I'm preparing for an economy filled with zero-employee corporations (ZECs). Let me share why.
The prevailing media coverage on artificial intelligence and the workplace is wrong. The current narrative hides today's real financial opportunity for most of us — solopreneurship. The media likes the drama of big companies, big government, and how changes in those organizations disrupt our aspirational ideals of life as an employee. The last word is key. Employee. AI is going to be emotionally and financially disruptive to individuals who don't want to be business owners or entrepreneurs. The idea of a "good job" at a "great company" is going to radically change. Many of today's most well known companies are going to go out of business. Not only will employees lose more jobs, but many companies will flat out cease to exist as new companies offer more value at lower prices. This will result in fewer stable "jobs". That's scary, especially for people who cling to the employee mindset that has been promoted for the last 125 years.
Most people are not built to be entrepreneurs. I'm not sure how governments will manage the inevitable strain on society as employee-minded people search for jobs that will never return. The media and entertainment industries can reshape this mindset. We can pay taxes to reskill and upskill displaced workers. We can explore UBI concepts. We can fix our education system. Lots of ideas to consider, however the societal challenges of this shift are not mine to solve. Those are problems that need large human teams. And for the first time in almost 40 years, there is a path to financial accumulation that doesn't require joining a team. My focus is on the opportunities emerging from this transformation: AI-first small businesses, and eventually zero-employee corporations (ZECs). The real opportunity isn't saving the past but leaning into a very different future.
Today, about 20% of working Americans are solopreneurs or business operators (U.S. Census Bureau, 2024). I believe we'll see that number double to 40% in ten years. That's a lot of people (~68M). These are my future customers and partners.
"When there's nothing to lose and there's nothing to prove. Well, I'm dancing with myself." — Billy Idol, Dancing With Myself
I don’t want to save the world. I’m not here to make an impact. I’m here for the journey. Selfish take, but worth sharing to give you an out before you read further. More precisely, if I were to prioritize the six human needs framework for myself, I would sort them in this order: growth, certainty, connection, uncertainty, contribution, and significance. Many of my peers and folks I mentor have a very different sort order. They're most professionally fulfilled when the work they do impacts others and they feel some sense of significance or recognition. I tried that path, and it doesn't do anything for me. That's still my position after working on products used by hundreds of millions of people. Same feeling when I've volunteered at nonprofits and the impact is more immediate and humanized. It's all just meh if the work isn't anchored in exploring something new. Learning new things and satisfying my curiosity is my professional purpose. I'm likely addicted to the dopamine release from my curiosity. More on that at another time, but I'm serious. Read "States of Curiosity Modulate Hippocampus-Dependent Learning via the Dopaminergic Circuit" (Gruber, Gelman, Ranganath, 2014) if you want more context on that topic. I was fortunate that media and software were the areas I was both exposed and drawn to. Both of those industries have gone through massive changes during my lifetime and meta learners in these industries who were willing to constantly upskill have been financially rewarded. So most of my professional success comes down to being curious, finishing what I start, and most importantly picking the right place to focus. Let's rewind.
Software applications were relatively simple when I started coding at ten years old. One person could write and publish complete programs. This wasn't the only way, but it was a very viable option. Back then, shareware was a popular business model for the single-person software developer. A developer would distribute a CD, disk, or web link to a limited or trial version of the product. They would upsell the paid version through pop ups and notifications in the application. Since this was usually compiled proprietary software, this approach was easier to monetize than most of today's open source software (OSS). Shareware was an early version of product-led growth (PLG) that could be done with one person. I got lost in a world where you could type characters into a keyboard and create a new world. I could communicate with people, create art, and print money. Then things changed.
"When I was young, I never needed anyone. Those days are gone." — Eric Carmen, All by Myself
By the mid-90s, big money had made its way through the software industry. Solo developers were pushed out by companies with more resources. PCs became mainstream. Distribution was consolidated through retail channels. Bundle deals and pre-installed software (e.g., AOL, Dell, Microsoft, etc.) created moats. What started as a cottage industry became a behemoth. This shift also started a twenty-year run where an influx of people became software engineers to make money. Nothing wrong with this, but it created a dynamic that the industry is still sorting through. Most of the people I grew up with in the industry (now in their 40s and 50s) became product managers and software engineers as a byproduct of others paying them for their hobby. This was akin to people becoming actors for the love of it and then stumbling into being paid incredibly well. During this transition, software development became a team sport. And if you wanted to stay in the game, you couldn't be by yourself. The hours were long. I frequently worked 16 hour days. But it never felt like work.
