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Really cool article from a famous investor about how he expects to see 3-person unicorn companies (companies worth over $1billion). I'll paste some of it below.
With the next generation of AI tools, teams of three very talented people will be able to grow software-centric businesses to $100+ million in revenue with automated workflows.
They will be able to set up AI systems for each aspect of their business and let them run, like spinning plates, periodically revisiting them to improve them and keep them spinning.
They will be able to develop software faster and better with AI dev co-pilots. Run sales prospecting, qualifying, and outreach with AI automated systems. Run marketing campaigns with AI optimizations. Run AI customer service and success faster and with higher quality. Run accounting and legal cheaper and faster. Run analytics with more detail, less fuss, and better results. Set up self-healing data pipelines. Set up automated workflows. File taxes and other government requirements. All with AI.
Founders in the era of AI will be able to do a lot more with a lot less.
he reason is allometric scaling, and it compounds.
In biology, allometric scaling is the idea that there is a relationship between certain characteristics of an organism (organ size, heart rate, metabolism, lifespan) and size. Some things go up relative to size, other things go down.
Allometric scaling is at play in every company in the generative AI era. You’ll notice lots of different ways that AI alters the relationship between your company’s size and its metabolism, growth, heart rate.
Some things won’t change. Smaller teams will always move faster, relative to larger teams. But other characteristics will be very different. The formula we use to calculate revenue per employee will change, for example.
If you can have fewer people, every business operation gets easier, and as business elements get easier, you need even fewer people. Fewer people means less of everything that isn’t building and selling to customers.
Fewer people means founders have fewer meetings, fewer disagreements, less politics, faster decision making, and faster experimentation.
Fewer people means less recruiting, interviewing, hiring, onboarding, coaching, performance reviewing, culture building, dramatic departures and firings.
Fewer people means less office space, office rules, or squabbles.
Fewer people means less salary spend, less fundraising time spent, less capital raised from VCs and less dilution to the founders.
This isn’t far-fetched. If you recall, we’ve already seen this alternative allometric scaling in tech companies before AI. It was just isolated in a small, but very visible, niche of the tech world: social media. Instagram had 12 employees when it sold for $1B, and WhatsApp had 50 people when it sold for $21B.
With AI, the TYPES of businesses that can achieve this type of allometric scaling will increase dramatically.
To be fair, to pull off a three person unicorn will require very special talent among the three people. Few teams will have the multifaceted skills to pull it off.
When is this happening? Now.
With the next generation of AI tools, teams of three very talented people will be able to grow software-centric businesses to $100+ million in revenue with automated workflows.
They will be able to set up AI systems for each aspect of their business and let them run, like spinning plates, periodically revisiting them to improve them and keep them spinning.
They will be able to develop software faster and better with AI dev co-pilots. Run sales prospecting, qualifying, and outreach with AI automated systems. Run marketing campaigns with AI optimizations. Run AI customer service and success faster and with higher quality. Run accounting and legal cheaper and faster. Run analytics with more detail, less fuss, and better results. Set up self-healing data pipelines. Set up automated workflows. File taxes and other government requirements. All with AI.
Founders in the era of AI will be able to do a lot more with a lot less.
he reason is allometric scaling, and it compounds.
In biology, allometric scaling is the idea that there is a relationship between certain characteristics of an organism (organ size, heart rate, metabolism, lifespan) and size. Some things go up relative to size, other things go down.
Allometric scaling is at play in every company in the generative AI era. You’ll notice lots of different ways that AI alters the relationship between your company’s size and its metabolism, growth, heart rate.
Some things won’t change. Smaller teams will always move faster, relative to larger teams. But other characteristics will be very different. The formula we use to calculate revenue per employee will change, for example.
If you can have fewer people, every business operation gets easier, and as business elements get easier, you need even fewer people. Fewer people means less of everything that isn’t building and selling to customers.
Fewer people means founders have fewer meetings, fewer disagreements, less politics, faster decision making, and faster experimentation.
Fewer people means less recruiting, interviewing, hiring, onboarding, coaching, performance reviewing, culture building, dramatic departures and firings.
Fewer people means less office space, office rules, or squabbles.
Fewer people means less salary spend, less fundraising time spent, less capital raised from VCs and less dilution to the founders.
This isn’t far-fetched. If you recall, we’ve already seen this alternative allometric scaling in tech companies before AI. It was just isolated in a small, but very visible, niche of the tech world: social media. Instagram had 12 employees when it sold for $1B, and WhatsApp had 50 people when it sold for $21B.
With AI, the TYPES of businesses that can achieve this type of allometric scaling will increase dramatically.
To be fair, to pull off a three person unicorn will require very special talent among the three people. Few teams will have the multifaceted skills to pull it off.
When is this happening? Now.