About the episode

Can one person build a billion-dollar company with AI? The tools have expanded what a single founder can do, but how realistic is a “one-person unicorn”?

David Burt, Director of Entrepreneurship at UNSW Sydney, works with thousands of entrepreneurs through the UNSW Founders program. In recent investment cohorts, solo founders jumped from 5% to 20% of the group. Startups today can be built faster than ever, but David says investors still look closely at the team behind the product.

David explains how small teams can use AI tools, what investors want to see, and why established leaders should start experimenting now.

Want to hear more about startups? Listen to our episode with Roby Sharon Zipser, the founder of Hipages, an online marketplace for tradespeople and people who need them.

The Business Of podcast is brought to you by UNSW Business School, produced with Deadset Studios. It’s hosted by Professor of Practice Fahim Khondaker.

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Edited transcript

David Burt  00:00
When you use the latest AI tools, it means that a smaller number of humans can take more responsibility for things. If you're not experimenting with these tools, you are rapidly getting left behind.

Professor Fahim Khondaker  00:15
It used to take a team to build a successful startup. You needed the big idea, the people to turn it into a business: engineers, marketers, accountants, and managers. But what if you could do it all yourself? Because AI can write your code, build your website, and create your marketing. That's raised a pretty extraordinary possibility: the one-person unicorn. Is this the future of startups, or are these lean business models built to break? And in a world where AI can do almost everything, what still needs a human? This is The Business Of: AI explained. I'm Fahim Khondaker, Partner in Data and AI at BDO, and Professor of Practice at UNSW Business School. Joining me is David Burt, Director of Entrepreneurship at UNSW. Welcome, David. Great to have you here.

David Burt  01:05
Great to be here, thanks.

Professor Fahim Khondaker  01:06
Look, AI has obviously made it easier to be a solo operator and a solo founder and running/doing the work of five or 10 people. Big question to kick us off. How realistic is this one-person unicorn concept?

David Burt  01:20
Not realistic, but fun to talk about. And what I mean by that is the idea that a single person with no other human help is going to create a company worth a billion dollars or more. I don't think that has happened yet. I don't think that's going to happen anytime soon. And there are a couple of reasons for that, but I think it's also true that what one human can achieve with these technologies, I think, is both astounding, and most people have no idea what's possible. One really good example that comes to mind is that there was a person called Paul who rang me up and said his dog had just been diagnosed with terminal cancer. And the vet said, "Hey, there's really nothing more that I can do, so enjoy the time you have left with your dog." Paul didn't want to accept that. He didn't have a background in medical science, but he was a software engineer, machine learning engineer, and so he, through a friend, got to me and said, "Hey, I need to do a genomic sequence of my dog's cancer," which is a very weird phone call to get. I then picked up the phone and called someone I'd never spoken to before and said, "Hey, I have a really random question." This is Martin, who runs the Ramaswati Centre. I said, "Can you genomically sequence a dog's cancer?" And he was like, "Yeah, it's possible." So I connected them together. He paid commercial rates, so Paul paid a few $1,000. A few weeks go by. He gets back a hard drive with several gigabytes of data on it, and then he kind of disappears into a cave for six months and uses these technologies, in particular a tool called AlphaFold, to basically understand what's causing the cancer. How might we therapeutically prevent, slow, and cure it? Long story short, he went down several dead ends but came back with the idea of immunotherapy, which essentially means you can train the dog's immune system to target that specific cancer. He used these tools to design an mRNA therapeutic, sort of like an N of one, just for his dog. And again, came back to UNSW and, using the expertise of the RNA Institute was able to synthesise that. And I could show you some photos of a dog with some big tumours, and then four weeks later, much smaller tumours, and so was able to really substantially increase the healthspan, like the lifespan and the quality of life for his dog Rosie, by like six months. Now, unfortunately, yes, then passed away, but the purpose of that story is that it would be unheard of for a single human with no scientific training in biology to achieve that. But also, he didn't do it alone and could not have done it without the other humans in that story, the expertise they have, the infrastructure of a university. However, once that story broke, he got some very interesting phone calls. He got a flood of people whose dogs had cancer, saying, "Hey, can you help me?" And he's like, "I'm just a dude." But he also received many phone calls from investors. So he got on a plane to San Francisco, recently raised about $4 million US to start a company in this space, and has a long waiting list of people. So now he's trying to help other people through this. So the point of the story is not that you have to start a company, but what's achievable as one person is radically different. And I think a lot of people are, kind of, missing a little bit of that at the moment.

Professor Fahim Khondaker  04:26
And whether we stay with this example or another, he obviously did a lot on his own.

David Burt  04:41
Yeah, with an astounding amount of, again, being really focused. What are you trying to achieve? Taking responsibility for it. And then using these technologies, which are essentially like mechanical intelligence. I think a lot of people aren't paying enough attention to how they might do this themselves.

