A.I. Is Changing How Silicon Valley Builds Start-Ups
Tech start-ups typically raised huge sums to hire armies of workers and grow fast. Now artificial intelligence tools are making workers more productive and spurring tales of “tiny team” success.
Tech start-ups typically raised huge sums to hire armies of workers and grow fast. Now artificial intelligence tools are making workers more productive and spurring tales of “tiny team” success.
Almost every day, Grant Lee, a Silicon Valley entrepreneur, hears from investors who try to persuade him to take their money. Some have even sent him and his co-founders personalized gift baskets.
Mr. Lee, 41, would normally be flattered. In the past, a fast-growing start-up like Gamma, the artificial intelligence start-up he helped establish in 2020, would have constantly looked out for more funding.
But like many young start-ups in Silicon Valley today, Gamma is pursuing a different strategy. It is using artificial intelligence tools to increase its employees’ productivity in everything from customer service and marketing to coding and customer research.
That means Gamma, which makes software that lets people create presentations and websites, has no need for more cash, Mr. Lee said. His company has hired only 28 people to get “tens of millions” in annual recurring revenue and nearly 50 million users. Gamma is also profitable.
“If we were from the generation before, we would easily be at 200 employees,” Mr. Lee said. “We get a chance to rethink that, basically rewrite the playbook.”
The old Silicon Valley model dictated that start-ups should raise a huge sum of money from venture capital investors and spend it hiring an army of employees to scale up fast. Profits would come much later. Until then, head count and fund-raising were badges of honor among founders, who philosophized that bigger was better.
