheets, CRMs, ticketing systems, file shares, and custom integrations. Context moved, but often awkwardly and at real cost. That is why the startup question now looks different from the classic stack question. Founders still have to choose platforms, but the harder problem is whether the company itself can be read by machines. Open standards reduce some lock-in, yet they also reveal a more uncomfortable form of dependency: undocumented judgment, hidden exceptions, private memory, and hallway context. The hallway conversation remains a fine social technology. It is a terrible form on long term knowledge retention.

So the real shift is this: in, let’s say, 2010, startups won by turning workflows into software. Now they increasingly win by turning parts of work into machine-readable, machine-executable, and machine-improvable systems.

That changes the nature of the company. Software is no longer only the product. The resulting report is no longer the measure of progress. How intelligence gets applied as information moves ever quicker is the business. The organization itself becomes part of the product surface.

So what is an AI-native startup? Plus five principles when building one

AI-native startup’s knowledge is stored in forms machines can read. Its tools are reachable through standard interfaces. Its workflows leave traces. Its routines are evaluated. Its people spend more time on judgment, taste, and exception handling than on maintenance labor. That’s what makes an AI-native startup so effective if done right: removing the hidden chores that keep people from doing the work that actually moves the company.

Two clarifications here.

First, AI-native is an operating model, not a product category. A startup can sell AI and still run internally on siloed files, undocumented decisions, and manual coordination. Second, AI-native does not mean fully autonomous. In practice, AI-native means machine participation where it pays, human review where it matters, and clear rules for crossing that line.

The organizational promise is fairly concrete. If intelligence becomes cheaper and more available, some of the hidden and routine labor of a small company can shrink: internal research, first drafts, summaries, coordination, documentation upkeep, support triage, recruiting prep, and parts of planning. Evidence we see from firms investing in AI is flatter workforce structures over time, with fewer middle and senior layers relative to junior or single-contributor roles with expanded capabilities. That does not mean hierarchy vanishes or that experience stops mattering. It does suggest that some roles built mainly around relaying information become less central than roles built around judgment and ownership.

The five principles of an AI-native startup

These are not necessarily The Ultimate Principles. You may come up with some additions to that as you build your own AI-native startup, but they are a useful way to clarify your thinking and a strong starting point to help you take off.

The first principle: make the company machine-legible

That’s the foundation.

Embrace markdown – simple text is your machine’s best friends.

That might sound trivial, but in practice it is usually such a mess, with so many missing pieces, that you have to stop and organize things intentionally. One bad habit that needs to be broken is stuffing everything into proprietary, structured silos. The previous generation of tools often required specialized formats, while the new generation relaxes some of those requirements: just put the material in and let the machine figure out more of it.

Some practical things to keep in mind: if you are recording conversations and calls, transcribe them with AI and store them. If you are making decisions, write them down or dictate them for transcription. If a customer conversation matters, store it somewhere searchable. If a process recurs, document it. If a tool contains critical knowledge, connect it.

Default to plain text or Markdown for durable knowledge. Structure still matters, but early on, legibility matters more.

We keep repeating it because it is crucial: if context lives only in people’s heads, it does not really belong to the company yet. Talking in Slack, for example, is better than talking in the elevator, because the computer can see Slack. Of course, people will still talk in person. But your AI cannot know what you were discussing in the elevator, even though that context may matter if you want your AI-native startup to operate at full capacity. Even wearables may become useful for capturing certain forms of operationally relevant data. If a fact is operationally important, it should not live only in somebody’s memory or in a post-meeting hallway conversation.

This is the first discipline of an AI-native startup: turn relevant work into artifacts. Notes, transcripts, plans, decisions, specs, summaries, and reviews all become part of a machine-legible knowledge layer.

BUT: this is also where many teams overcorrect in the other direction and say: fine, everything is text now, structure is dead, long live vibes. That is a great way to build the first AI-native junk drawer. Structure is still necessary. You need naming conventions, version history, ownership, access controls, clear states such as draft and approved, and a way to mark what is current versus deprecated. In an AI-native startup, context management becomes part of management.

The second principle: choose tools by visibility and portability

Founders often ask the wrong tool question. We hear it a lot →

If you want us to evaluate what step of the ladder you’re on, and tell you honestly what is missing before AI becomes operational in your company →