Professor Fahim Khondaker  04:59
Are we seeing more people doing more on their own than ever before? And I guess the other question is: is that now the norm in the startup world?

David Burt  05:11
Yeah. So I think about it in a few different ways, and again, in my work at the university, I lead a philanthropically funded team that helps people start companies. So, thinking about the moment of incorporation, we are their best friends shaping up. Is this a good idea? And if this is a good idea, how do you find your first customer? Find your first investor, get some media, and get your story out there. And so each year we'll see about 10,000 people show up to do that with us, and we'll get about 100 new companies. So that kind of gives you an idea of the conversion rate. Because my first piece of advice to people is: don't start a company. You're going to get tortured, and if they ignore me and still want to do it, great, I can help you. But what this gives me is a really good flow into the data and numbers. I've been doing this for over 10 years, and what I can tell you is that for each stage of the company, you need about a third of the humans. So, if you take a normal software company, maybe they have a few million dollars in revenue. They might have raised 10 or $20 million of venture capital. That company, pre these technologies, needed about 20 humans. Now you need about five. The other thing is looking at that founding team, and the number of credible, effective solo founders has gone through the roof. That's not just with us. Y Combinator, which is a really important and successful startup accelerator and, sort of, pre-seed investor. Historically, they have shied away from funding solo founders because it's so hard. They released some stats that, I think, show that in their latest round of investments, solo founders went from like 5% to 20%. So they're seeing, and we're seeing, a similar effect because when you use the latest AI tools, a smaller number of humans can take more responsibility for producing outputs. And again, what's maybe, sort of, pushing back on that narrative of the one-person unicorn is, you still need a couple of other humans, like no one human can take responsibility for everything, and especially if you're taking on investment cash. As an investor, it's pretty risky if you're worth a billion dollars and it's just you, you might get him by a bus. Like you're still mortal, and so investors actually don't want a one-person unicorn. I did a little bit of research before talking with you about whether I could find any example of a company worth more than a billion dollars that was created in the past 20 years and had no investment capital, and I couldn't find one. Doesn't mean it doesn't exist, but the notion that you grow quickly usually involves investor cash. It's very risky for an investor to put capital into a one-person company.

Professor Fahim Khondaker  08:07
So, is anyone saying I'm not a one-person company? I've actually got 10 AI agents that work with me. So, as an investor, you wouldn't be investing in me alone. And then, how's the IP being treated by the AI in these companies? As the investor, do you own the IP? What happens there?

David Burt  08:24
So I think the version of that we are seeing is when you run a business, often, especially when you have employees, people will come to you and say, "Oh, there's too much work. There are all these things that need to be done. I'm at capacity. We need to hire another person." Smart business owners and founders today are like, well, "maybe we should do that, but let's give AI a go first." And so, there's no standard for this yet. Frankly, we're still at the frontier, trying to figure stuff out. Frankly, I think the best founders are just rolling their own and running lots of experiments. To the extent that it reduces risk for investors, I haven't personally seen it as a big deal. They just, they frankly just want to see usage and growth go up. I think the purpose of that, sort of, story I shared was, if you're not experimenting with these tools, you are rapidly getting left behind.

Professor Fahim Khondaker  09:18
Do you think AI has changed the nature of startups, and if so, how?

David Burt  09:24
I think AI has changed the nature of what one human can accomplish. And so, again, I come back to this notion: what is a startup founder? And on day one, and let's just run with the example of a solo startup founder, they are essentially taking responsibility for everything. Every single thing that needs to get done is on that person, and that was true before AI, and that's true after AI. What's changed is their level of ambition, of how much they can take responsibility for, and so whether you're a startup founder, whether you're a doctor, whether you're a teacher, whether you're an accountant or a plumber, what you can take responsibility for if you adopt the tools is astoundingly larger than you think. Now, there are some consequences that come with that: the cognitive load on people goes up, so the stress and pressure you're under can rise as well. And I think that's something that I don't think many people are talking enough about. I think a lot of people are just sort of saying like, "well, either I sort of do or don't want to use these tools, and especially in Australia, which is a market economy, some people are going to maximally adopt these tools in their life, and they are going to outcompete everyone else. And so, I think my kind of practical advice for people is, even if it feels a little uncomfortable or it's hard to learn, dive in and start integrating it into whatever your practice is, whether you're a startup founder or not. Because if you don't, someone else in your profession will, and eventually, that's not going to be a good outcome for you.

Professor Fahim Khondaker  11:08
Let's say I've got a very big idea right now. What would you recommend I do with that idea in the world of AI now that it's there at my fingertips, like you just said?