The world of software is different now. The industry is filled with corporations with too much bureaucracy, individuals with widely divergent motivations, and existential threats to traditional software business models (ads, subscriptions). During this evolution, I rolled with the changes. I ended up getting good at resource allocation, managing people, and navigating big companies. But that was an accident. Never the goal. Us "old" folks in their 40s and 50s are the leaders of teams that commingle passionate dream chasers with pragmatic careerists. People can obviously be both, but there are far fewer dream chasers than there used to be. Financial security and professional prestige are understandable things people optimize for. Still, if you never showed up to code just for the passion, there are likely fewer points of friction you're willing to tolerate during a day that feels more like work than play. Ten years from now, I suspect people won't become a traditional programmer simply because it pays well. I envision there will be more dream chasers. These folks will work on tiny teams, spend most of their day actually making things, and surround themselves with folks with a deeper sense of shared values. The early stages are happening now. Here's how.
"Me, myself and I. That's all I got in the end, that's what I found out." — Beyoncé, Me, Myself and I
The Nature of the Firm (Coase, 1937) explores why companies exist and what determines their scope and size. Coase argues that companies exist because they reduce transaction costs. These costs include bargaining, coordinating resources, enforcing contracts, and research. Companies can operate more efficiently instead of every transaction being handled through the market. The size and scope of a firm are determined by the trade-off between external and internal costs. If internal costs exceed the cost of outsourcing, companies will shrink or outsource those functions. The reverse is also true. Inside a company, the market price is set by managerial authority and decisions. The company functions as a hierarchy where decisions are made more centrally rather than through decentralized market forces. As companies grow larger, the internal costs of managing and coordinating resources increase. Beyond a certain point, it becomes more efficient to rely on the market rather than further internal expansion. Much of modern corporate resource allocation is based on these concepts. Let's come back to Coase in a minute.
Ben Thompson wrote a great Stratechery article last year called "Enterprise Philosophy and The First Wave of AI" (2024). The gist is that since the 1930s, technology products have largely prioritized automation or enablement. Automation performs tasks without humans. Enablement augments human capabilities or experiences. I'm betting my personal net worth on automation-centric products. The potential of AI to accelerate automation in business requires change management related to compliance, data collection, employee incentives, and internal processes. This is going to require a lot of change. I'll let big companies sort out that shift. The more insightful takeaway for me is that the fewer employees you have, the easier it will be to take full advantage of new capabilities to automate a business. And I think we can take that to the extreme — zero employees. How? Agent-only corporations. When? Not by 2025 in any meaningful manner. Still, we will get there in the next ten years. I'm getting started now. If we already create economic leverage through capital, labor, media, and tech (Naval Ravikant), then AI automation is going to create extreme leverage. You will need less capital, little to no human labor, a personal brand, and access to the low-cost tech stacks from big companies. You'll be able to operate profitable businesses with 0-12 employees. Gluing all of this together will require a unique talent stack and set of lived experiences. However, this path will not require the permission of investors or gated distributors to start and grow a business that generates monthly free cash flow. I assume there will be diminishing returns to how large this business structure can grow. 50 employees? 100? 500? Not sure, but I'm only interested in owning businesses that never need to grow beyond 12 employees. More on that in a minute.
Back to Coase. My thesis is that agent-only corporations with zero employees are inevitable in a world where external costs continue to fall faster than companies can manage the change management required to make material changes to automate their businesses. I envision a world where fewer people are W-2 employees and more are profitability running their zero employee corporations. This is going to be highly disruptive to people in their 30s-50s who aren't interested in this model. As I mentioned earlier, there will be fewer jobs for them. I suspect those who were formerly working for large companies and who may have been laid off will choose smaller companies that better align with their values. I'm not sure how to solve these transition problems for folks in their 30s-50s. Still, this change is going to happen whether we solve that particular problem or not. Why? The customers buying from zero-employee corporations are going to prefer products that they perceive as lower cost and more personalized.
Plus, new business models will emerge. Results-based pricing will be more common. Don't pay unless the value is delivered. That will allow more zero employee corporations to compete for tasks and processes. And the market will make the pricing for a given workflow extremely transparent. Consultancies and service agencies that don't reinvent themselves will struggle or disappear. SaaS pricing will fall apart in the mid market. Maybe for enterprise too. I'm largely ignoring regulated spaces or those with a lot of compliance overhead (accessibility, corporate governance, privacy, regulatory, security). That's not my world. And back to my opening sentences, my path isn't going to fit for many (most?) people. You should probably work on something hard with huge upside if you're going to do something that needs a large amount of capital and tens to hundreds or even thousands of people to execute. But per the theme I've been pushing for years, that's not the only (or even best) path. There's an interesting philosophical discussion to be had around what a zero employee business owner owes back to society. It's easy to call out big companies, but the financial responsibility to society beyond paying taxes for someone who isn't employing anyone is harder to parse.
So what does this have to do with investing and making money? AI creates the type of economic opportunity that disappeared back when I was ten years old. We're on our way back to a world where one person can type (or talk) into a computer and print money. We've moved from shareware publishers, to indie hackers, and now zero-employee corporations. This latest evolution is more than just being a solopreneur. You need to think like a CEO or GM who is leading a team. That's different. As I look into the future, it makes more sense to bet on preparing myself and my capital for this inevitable world. We're not quite ready for zero employee corporations. Until then...
