Forget about the employees. Artificial intelligence can revolutionize entrepreneurship as we know it

Alex Kruglov is co-founder and CEO of pop.in.

As artificial intelligence (AI) reshapes one industry after another, we will soon witness not only the automation of tasks but also the proliferation of elevated mediocrity: a wave of AI-driven “good enough” results that It will flood the markets at an astonishing speed. This relentless pace of disruptive imitation will do more than improve productivity: it will spawn a cottage industry where constant self-disruption by imitators is the norm, and the traditional venture capital model struggles to be relevant.

In this brave new world, every revolutionary idea will be instantly received by a legion of fast followers, blurring the lines between breakthrough and bottom line, and reshaping the startup ecosystem as we know it.

The Steep Rise of AI Competition

In less than a decade, AI has gone from struggling with complex tasks to mastering them with increasing ease. He AI Index Report from Stanford University provides a striking snapshot of the explosion of AI capabilities over the past decade. AI capabilities show not only gradual improvement but also a significant leap towards and beyond human performance levels in various tasks. These models are approaching the human baseline with such speed that it underscores the exponential pace at which AI technology is evolving.

Consider the transformation of AI-generated images. As recently as 2022, AI cue-based renderings were, at best, unimpressive and confusing approximations. In less than two years, the images are not only recognizable but surprisingly detailed, surpassing the artistic talent of many human illustrators. The result is amazing. What’s more surprising is how quick and easy it is to get it. This new art mode has immediately reset the baseline of what was expected.

And we’re just getting started. Large entities are investing billions in learning models, achieving much more than simply improving production capabilities: they are transforming competitors’ entire business models into mere features.

More importantly, these organizations are pioneering a critical development known as “AI Agents.” These agents allow AI to manage not only individual complex tasks but also orchestrate multiple parallel and sequential tasks simultaneously. As Mustafa Suleiman put it in his historic book The coming wave“an AI capable of acting successfully following the instruction ‘Earn $1 million on Amazon in a few months with only an investment of $100,000’.”

Let us consider the implications of this development. Suleyman describes tasks that typically take months or even years for teams to complete with a low probability of success. We’re not there yet, but Suleyman predicts it’s imminent. When what he describes as “the modern-day Turing test” is passed, Marc Cuban’s reaction to every pitch on Shark Tank will likely be some version of: “Why can’t I let my AI agent handle that?” while I take a nap?” ? For those reasons, I’m out!’

The traditional venture capital model is about to stop making sense

For decades, venture capital has been the lifeblood of innovation, fueling the fire of startups seeking to revolutionize markets and redefine industries. Investors poured money into early-stage companies, hoping to guide them along the perilous journey from idea to product-market fit. The path from startup to expansion was fraught with risk, but the rewards were potentially astronomical.

This model relied heavily on finding, funding, and expanding human ingenuity, a costly and often inefficient process. New companies burned money to develop products and capture markets, always under the looming shadow of failure. The long-awaited reward, represented by the sharp rise that followed the initial drop in the J-curve, was the venture capitalist’s dream: a startup finally turning the corner to produce lucrative, ever-growing returns.

Once the modern Turing test is passed, the arrival of AI agents will profoundly reshape the business landscape. Solopreneurs armed with advanced AI capabilities will be able to execute and scale business ideas at an unprecedented pace and with significantly lower overall costs. This changes the traditional role of venture capital and challenges its very necessity.

Furthermore, as these AI-driven companies become successful, their strategies will be quickly analyzed and replicated by competitors, who also have advanced AI capabilities. This could lead to a hypercompetitive market environment where first-mover advantage diminishes and business life cycles shorten dramatically. The path to achieving positive cash flow will shorten, but margins will likely be erased within months, if not weeks.

Forget the J curve, cash flows will look like a “rib cage curve” where each “rib” is a new project with its distinctive J curve that the solopreneur milks until it stops generating cash flow.

If you are a VC investing in vertical SaaS, consumer packaged goods, content farms, b2b sales, or marketing technology, you will need to pivot or inform your limited partners that you are closing the deal. If entrepreneurs are not limited by capital, why would they take your money and dilute themselves? More importantly, if the longevity of each idea they start is minimal, they can easily close up shop and start a new company without you.

The market will be flooded by an abundance of very good mediocrity. For every decent idea, a cottage industry of equal or better imitators will emerge almost immediately.

So who will benefit most from this seismic shift? Today it is Nvidia, whose graphics processing units (GPUs) are in limited supply and are used in creating learning models. Tomorrow it will be those learning models that, having spent tens of billions of dollars, will become the backbone of most of the agent-driven production of individual entrepreneurs. Just as Apple makes money by charging for every revenue-generating app in its App Store, so will the learning models whose agents do all the work to build these companies. Today’s leaders are likely to reap enormous benefits if they play their cards right.

What about individuals? A decade or two ago, you were told to learn to code. The solopreneurs of tomorrow who do best might be those who know how to ask the most interesting and creative questions. We may very well see a massive comeback of the liberal arts. Maybe reading everything Atwood, Nabokov and Marx will be worth it?

What about venture capitalists? Is venture capital dead? Not yet, but it must adapt. Venture capitalists will have to take greater risks, targeting potentially transformative technologies that are beyond the reach of current AI capabilities, such as cold fusion or room-temperature semiconductors.

The landscape is changing rapidly, driven by the relentless evolution of AI. As we stand on the brink of this abyss, the challenge for today’s investors and entrepreneurs is not only to keep up but to anticipate and shape the future. The era of “high mediocrity” is approaching, making it even more important to ask: in this new world, what can be truly exceptional?

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