David Burt  11:20
Yeah, it depends on the domain, because I think if your idea is to create a product or service that helps the consumer on the street, that's one category. If your idea might help people who work in large businesses or in government in some sort of service delivery, that's another. Just yesterday, I had a random conversation with someone who I think has a really interesting, sophisticated, and novel idea for how to do distributed physical autonomy really well. So think about 1000 drones, or 1000 robots in a warehouse, all interacting with each other. Now that person has a pretty steep hill to climb to get attention from the right people, and so the reason I'm telling you this story is that my advice to that founder was a question: What's the cheapest way you can demonstrate how you're orchestrating physical autonomy? Because this person has just spent about six months doing a lot of math and has a bunch of algorithms and some papers they've published in a research journal. Now, pre-AI, that might have been enough to get into the room and have conversations with government, business and military organisations about how they might fund you to take the next step. But given how crowded that space is, my advice to the founder was: what's the cheapest way you can fabricate or buy very cheap off-the-shelf drones or robots and show your algorithm in action? And I think that's the thing that AI has really transformed in startups. It's really compressed the time to show, whether that's physical or digital. Another example: I was speaking to someone called Miles, who's, I would say, a leading thinker in game design. Has worked for leading game design studios that employ many people, and he's currently designing a game, creating a prototype, and now looking for financing. And I kind of said, like, pre-artificial intelligence, how long would it have taken you as a single person to create this proof of concept? And he said it would probably have taken him about 12 to 18 months, but with these tools, it's taken him about six to eight weeks, as a single person taking responsibility for that. Now, he still needs to use this to pitch someone for financing, then build out a small team of experts to execute it. But that's a really good example of, I think, in that creative economy space in particular, there is so much opportunity if only people can get over the emotional friction of some of these tools. Like, we're seeing some people really reject these, but we've seen this before with every single technology. Like, if you go back and read the newspapers around the time photography was invented, there was a time in human history where you couldn't take a photo. And then, there was a period of time when you could. If you go back and read the newspapers from that time, and the academic literature, huge negativity. And people were saying, "This is going to kill art, this is going to kill human expression. And yes, there were a whole bunch of people employed as artists to create really realistic images. And when photography came along, we needed fewer of those people. But if you go back and you think, well, what else changed? I'm pretty sure entire domains of art were created, like Impressionism as an art category. Because suddenly you had all these people who could draw. But you can't compete with the camera, but the camera couldn't take an impressionist image, right? It just showed you reality, and so I think, every single moment where you have these new technologies, I think, especially in the creative industries, it comes with this extra layer of emotion, fear, and disruption. But I think anyone who can get past that, and just think, great, how can I use these to create delightful experiences for other humans? They're going to have a really good time.

Professor Fahim Khondaker  14:24
And you'd think the startup world is kind of suited to that disruption, you're looking for that opportunity for disruption, right? So I think, are you seeing that? Is the objection to AI, or the concerns around AI, less so in the startup world versus established businesses?

David Burt  15:42
Yeah, it's definitely less. And part of the reason for that is that anyone who has the ambition and the agency to start a company already has to have a pretty high tolerance for shame, attracting criticism, being told no, and being told you're crazy. One of the startups we helped support through the university was called Breaker, which was a distributed physical autonomy software. But those were three recent engineering graduates from the university. They were a couple of years into their careers, working in robotics, software, and machine learning. And they came, they came to us with an idea, and literally everyone else laughed at them. They couldn't raise any money from the venture capital industry when they were starting their company. Actually, I had the founder on stage a few years into the company's life, and they've raised millions of dollars and have millions in revenue. It's going well. I had the founder on stage, and I said, "When you were starting the company, the university supported you. We were their first angel investor." And he said, "Every single one of his friends and family said, 'You're crazy, like, don't quit your job.'" And so, if your question is, does the startup community have a higher tolerance for embracing AI? The answer is yes, because they already face so much shame and noise and opposition, and people just think they're crazy. Like, what's one more criticism in the bundle?

Professor Fahim Khondaker  17:09
You mentioned angel investors. Do investors now have a different way to view what they expect? Are they getting a glut of information, and there are just too many pitches now that it's easy to make pitches? What are your views on that space?

David Burt  17:25
Depends on geography. So, if we're talking about San Francisco or Sydney, I think if you're trying to raise funding for an AI company. Again, I try to never tell founders what to do. This is probably one of the exceptions, which is, at a minimum, you should get on a plane and go to San Francisco and see if what you're pitching has a home there. Because that really is the centre of the universe right now, and some of the federal government policy in place at the moment, both copyright legislation and capital gains tax changes, make it incredibly hostile for pre-seed investing in Australia. And in fact, some of the angel investors we normally co-invest with have told me they are not investing at the moment. And so I think, in particular,

Professor Fahim Khondaker  18:14
As in, not investing in Australia?

David Burt  18:16
In Australian startups in particular. There are also a whole bunch of tax concessions available to American angel investors that apply only if the company is domiciled in the US.

