artificial intelligence
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If AI is absolutely important in our economy, it must first be important for small businesses.
As a search fund entrepreneur, I met and collaborated with over 300 CEOs and founders in cities across the United States, from New York to Sunnyvale to Las Vegas, Maryland. The same concerns are superficially mentioned in every conversation. The AI model of smartphones is more advanced than the technology stack that runs our business. Pocket devices are updated monthly, but most business systems remain the same for years. And this is not as obvious as small businesses.
This is important as small and medium-sized businesses employ over 61 million people. Half of private workers. Still, just A small portion of 1% It builds the kind of technology venture that attracts institutional capital.
Therefore, this means that the vast majority of small and medium-sized businesses are self-funded and family-run. They are bootstrap by owners who pour their savings into businesses that pin the communities they care about. These are companies that still run payroll on technology built 10 years ago.
Family business meets AI startups
Trustworthy relationships build a business.
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The other day I attended a luncheon with 80 small business owners who lead a multi-generational family business. This gathering was a masterclass in human networks. However, technology was not mentioned throughout the meeting.
Every three weeks, all 80 members gather at a private club on Park Avenue for a three-course meal. The goal was to share business priorities and introduce and introduce each member. The table, embossed with a motto, had a green pen and a notepad.Trustworthy relationships build a business. ” Over 400 new channels opened before dessert if each of the 80 members received a referral of five new customers at lunchtime.
Four hours later I was downtown at the city's latest restaurant for a startup forum. Here, all the conversations were about AI and technology, from AI-powered rollups and cybersecurity to founders who transform vacant New York warehouses into sushi pop-ups.
NYC Restaurant Startup Forum
New York, New York
Two worlds in one city
In every city I travelled to, these two business communities live side by side, but rarely meet them. One is guided by a family built through reliable referrals and intellectual property developed over decades. The other is driven by race-backed startups to deploy the latest technology at scale.
What happens when these two worlds connect? Imagine today's most advanced technology.
Over the past 40 years, one model of entrepreneurship has been 10 billion dollars Doing this accurately is valuable. Invest in established small businesses and build with new technology and leadership. The search fund model, first launched at Stanford in 1984, was designed to bring innovation to established companies. One of the earliest search funds invested in and incorporated 50 roadside support companies. Astrionis a global high-tech care company with 23,000 employees and 300 million customers. Another has converted a compliance service company ria-in-a-boxa major SaaS platform used by over 2,600 companies nationwide.
Once that took years, significant capital investments can be made in a few months. Today, enterprise-grade tools once reserved for Fortune 500 businesses are within the scope of almost every business. Playbooks that SMEs have relied on for decades can build multi-generational value-based businesses. When combined with AI, it can affect you in weeks rather than weeks.
Through core functions, generative AI is reducing over work hours 60%. If you can sketch ideas with a napkin, you can build them in hours rather than weeks. Supply chain, compliance, document processing and technical workflows have already shown double digit productivity gains. In some cases, technical tasks have been reduced by up to 70%.
Search funds are a proven pathway to bringing technology into legacy business. Others are also emerging, such as AI consulting companies, AI studios, and AI-powered roll-up strategies. Each has its own strategy to rebuild a company established with cutting-edge technology available today.
The tools are here, the costs are lower than ever, and the doors are wide open.
If AI is important at all, it must first be important for small businesses. When it works, it will drive growth across Main Street and an economy that directly supports half the workforce.
