America's newest small business owners with no employees are off to a hot start in AI era

Skip Navigation Markets Business Investing Tech Politics & Policy Video Watchlist Investing Club PRO Livestream Menu Key Points Recent research indicates that business applications in industries highly exposed to AI are increasingly coming from prospective owners with no indication of employing others. With models from OpenAI and Anthropic powering AI tools for bookkeeping, customer service, advertising, design, and inventory, among other tasks, new business owners can get up and running and scale revenue without employees. AI is creating a longer tail of powerful small producers, while it is also likely to concentrate even greater power with hyperscalers, according to Stanford economist Erik Brynjolfsson, and that may leave medium-sized firms as the worst positioned in the market. Kristin Ginn, who left Microsoft earlier in 2026 to start trnsfrmAItn, an AI-adoption consultancy, uses AI to help with proposals, pricing, strategy, and other work and is exploring an AI agent to perform part of a labor-intensive client process. Kristin Ginn It takes hundreds of billions of dollars for the tech giants to scale artificial intelligence, but it takes just a few AI tools for the smallest companies in the U.S. economy to get up and running with a cost-competitive business model. Alex Willen expects the 12 e-commerce brands he operates with no employees to generate between $2.5 million and $3 million this year. Kristin Ginn left Microsoft in March and started trnsfrmAItn, an AI-adoption consultancy. Seven months later, she has roughly $250,000 in business received or contracted through year-end with no employees or regular contractors. "The biggest misconception is that it's just about individual productivity; it's actually about leveraging AI to perform tasks that previously required a whole team," said Stanford economist Erik Brynjolfsson. Early research on the impact of AI within the solopreneur business world bears watching. According to Liya Palagashvili, a labor economist and director of the Labor Policy Project at George Mason University's Mercatus Center, new business formation is rising in direct correlation to applications unlikely to become employer firms. In industries highly exposed to AI, business applications without early signs of hiring rose 26.8% from the first quarter of 2024 through the first quarter of 2026, from roughly 222,000 to 281,000 per quarter. Over the same period, applications in those industries with stronger indications of eventually becoming employer businesses fell 6.4%. In construction and wholesale trade, which Palagashvili used as a comparison group, non-employer-type applications declined 0.4%. "What AI is doing is giving those capabilities directly into the hands of the individual," she said. Palagashvili cautioned that the findings are preliminary and descriptive and do not establish that AI caused the increase. The Census-based measure identifies applications without indicators associated with near-term payroll or hiring plans; it does not show that those businesses ultimately remained one-person firms or never hired employees. But Willen shows what the economics can look like. Anthropic's Claude helps with bookkeeping, customer service, advertising, and inventory across his businesses, while OpenAI image tools perform work that once went to photographers and designers. Without AI, Willen said, "I'd probably need one other full-time person, plus I'd need to use contractors for photography, design, bookkeeping, and ad management." A traditional product photography shoot could cost $2,000 to $5,000, and a designer $300 to $1,000 for new listing images, he said. When AI directly eliminates one of those expenses, Willen said, "that money just goes into my pocket." AI has also allowed him to pursue revenue channels he would not have previously considered. After acquiring Lone Trail, a hunting-gear brand selling binocular harnesses, packs, and other outdoor accessories, Willen said its Shopify site accounted for roughly 1% of sales. Rather than shut down the channel, he used ChatGPT and Claude to rebuild the site and AI to help run Meta advertising. In a recent 30-day period, he said, Shopify accounted for roughly 30% of Lone Trail's revenue. "That's going to end up being at least six figures of annual revenue that would not exist without AI," Willen said. Ginn's business shows how quickly a new entrant can reach meaningful revenue without first building an organization around it. She uses AI to help with proposals, pricing, strategy, and other work and is exploring an AI agent to perform part of a labor-intensive client process. A survey conducted by accounting and invoicing software company FreshBooks identified similar behavior more broadly. Seventy-nine percent of solopreneurs said they had tried AI before hiring someone for a task they could not perform themselves (the same figure was 86% among when including microbusiness owners). AI allows them to "look much bigger than they are," FreshBooks CEO Shaheen Javadizadeh said. But among existing small businesses, the available data tells another story. Gusto, a payroll and HR software company that serves small businesses, tracked businesses after they adopted AI and found their headcount was about 7% higher after a year than a comparable businesses that knew about AI but had not adopted it. Among firms with fewer than 10 employees, AI adopters grew headcount about 10% more than comparable non-adopters. Willen's experience also highlights a tradeoff in the new business model: operating with fewer people does not eliminate reliance on larger technology platforms. Roughly 80% of its overall revenue still comes through Amazon, and he uses Meta and Shopify to expand direct sales. Ginn has no staff, but LinkedIn has been one of the biggest drivers of customers to her consultancy, she said. Brynjolfsson said the proliferation of smaller producers can actually increase the value of the platforms that connect them with the buyers. "There's this long tail of products, but at the same time, big platforms like Amazon are more powerful than ever because they aggregate all of these and they bring them together," Brynjolfsson said. But the relationship is not as simple as labor savings flowing directly to Big Tech. Willen said some of the money he saves becomes profit, while Ginn spends less than $60 a month on paid AI tools. AI can make it economical for more small producers to exist. And as core business production becomes cheaper, small businesses place greater focus on customer acquisition and distribution, Brynjolfsson said. Adam Branch, who founded rhino.ai, an enterprise software company that uses AI to modernize legacy systems, previously founded a 500-employee tech company. Now, he says, AI software will "do more of the work those teams used to do." Adam Branch Brynjolfsson believes that while solopreneurs will thrive, use of AI will at the same time lead to the creation of even larger firms, on average, than exist today. In a September research report titled "AI's Use of Knowledge in Society," Brynjolfsson and Zoë Hitzig, a researcher at the Anthropic Institute who studies the social and economic impacts of AI, argue that as AI codifies knowledge previously scattered among workers and enables more information to be aggregated and acted upon centrally, firms will grow larger on average, while industry concentration increases and local managerial autonomy declines. The researchers say early evidence is largely consistent with those patterns. That's bad news for medium-sized companies. Brynjolfsson predicts AI could contribute to a "hollowing out" of midsize firms — very small teams capable of doing more at one end and giant organizations exploiting AI and scale at the other. "The fat in the middle — the layers of management focused on internal coordination — will likely be significantly reduced," he said. Adam Branch has exper