Professor Fahim Khondaker  18:17
So, no matter how good AI gets, what can we not pass off to AI, and what has to be intrinsically human going forward?

David Burt  18:37
If you're flying into or out of a major airport in a modern plane, those planes can technically take off and land themselves. So, pilot, copilot, not actually necessary. And if you dig into the data on crashes in the last 5, 10 years, 20 years, even. And when the regulators say, like, "Why did the plane crash? The most dominant reason is human error. So, one could argue that because we still have humans in cockpits, planes are less safe. But most people would not step onto a plane without a pilot, so that's kind of how I want to answer your question: there are some things we feel a lot more comfortable doing when there's human accountability in the loop. I think, in terms of anything to do with I think robotic surgery is a really interesting one, even if the robot can technically do the surgery at a more precise, less error rate than a human, I would still feel more comfortable if there was a human standing next to the robot, and if for whatever reason something gone wrong, like that person's medical licence is on the line. And so I think, any time that there's an element of harm or risk, having a human in the loop is super important. I think the other thing that comes to mind is computers; artificial intelligence has been able to crush humans at chess for at least 15 years. And yet there are hundreds of people who, as a job, play chess against each other and make it work. And there are hundreds of 1000s of people that watch them. There's still a role for that. And so again, I think, especially from the Australian perspective, that opportunity in the creative economy is somewhere we can play at the global game. Because if you look at the conditions a country needs to create great entertainment products, you kind of need freedom of expression. And Australia is one of the few places in the world where we have almost unlimited freedom of expression, which is both great politically, but also great because it gives you, like we have such a big creative economy here. Those are the things where the AI and again predictions about the future are very hard. I find it very hard to imagine a world where AI is buying entertainment products for itself. So humans are still going to be there, wanting to buy entertainment products, and I think the counterpoint to investing in AI is investing in physical experiences. So, if you look at some live music or live sport, there are so many opportunities for commerce that still require humans as part of either delivery or consumption. I think we have many reasons to be optimistic about the future. Humans want to be with other humans. Like, at the end of the day, we're incredibly social animals, and that biology is impossible to unwind.

Professor Fahim Khondaker  21:46
We've talked a lot about startups, and startups are into disrupting businesses and industries and creating new solutions. Let's go the other way. If I'm an existing business, how much more of a threat is a startup to me now in the world of AI than it was before, I guess?

David Burt  22:06
The reason a startup is a great vehicle to do something new is that it's not worth anything. And so if you get it wrong, you've lost nothing, just your time. So the reason large businesses find it hard to innovate is that they have real assets at stake, and if they make a mistake, there's a high chance they'll destroy value. It gets even worse if you're a publicly listed company, because you then have a shareholder lawsuit on your hands. And so, for anyone in a leadership position at a large business, the cultural change component of integrating AI is the most important thing. Because the worst thing you can do is go to your team or employees and say, "Everyone has to use AI now." You're guaranteed to get a bunch of friction and sadness. I think if you have a good culture, then you have a bunch of people inside your organisation that are showing up to work on whatever the mission or purpose of that company is, and then the cultural change of, hey, there's been a whole bunch of new technology invented. How might we use this to better achieve our mission? And that's where I'd recommend leaders inside large organisations or government approach it. Because if you've recruited the right people to work in your organisation, and they actually care about the purpose of why that company or government department exists. Then, if you frame it as a how question, and you give people permission to be creative and experiment, then you're going to be on a much better path than someone who rocks up and just says, "Everyone has to use AI now. That's not going to work.

Professor Fahim Khondaker  23:50
In the context of innovation broadly, whether it be a startup or in an existing business. What's your top tip to everyone today after listening to this episode? What should they be doing?

David Burt  24:01
I think the top tip is to ask yourself a question: how much time are you spending learning, being creative, being curious, and practising integrating AI into some part of your life? It could be at work, it could be a hobby. If you're spending a few hours a week doing that, you're much more likely to benefit from what happens next. Because what happens next from a technological, economic, and political point of view is largely out of the control of most people. But the biggest takeaway from what's happening right now, if I come back to this notion of things that just one person can take responsibility for, it's an incredibly great time to be someone who has agency. And that's, again, something that we spend a lot of time on at the university, not just teaching students, but anyone who wants to be a startup founder, is to believe in themselves. Have more agency, and I think I would extend that to having agency of how you're trying to use these tools in your life.

Professor Fahim Khondaker  25:08
What a wonderful note to end on! So thank you so much, David, for coming in today.

David Burt  25:11
Thanks for having me.

Professor Fahim Khondaker  25:13
David Burt is the Director of Entrepreneurship at UNSW. If you want to hear more about startups, listen to our episode with Roby Sharon-Zipser, the founder of Hipages, an online marketplace for tradespeople and people who need them.  You'll find the link in the episode description. The Business Of is brought to you by UNSW Business School, and produced with Deadset Studios.

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