In this, the fourth of our 2024 AI Predictions Mini-Series, we discover how AI will fuel the 3-person unicorn company and allow startups to scale rapidly and grow revenue with automation, augmented sales and marketing, and extremely lean operations.
– 2024 is poised to witness the emergence of a new breed of unicorn companies, characterized by their small, agile teams empowered by AI-driven efficiencies.
– These companies will achieve rapid growth and valuation, leveraging AI tools to streamline operations, reduce overheads, and scale with unprecedented speed.
– The era of the “3-Person Unicorn” will demonstrate the transformative potential of AI in the startup landscape.
The New Even Leaner Startup
To become a unicorn, achieving a company valuation of $1 billion+ is the aspiration of most startups. There are 554 unicorn companies in 2023, but these rapidly successful companies are emerging at an ever faster pace. AI is now facilitating the rise of the unicorn company and allowing these shining lights of industry to grow to these heights with very few employees.
AI-powered solutions provide an affordable and scalable way to develop new products and services while vastly empowering leaders with powerful analytics and insights. These insights allow startups not just to launch but also to launch market-perfect products with all the marketing flounce and flair of enterprise companies and far fewer human work hours.
Lower overheads and less complex team structures take the concept of “lean” to the next level.
James Currier, General Partner at seed investment firm NFX, predicts that:
“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.”
Currier believes these companies will use AI development co-pilots, automate prospecting, qualify leads, and outreach with AI. They will also create and optimize marketing campaigns, use AI for higher-quality customer service, leverage cheaper accounting and legal assistants, file taxes more easily, benefit from better analytics, and even create self-healing data pipelines.
Smaller teams equate to greater agility and vast amounts of money and time saved from team meetings, disagreements, hiring and firing, salary spending, and office space.
Lower overheads at the outset also mean less time-consuming capital fundraising. Currier refers to the concept of “allometric scaling” and says these small teams are likely to consist of an aggressive founder, a numbers person, and a words person. Each of the three must be multi-taskers, able to juggle multiple roles, and each is capable of “outlier performances” because AI will be consistently good, but the humans will need to be “prone to a stroke of genius.”
The investment partner provides the examples of Instagram, which had just 12 employees when it sold for $1 billion, and WhatsApp, which had 50 when it sold for $21 billion. Both examples occurred long before generative AI.
7 Ways AI Streamlines Startup Operations
Let’s take a look at HOW a unicorn company can rise with AI or simply how a startup can thrive by taking advantage of the benefits of AI for business insights, efficiency, competitive advantage, and customer service.
Analytics and Data-Driven Decision Making
AI-powered data management, analytics, and insights can quickly reveal market patterns and customer behavior that help identify audiences and refine and develop minimum viable products (MVPs).
A constant flow of data from the sales and marketing process, social media, web analytics, and customer feedback enables real-time data-driven decision-making, allowing startups to quickly make changes in their agile enterprise if a product appears to be failing, a market is shifting, or a competitor has taken the lead.
Developing and Validating
Particularly relevant for the software and SaaS space, startups no longer need to be expert round developers themselves. AI’s ability to code is constantly growing and has the potential to replace entire teams and months of development work.
Launching an MVP just became possible in days or weeks instead of months or years. Likewise, changing or developing an MVP can be amazingly quick, allowing startups to iterate and grow rapidly with much lower overheads and less risk.
Automating Operational Efficiency
A multitude of startup tasks can be automated, including content creation, marketing activities, customer support, and degrees of project management.
Leaders can focus on their bigger picture view, problem-solving, and making those fast-moving decisions that will ensure success.
Once a startup has processes in place, those “spinning platers” that Currier refers to can be further tweaked with insights from AI-augmented productivity and engagement platforms.
Augmented Sales and Marketing
Not only can AI automate content creation and marketing activities, such as scheduling and even community engagement, but AI can also be the first point of contact for leads and customers.
Today’s generative AI chatbots, especially those that use ChatGPT-4 or equivalent, are able to have human-like conversations with potential customers, answer questions, and forward complex inquiries or potential conversions to humans.
For a startup, sales, marketing, and reaching as much of a new market as possible are essential, but it’s incredibly costly and labor-intensive without AI. With AI, a much smaller team is able to pick up on qualified leads and in-depth issues.
Enhanced Customer Experience
Generative AI chatbots can be available 24/7 in multiple languages to serve basic customer inquiries and are quickly replacing contact center agents.
These chatbots can upsell and identify conversion opportunities, leads that feed into automated platforms and onto marketing campaigns. AI algorithms can quickly analyze user behavior to provide personalized recommendations, improving user-experience, matching the right products, and, of course, more upselling. Attracting and retaining customers is critical to a new startup’s success.
Raising Capital and Scalability
AI-powered platforms and insights quickly create a dashboard of business performance metrics that are vital to leaders but also essential for potential investors.
Startups seeking funding no longer need to spend weeks presenting the data for their business case. They can easily demonstrate market activity and customer response and give an overview of the new operation in real time.
Investors are attracted to startups that can provide clarity of their performance from the outset but are also seeking out startups that will use AI with the realization these will be lean revenue-generating machines.
What’s more, scaling technology deployment is much easier and faster than recruiting and scaling teams to meet increased demand. AI-powered platforms simply accommodate more and more tasks. Scaling with AI could be as elementary as upgrading a platform subscription.
It’s clear that processes to drive business growth that would have taken teams of people just a few short years ago can now be completed with a tiny but strong team of people and the right AI, automation, and analytics tools.
AI-Startups will Lead Unicorn Growth in 2024
What is also apparent for 2024 is that AI startups creating new AI software and AI-powered platforms are going to be outriders for achieving unicorn status as the demand for transformative generative AI solutions rises. A report in October 2023 from venture firm Accel says generative AI companies are now the “main driver” of startups valued at $1 billion and form 60% of all new unicorns.
Part Two of our 2024 AI Predictions Mini-Series anticipates enterprises will shift 10% of budget allocation to AI projects, and Part One speculates that open-source LLMs have the potential to overtake closed LLMs like ChatGPT.
