Earlier this month, Y Combinator — the world’s most famous startup accelerator — and its head Garry Tan traveled to Washington, D.C., to lobby for what Tan says is an existential fight in the world of tech: Little startups versus corporate “incumbents” like Alphabet (Google), Apple, and Meta.
The trip centered around Y Combinator’s “Little Tech Competition Summit,” which took place on April 2. The conference’s headliners included regulators such as FTC Chairman Andrew N. Ferguson, his predecessor Lina Khan, and Teresa Ribera of the European Commission. Other politicos were in attendance, too: Sen. Corey Booker, as well as his right-wing peers Sen. Josh Hawley and Trump strategist Steve Bannon, all spoke at length in separate panel events.
The term “Little Tech” does not have a strict definition, but it usually refers to smaller, often early-stage startups that do not have support from the “Big Seven.” Little Tech acolytes argue that the movement is key to progressing innovation in the face of Big Tech’s efforts to quash competition — see ongoing federal prosecution against Google — and dominate political lobbying, all while their own development stagnates.
But Tan’s trip to D.C. also showed the fissures in how a variety of players view the crisis, which is making for some intriguing alliances and new questions about the role of government, not just in oversight, but rather the acceleration of the Little Tech market.
“We want 10,000 flowers to bloom and for startups to have every chance to give consumers choice and for there to be truly free markets that create prosperity everywhere,” Tan wrote on X ahead of the event.
Speakers at YC’s conference agreed that startups face an uphill battle against incumbent heavies. There was also agreement that a lack of political intervention led to de-facto monopolies in the past by companies like AT&T, IBM, and Microsoft, who crushed competitors and subsumed smaller entities that threatened their market share.
As for how to make Little Tech rise? Therein lies the dispute, and it revolves around regulation: Who gets it, who dodges it, and who profits most handsomely from political change.
Much of the movement is articulated by mega-VC Andreesen Horowitz (A16z), which published its manifesto, dubbed “The Little Tech Agenda,” last summer. It rails against what it deems an “anti-startup bias” in the form of regulations (primarily on cryptocurrency and AI), claiming such oversight and efforts to increase taxes will “hobble industries” like military defense.
“The war on tech startups and the resulting threat to America will continue,” it warns.
The jostling over the Little Tech narrative and the future of startups is, in many ways, a result of the tech industry’s maturation over the last 20 years, said Charles Hudson, founder and managing partner of early-stage VC firm Precursor Ventures.
“In the past, it was easy to think that these companies like Google that were once startups would still care, after they blew up, about the issues that affect little companies,” Hudson says.
Now, because legacy entities have grown so massive, there is a divergence in priorities — and small startups are feeling increasingly like they have little in common with companies like Meta. The fact that these big players now control so much of the distribution of tech products into the mainstream has pushed startups into political advocacy, Hudson says. In addition, AI development has been influential in giving small companies a new edge in the industry.
“I think there’s a cycle in tech, where companies become really big and entrenched and powerful and they seem almost unbeatable,” Hudson adds. “Then something changes in the ecosystem that makes their old assets less valuable — for Microsoft, it was cloud computing. And then you get a new generation of companies that repeat the same cycle.”
Microsoft’s dominance in the 1990s led to increased calls for government intervention via antitrust enforcement, and a similar conversation is here again. In a Congressional hearing on Little Tech on April 1, for example, Tan used Apple’s much-maligned virtual assistant Siri as an example of how “monopolistic control” has stifled Apple consumers’ ability to access “cutting-edge generative AI.”
“This abuse of dominance directly contributes to the decline of innovation and undermines America's technological leadership,” Tan told the Senate committee.
Critics of the movement, however, say the Little Tech agenda is more complicated than just rooting for the little guys. Rather than pushing startups to grow and compete with behemoths like Google, many “Little Tech” advocates just use the language of antitrust policy to encourage deregulation and further profits for venture capitalists, argues David Karpf, a professor at at George Washington University’s school of media and public affairs.
As an example, he pointed to an item in A16z’s agenda: “Regulatory agencies are punitively blocking startups from being acquired by the same big companies the government is preferencing,” it reads.
“I think Garry Tan does earnestly believe that the way to build a better world is to let YC companies do their startup launch, give them funding, stay out of their way, and make sure that there's a pathway for them to make their investors billions,” Karpf said. “But they’re arguing for the right for Big Tech to take over Little Tech firms. This is not really about competition. It’s making sure VCs have the exit opportunities they want.”
(Y Combinator did not respond to questions from Gazetteer SF about Little Tech advocacy.)
The call from an investor class to pull back regulatory action on growing industries is a “frequent song” in modern American history, Karpf says. Others have similar takes: Gary Shapiro, CEO of the Consumer Technology Association — the largest trade organization representing the industry — in January disputed whether firms like A16z are fomenting a radical Little Tech disruption.
"I want to reject the premise that there's somehow a schism between Big Tech and Little Tech. It doesn't exist except in some extremely narrow areas. They agree on everything," Shapiro said at an event hosted by the tech media outlet Broadband Breakfast.
Hudson feels differently: The sheer scale of Big Tech companies today, including their in-house teams for development, has made startup acquisitions less appealing. At the same time, small startups don’t have the resources to wade into political waters. Hence the advocacy of mega-VCs, which presents a philosophical dilemma: Is a small startup still “little tech” if it’s backed by capital from major players like YC and A16z?
The latter raised more than $7 billion in 2024 alone to invest into startups, and has spent some $89 million on contributions to political action groups, the majority of it ($67 million) to the pro-crypto group Fairshake. At least for Andreesen and Horowitz, the spending is in service of a “techno-optimist” ideology that promotes hyper-capitalist productivity and deems socialism and government regulation as enemies to human progress.
Taken in context, the Little Tech narrative is a lot more complex than indie vs. mainstream or Democrat vs. Republican or workers vs. owners — and that’s perhaps the reason why the April conference attracted such disparate voices. Right-wing politico Bannon, for example, praised staunch Democrat Khan for her work to regulate Big Tech and prevent consumer fraud through government oversight. Meanwhile, Sen. Hawley and Sen. Booker both spoke about how tech must create prosperity for the American working class, rather than the Silicon Valley and Wall Street elites, a facet not even mentioned in the “Little Tech Agenda.”
In other words, the Little Tech fight is just getting started — and the pressure to steer government action will mean new alliances and uncertain variables in whom, exactly, wins the most.
