The Rise of AI and the One-Person Company

Unlocking the True Power of AI: New Companies in the Digital Age?

April 30, 2024 by Clint Chao, Moment Ventures

Quite a few years ago at an National Venture Capital Association gathering, our guest speaker was legendary film and TV director JJ Abrams. At that time, Abrams’ show, Kiefer Sutherland-anchored “24”, was at the height of its popularity.

In a Q&A session, someone from the audience snarkily commented that many of the technologies depicted in “24” were not very realistic as it wasn’t yet possible to do many of the things that Jack Bauer was doing. Without hesitation, Abrams replied: “well here’s the thing… people don’t realize that '24' actually takes place 5 years in the future. We’re just waiting for you damn VCs to fund the companies to make this stuff possible!” Touche.

Welcome to the Lighter, Nimbler World

If you were to start a company today, would you go out and buy a paper shredder or file cabinets? Would you fill your closets with IT equipment and disk drives? Last night I had the opportunity to meet up in person with a founder of one of our most recent investments, and we had a really enlightening discussion about the future of his company, as well as the future of companies in general. The fun part of our conversation began when I casually and habitually asked about his hiring plans going forward (as of today, his company is comprised of 2 founders and no additional employees).

I have no doubt that he will need to hire employees as the company grows, but in today’s fast-paced business landscape, agility is key to success. And for newly-founded companies like his, the emergence of Artificial Intelligence (AI) presents a game-changing opportunity to leapfrog traditional organizational and functional barriers to readily compete against more established incumbents that are saddled with headcount that may no longer be that necessary.

Unlike established companies, which often grapple with the challenge of integrating AI into existing structures, new ventures have a distinct advantage. They can leverage AI to build their company infrastructure from the ground up, bypassing the need to hire extensive teams for various operations. For example, if you were ready to pedal down to reach out to win new customers, would you simply hire salespeople or SDRs to fill the funnel with leads, or take advantage of new AI tools that can perform a significant amount of top-of-funnel actions at orders-of-magnitude more efficiency?

This strategic use of AI not only enhances efficiency but also provides new companies with a significant operating cost advantage over their legacy counterparts. By deploying AI solutions to perform tasks that would typically require human capital, these companies can allocate their resources more effectively and focus on core business priorities.?

The Beauty of AI is Prevention, Not Elimination

Interestingly, this trend underscores a fundamental shift in the way we perceive AI in the workforce. Rather than viewing it as a replacement for human jobs, AI enables employers to optimize their operations and make smarter decisions about resource allocation. It’s about augmenting human capabilities, not replacing them, so those interested in staying relevant need to lean into this movement and learn what it takes to deploy AI tools into the enterprise.

Take any job function in the workplace: sales, marketing, HR, finance… chances are there are scores of startups working on building AI-powered platforms to significantly increase the efficiency of the role. So instead of hiring banks of people to perform those functions, new companies can think of these challenges as greenfield opportunities to build up a different kind of organization.

Welcome to the One-Person Company Era

Could this trend mark the emergence of the one-person company (“One Person” sounds more thought-provoking than “Few People”)? With AI solutions capable of handling nearly every task within an organization, the concept becomes increasingly plausible. And while many of these functions are not quite at the point of being a no brainer purchase in lieu of headcount, here in 2024, we may be facing our own Jack Bauer moment. In just a few short years, this will absolutely become reality. Entrepreneurs armed with AI technologies can achieve remarkable feats with minimal overhead, paving the way for a new era of lean, agile enterprises.?

So where will opportunities emerge in this new era of AI? I recently wrote a piece addressing the 3 ways in which companies can seize the AI revolution. And after dinner with my founder friend last night, I got even more excited about what’s to come in the next few years. Let us know what you are working on!

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Clint Chao is a General Partner at Moment Ventures, an early-stage venture capital fund based in Palo Alto, CA. You can reach/follow him on LinkedIn, Medium and X.