Will GenAI Lead to the First One-employee Unicorn?
As the world comes to terms with this technology, the next few months and years will see GenAI become an integral part of business operations
In 2013, Aileen Lee of Cowboy Ventures’ wrote a column for TechCrunch. Titled “Welcome to the Unicorn Club” Lee’s column introduced the world to the term Unicorn. According to Lee’s definition, any startup founded after January 2003, valued at $1 Bn+ by public or private markets was a unicorn. The scope has since been expanded to cover all private companies with a valuation of $1 Bn or above.
When Lee penned her article, there were 39 unicorns in the world. Numbers vary but today, conservative estimates put it at over 1,400. Every year since 2018 has seen 100+ new unicorns minted and 2023 alone saw the unicorn club gain one new member every two days. The United States, the hotbed of innovation, leads this list with 700+ Unicorns, while China with its powerful economy, and India with its vast intellectual capital and consumer base, are second and third with roughly 340 and 67 unicorns respectively.
These numbers tell many stories, and raise many questions. An important one is this: Has it become progressively easier to build a unicorn today, than it was, say, in the last decade? The answer is yes and no. Competition has increased and the days when you could raise money with an idea drawn on a paper napkin are long gone. Today, investors demand a solid MVP, usually with proof of market traction and a list of paying customers.
The other side of the coin is this: With startups like Uber, Airbnb, Ola and others creating massive windfalls for early backers, there is now precedent for investors to take big bets. Technology has also played the role of a great leveller, making it easier to start-up than ever before. Here is an example: Low-code and No-code platforms now allow founders to take their startups live in a matter of hours with a state-of-the-art app or a website. By contrast companies earlier needed a dedicated team of coders and months of development time to achieve the same thing.
Things are set to change further. In fact, all of us are currently witnessing a paradigm shift in slow motion.
Generative AI is Changing the Rules of the Game
When ChatGPT was first released, it found instant traction with people. So much that the platform racked up over 1 million users in just five days, and its first 100mn users within three months of launch. While the initial excitement has somewhat subsided, the platform still attracts around 180 million active users every month. However, the real breakthrough lies in the enterprise applications of the technology.
According to a Bain report, 56% of engineering teams are already deploying coding assistants for software development. 75% of executives said that AI met or exceeded their goals, while 76% said it was speeding up time to market, and 63% agreed that use of Generative AI was improving the quality of code. Companies are now using GenAI to propel research, make their chatbots smarter and create new customer journeys and experiences. While all of these use cases still rely heavily on human intervention, that could change as businesses train smarter models to take on specialized tasks.
Will GenAI Agents Need Dental Insurance?
Provocative headline aside, imagine a platform where you can create different GenAI agents that can communicate with each other. Each of these agents could be connected to the internet and tasked with taking care of separate parts of the business. As the founder of a business, you could login at a fixed time everyday to provide a list of tasks to your AI agents and ask for updates on the pre-assigned ones.
The marketing agent, for instance, could tell you the results of the A/B test for its LinkedIn outreach campaign, and provide recommendations and message tweaks for you to approve. The sales agent could share an update on the ongoing drip campaign, with thoughts on altering email frequency. The dev agent could make recommendations on the direction of website development, based on its conversation with the strategy agent.
While all of this may sound dystopian, it lies firmly within the realm of possibility. Google’s Vertex AI Agent Builder for instance, enables you to “design, deploy, and manage intelligent conversational AI and process automation agents using natural language.” These agents can also be made to collaborate with each other, and connect to enterprise data to drive transactions, and streamline interactions across multiple channels.
As Gen AI models get smarter (and they inevitably will), there is a possibility of AI agents with near-human accuracy when it comes to tasks that have historically been the responsibility of human employees. However, would these AI agents be capable enough to enable an enterprising CEO to run and operate a single person unicorn?
A Single Person Unicorn With Generative AI
Does the size of the company have an impact on its valuation?
There was a time when the number of employees a startup had on its payroll formed an important vanity metric for its founders to talk about. Today, the needle has swung in the other direction and founders and VCs in the Silicon Valley (and elsewhere) prefer to talk about revenue/valuation per employee.
Instagram was acquired by Facebook for $1 Billion when it had only 13 employees. WhatsApp was acquired for over $21 Billion when it had 55 people on the team. There is historic precedent for small companies with a handful of employees, to command a price tag in the billions. Considering the pace at which GenAI is progressig, it doesn’t seem far-fetched for AI agents to take up some of these jobs in the coming days.
Earlier this year, in an interview with Reddit co-founder Alexis Ohanian, Sam Altman spoke about a group of tech CEOs who have placed bets on when the first single person Unicorn will emerge. The operative word here is when not if. For the first time ever, Gen AI-based tools are approaching an inflection point where they can offer a way for founders and CEOs to automate the majority of their work.
So much so, that a handful of people coming together, aided by GenAI agents, could in theory build a billion dollar business.
Web development, check. Marketing automation, check. Lead generation, check. Customer support, check.
A New Age of Startups
The discussions around a one-person unicorn may be hypothetical, but they are extremely relevant because they highlight a broader shift taking place in the business world. We are at a point where we can see some interesting new trends emerge in business’ operating models. These include:
The era of headcount-heavy companies is on its way out. Companies will start using technological interventions to reduce costs and headcount wherever possible.
There will be a rise in the number of companies operating within different domains, each of them bringing a different flavour of innovation and customer experience to the table. In fact, in a world where accessible-to-all tech is becoming the great leveller, creativity and focus on the customer journey will act as the key differentiators.
While customer-focused startups tend to get the most limelight, the number of enterprise and SaaS startups where GenAI adds a lot of value, could increase rapidly.
Repetitive work will be rapidly automated or outsourced to vendors. Senior business executives will shift focus to building strategic differentiators.
GenAI agents will bring a certain uniformity and predictability to startup operations. The founder’s personal brand will be more important than ever in helping the company stand out from the crowd. There may also be a rise in the number of founders with broader skill sets.
There is a maxim “Don’t prospect for gold, sell shovels.” Companies that can productize GenAI, and package it for specific use cases, will prosper and thrive.
With GenAI automating a significant percentage of current roles while simultaneously lowering the entry barrier to entrepreneurship, we may see an increase in the number of startups.
The advantages of Generative AI in terms of enabling leaner, more predictable, and agile, customer-centric, data-driven business models is undeniable. As the world comes to terms with this technology, the next few months and years will see GenAI become an integral part of business operations.
Enterprises must either adapt, or be left behind.
After that? Well, the possibilities are endless.
The next Steve Jobs may well continue operating out of her garage, even after her business hits a billion dollar valuation.
