How cheaper coding is changing which companies can even be started
Falling software development costs are letting small teams build businesses serving niche markets that were previously technically possible but financially uninteresting to venture capital. Europe's fragmented markets may be unusually well suited to this shift.
For thirty years, investors and founders used headcount as shorthand for a company's progress, because software output was tightly linked to the number of people building it. That link has now broken, argues Abtin Aghagolian, co-founder and CTO of Pikd, in a piece for EU-Startups.
Teams of under a dozen people can now maintain a full production backend, a rendering engine, an on-device AI component, and commercial operations running in multiple countries at once. Five years ago, the same scope would have required a team several times larger. The difference isn't that engineers have gotten smarter — it's that writing ordinary code and wiring systems together has become cheap.
Smaller markets become viable
The biggest shift is in the category venture capital has always struggled with: products serving markets of tens of thousands rather than millions of users. These businesses were never technically impossible to build — they were unfundable, because the engineering cost floor sat above what the market could return. Now that the floor has dropped, such products can be built by as few as four people, reach profitability at a smaller scale, and serve their market for years — but they still can't deliver the kind of return a venture fund needs.
The author argues Europe is unusually well positioned for this shift, for structural rather than sentimental reasons: fewer megafunds, more fragmented markets that reward specificity, and a large pool of technical founders who'd rather own most of a real business than a sliver of a speculative one.
For founders, this changes the hiring question — it's no longer about how many engineers are needed, but which constraints were ever actually about headcount in the first place. For investors, it means diligence has to shift toward assessing what has actually shipped and works in production, rather than simply counting team size.
Small teams still have real weaknesses
The author is candid that small teams have little slack, so unglamorous work — like fixing a known retention problem — often stays unfinished because something more urgent always comes up. Cheaper code can even make this worse, since it's easier to start the next thing than finish the last one. Focus, judgement, and the discipline to complete work remain expensive and human, and increasingly separate companies that actually function from those that merely exist.
