Solo Unicorn

The idea of a solo unicorn has made the rounds lately in the AI fantasy realm. And don’t take “fantasy realm” as a pejorative here. Fantasy remains an essential part of entrepreneurship, although we typically call it “vision”.

What would it take for a solo entrepreneur to create a unicorn? What functions can be replaced by technology? What constraints are there on structure? Here are some early thoughts on these questions.

What Can Be Replaced? #

A common current vision for AI has it replacing all coding functions. No need to hire a team, just direct the models to build your system. And even if you need a team, that you can outsource.

What about deployment? That’s a lot of integration work unless you are doing B2C or SaaS. Assuming that we have one of these models, that’s possible to outsource.

What about Marketing? You can pay an agency to do this. So it also works today.

What about sales? Well that depends. In B2C the app-store model exists now. So does the Amazon Reseller model. So does the bootstrapped SaaS model. Assuming one of these applies you can outsource this as well. Alternatively, if the founder can outsource everything else and focus on high-touch sales, it may be possible to cover sales outside of these reseller and SaaS models.

What about accounting? The app-store and Amazon Reseller models potentially handle most of this from a revenue side. Many firms offer outsourced accounting, and in fact having them may add a trust factor. You may still need a 409a. All of these are readily available on an outsourced basis.

Legal counsel is rarely an in-house function in a startup already. Outsourcing is the norm.

Insurance is available, and there is the PEO model in which a vendor deals with payroll (even if to a single founder), insurance, and other HR functions. So this too is available to outsource.

Compliance depends greatly on the niche in which a company operates. In heavily regulated areas a lot of work goes into compliance. Can this be fully outsourced? I doubt it, because it requires too intimate an understanding of the application or platform. Can it be automated? Maybe. This seems like one area in which AI can contribute beyond the limits of current outsourcing.

What about absence due to vacation or illness? Can the solo founder take a day off? There are firms that one can outsource support to. And AI will play a strong role here, effectively covering at least first-level support. If all technical and operational needs are outsourced then a little time off should work.

Ideation is easier than ever with AI. And the output from AI-based ideation feed well into the networks that all entrepreneurs use to test and sharpen their thinking.

What Might Be Replaced? #

What about coordinating all of the foregoing components? Even if each component is outsourced, how much time and effort go into managing the vendors instead of selling the product? Can this really be outsourced or automated? This does seem like an area in which AI automation can help. I expect someone to create a service analogous to the PEO to act as the general contractor coordinating the individual vendors for each of the functions listed above.

This GC will need to establish a very high level of trust with two parties: the entrepreneur, and the investors. That seems like a big lift, but possible.

What about the board of directors? For bootstrapped startups I expect the board to shrink or even vanish, coming to resemble what happens in lifestyle businesses. For VC-funded startups I would expect investors to demand board seats as they do now.

What Cannot Be Replaced? #

What about fundraising? Bootstrapping aside, a startup founder must handle this. An investment in a company of one founder is an investment in a team of one. I don’t see how that can be outsourced.

Alternative Paths to Unicorn Status #

Obtaining a patent certainly falls within the capability of a solo entrepreneur. The right patent could easily sell at a unicorn valuation. If selling this patent is the exclusive focus of the startup, much of the operational difficulty falls away. It would not surprise me if the first solo unicorn takes this form.

The musings above implicitly assume that a solo founder takes the unicorn from inception through exit, or at least through unicorn valuation. Another way to divide the work is by time slicing. A founder may conceive of an idea and create the early-stage company, then sell a solo operator who gains traction in the market, selling to a new solo operator who specializes in growth funding, who sells to a new solo operator who specializes in closing the sale of unicorns.

This path resembles the common path for a successful VC-backed startup, with rounds of investment bringing new operators, advisors, and board members into an organization appropriate to its current stage. But instead of growing the team, it takes the form of a hand-off from solo operator to solo operator. Who in the VC world is already looking at or doing this?

Are We There Yet? #

Some in the crypto space may argue that Bitcoin is a solo founder unicorn. Maybe. Does unicorn status require that someone control the value? Does it require the ability to sell the entity? How does this map onto the regulatory frameworks? I’m uncertain on these points. But the distributed model does suggest one more question.

A Zero Founder Unicorn? #

At what point is the entrepreneur outsourced alongside everything else? Will this only occur with a bootstrapped business, or will a VC invest in a team of zero?