Last month, in Y Combinator's call for startups for their Spring 2026 cohort, they called for "AI Native Agencies." Historically, they say, "Agencies have always been crazy hard to scale. Low margins, slow manual work, and the only way to grow is to add more people."

YCs frames this opportunity simply: "agencies of the future will look more like software companies, with software margins. And they'll scale far bigger than any agencies that exist in these fragmented markets today.”

We believe YC is right. When we launched Gigi in June 2025, we made a nearly identical argument:

We also think agentic AI will transform the operating model of agencies. Currently, an agency needs to linearly scale headcount as customers and revenue grow. A fixed ratio of FTE to clients is formed. But, as agentic AI performs many of the time-consuming and repetitive tasks of a team member, an agency should exponentially increase its customer base without the need to grow its existing team. Agencies that adopt agentic AI at scale will, in turn, benefit from margin expansion and, with an improved operating margin, will transform how agencies are valued.

We differ, though, with YC in our belief in where the value will accrue.

By calling for "AI native agency" startups, YC is implicitly betting that incumbent agencies will be too slow to restructure around AI. The argument is that a new crop of agencies, built natively with AI tooling and AI-first service models, will move faster, steal share, and ultimately scale beyond any incumbent. We disagree.

Services businesses are built on trust, and trust takes time to build. While new media agencies emerge continuously, leading brands tend to choose partners with years of domain expertise and proven results. A new AI native agency may be able to operate at software-like margins at scale, but acquiring and retaining the clients needed to reach scale could take years. Even granting that optimistic timeline, this argument assumes that incumbent agencies are asleep at the wheel and not similarly hungry to seize the AI opportunity in front of them.

We talk to agencies every day. They know AI is transforming how they work. They know humans shouldn't be spending their days laboriously building media plans or copying and pasting line items in the DSP. Most importantly, they know this is all possible with AI right now.

Yes, transforming org structures in an AI-first way will be messy. Yes, finding the optimal service model and the right ratio of team members to clients will take time. But these are challenges that nearly every agency leader we meet recognizes as not just inevitable but immediate and existential. We believe incumbent agencies have a once-in-a-lifetime opportunity to bend their operating model in a way that genuinely changes how they work for their clients. Gigi wants to be a catalyst for that transformation.

We also talk to a lot of VCs, and many ask us: "why don't you just become an agency?" Harvey, the leading AI agent for law firms, gets the same question regularly. In a No Priors podcast episode at the 25-minute mark, co-founder and President Gabe Pereira answered it directly:

"For Harvey, the best outcome is helping every law firm become an AI-first law firm. And the real problem we're trying to solve is: can we make every law firm more profitable? Can we make their clients get better, faster, cheaper legal services? Solving this equation at scale is a much bigger opportunity."

We share that perspective. Building products that enable media agencies across the industry to become AI-first is a significantly larger market opportunity than becoming an agency ourselves. Harvey builds products to transform law firms. We build products to transform media agencies. Both of us have chosen intentionally to partner with existing services businesses because we similarly believe the incumbents aren't the obstacle…they're the opportunity.

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