The One-person Billion-dollar Company

Can a single person use AI to build a billion-dollar company? That’s the question Evan Armstrong posed in February, responding to a prognostication by OpenAI’s Sam Altman. With OpenAI’s DevDay set for October 1 and Every taking a quarterly Think Week to step back and evaluate the tech landscape, we felt it was a perfect time to republish Evan’s look-ahead from earlier this year.—Kate Lee

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In a February interview, OpenAI cofounder Sam Altman said:

“We’re going to see 10-person companies with billion-dollar valuations pretty soon… in my little group chat with my tech CEO friends there’s this betting pool for the first year there is a one-person billion-dollar company, which would’ve been unimaginable without AI. And now [it] will happen.”

Altman’s idea is that AI tools will soon reach the point where they can replicate the entire output of human employees. Instead of needing to hire a designer, you can use, say, GPT-6 to design something entirely for you. There will be far less need for software engineers (meh), sales staff (no one will miss them), and newsletter writers (a tragedy of Greek proportions, leaving our society barren and empty).

An ambitious founder could outsource the work of employees to an army of artificial intelligence agents. Theoretically, this would allow entrepreneurs to focus on only tackling their most important competitive advantages. 

This is a claim worth examining, not just because I would like to be the first person to build that billion-dollar company. The one-person billion-dollar company matters because it is a handy way to understand how AI will disrupt knowledge work. In a good world, Altman’s prediction would come true because AI would allow people to build whatever they can dream up. In a bad world, it would become true because AI will make most people’s jobs irrelevant, concentrating power in the hands of the elites.

Writing is perhaps the most obvious use case of AI. All of these AI companies have my life’s work squarely in their crosshairs. It makes me wonder if the consumers of the future will even want writers in their life. This is a deeply important question for me personally, because, you know, student loans. Is there a way I can use these same tools to build a billion-dollar company of my own? Can I use the instrument of my career’s destruction as my financial savior?

But let’s start with a more basic question: Is anybody close to achieving this today?

What are the closest proxies?

First off, we need to lay some ground rules. Altman is talking about a billion-dollar valuation for a company—which is not a rigorous metric. As I wrote in January, valuations for startups are made up anyway. I’m pretty sure that if Sam Altman tweeted, “I have an idea for an AI company,” he could raise a round that valued his company at $1 billion. (This is essentially what happened with OpenAI cofounder Ilya Sutskever’s new company, which is currently valued at $5 billion.)

What I want is a real business, one that has healthy profit margins and judicious revenue growth. To keep things simple, let’s say that our one-person billion-dollar company has to have at least $100 million in annual recurring revenue (ARR). Then, if the company is hot enough to attract investment, it could probably get a 10x revenue multiple, valuing it at $1 billion.

There is no company that even comes close to qualifying.

In the technology sector, the most recent example is Midjourney, a generative AI imaging startup. It’s never raised outside capital, it has fewer than 100 employees, and it reportedly has more than $200 million in annual revenue. Not bad! But it is still disqualified on an employee volume basis. In 2012 there was Instagram, which Facebook acquired for $1 billion, but it had 13 employees and no revenue, so that’s out. Alternatively, I have a few friends who run $1–10 million ARR SaaS companies with no full-time employees—but that’s because they contract with part-time, low-cost developers, which feels like it violates the spirit of the exercise. Plus, those companies are a tenth of the size we need to get to the billion-dollar mark. So no dice in the private tech sector.

In the public markets, investment and energy firms come closest to meeting the bar. This data set from 2020 provides a sense of what they look like.

These firms don’t pass muster because they are a tenth of the size needed on a revenue-per-employee-basis, have too many employees, and are more like Russian nesting dolls than real, meaty businesses. Subcontractors outside of the publicly listed corporations are doing a large chunk of the labor, again violating the spirit of the rule. Plus, I’m skeptical that ChatGPT will be able to work on an oil rig.

So, fortunately or unfortunately, Altman’s prediction isn’t close to coming true (yet).