"I've lived a life that's full. I traveled each and every highway. And more, much more than this. I did it my way." — Frank Sinatra, My Way
General partners (GPs) who invest other people's money commonly use the 2% and 20% compensation model for PE and VC firms. This is where the GP is paid 2% of the money raised each year and receives 20% of the profits from the investments they make on behalf of their limited partners (LPs) after paying back the negotiated preferred return. See my 2023 letter for more on how that works. This model doesn't make sense when you're investing your own money. If the old world is 2 & 20, the new world is 1 & 2 — where 1 person can generate $2M. This won't be the norm, but will be the bar where AI generalists operate multiple zero-employee corporations.
To reiterate, AI generalists will operate single-person companies that can make $20K, $200K, and $2M per year depending on their talent stack. Excluding folks who live in very high tax regions, high-margin digital product owners should be able to generate 40% free cash flow (FCF) on each dollar earned. This is true FCF after COGS, SG&A, and taxes. So $800K in cash flow on $2M generated. Solid. Sidebar, you'll also be able to skill stack more aggressively in this new world since 80% proficiency or less will be enough. Your AI workforce will fill the gaps. The reason I previously mentioned focusing on companies that don't need to grow beyond 12 people is because you keep the managerial overhead of running the company low. One manager, the CEO, can manage up to 12 directs. No additional management layers for the entire company. If a business doesn't work with that org design, it's probably not for me as an active investment. Be an octopus, not a unicorn.
It's a wonky time trying to use yesterday's playbook in today's changing world. Late stage startups are being challenged by cloud hyperscalers. That seems backwards. Seed stage investing is more challenging than ever, since you don’t have a clear way to pick the increased number of players chasing the same problem. Public markets aren't my thing. I don’t invest in public markets as a growth strategy, only to preserve capital and let it compound. That brings me back to really simple businesses. The model I’m evolving for 2025 is writing $50,000 checks for an idea that can get to profitability and never raise additional funding beyond that initial check. I'm still interested in buying small businesses for less than $3M where I can add value through audience building and automation. This approach allows me to turn my capital with relatively low risk, while others are trying to get the timing right chasing moonshots in the current AI hype cycle.
I'm currently spending my time across a few areas. Horizon 1 is around automated product design and micro real estate development. These are areas where I can apply my concepts and see immediate returns. AI needs a use case and domain expertise to monetize right now. Go deep with what you know and you'll likely find problems people will pay you to solve. Horizon 2 is an evolved take on dual-use physical AI and robotics. The timing might be right this time. I'm writing those small $50K checks here to explore new in-house ideas rather than fight to get on overpriced cap tables. More risk, but it's worth the exploration. I have a 12-step process I've created to test out these ideas: Scan, Search, Ingest, Compose, Design, Catalog, Curate, Validate, Launch, Analyze, Build, and Monetize. Horizon 3 is about generative entertainment. I'm not sure where the money is, but I'm upskilling. Learning. There is going to be a huge polarization of people who love and hate generative books, movies, social video, songs, and video games. When the customer polarization is high, I know that there's a business there. The macro thesis for CAGR is still the same, audience-led and automation-driven businesses.
It's not lost on me that my path isn't the path for most. The point isn't to follow me. The point is to be intentional with your path. Moreover, I'm not sure what parts of my journey you could predictably repeat since so much of it was luck and timing. However, the thread worth pulling is exploiting the reality that most people advocating for traditional paths to success are miscalibrating their risk. Either chasing lottery ticket exits or being too risk averse. Big companies and big governments are incentivized to sell you on the idea that being their employee is the best place to work. Nonesense. Forge your own path. Extract value from these legacy systems instead of fighting to get inside or on top of their dying clubs. That may require a new sort on how you value perceived certainty and significance.
David Bowie made a great speech about going your own way and staying uncomfortable:
"Never play to the gallery. Remember the reason you started working was that there was something inside yourself that if you could manifest it, you would understand yourself and how you coexist with society. It's terribly dangerous for an artist to fulfill other people's expectations. I think they generally produce their worst work when they do that. If you feel safe in the area you're working in, you're not working in the right area. Always go a little further into the water than you feel you are capable of going. Go out of your depth. When you don't feel that your feet are quite touching the bottom, you're just about in the right place to do something exciting."
I've always fancied myself as an artist who figured out creative ways to get paid exploring my curiosity. I never played to the gallery. This feels uncomfortable at times, but every once in a while the world catches up.
One more thing. When you're running a 12-, 6-, or even 1-person company, the accountability is all on you. No place to hide. You create value, or you don't. No excuses. The world looks small again. And I love it! Back to my roots. The path is simple if you want to join me. Ignore the noise from employees, investors, and the media. Stay curious. And don't just play by your own rules. Invent your own game.