More and more companies are cutting back on employees and leaning towards AI. Coinbase CEO Brian Armstrong is the latest tech executive to head in that direction.
Armstrong said the fintech company plans to lay off about 14% of its workforce. He shared his message publicly on X Tuesday morning, saying, “The pace of what small, focused teams can do has changed dramatically, and it’s accelerating every day.”
The charm is simple. Smaller teams mean faster decision-making, lower costs, and more control. But new challenges are emerging as AI changes how many people companies actually need.
Over the past few months, Business Insider has spoken with more than a dozen executives at Lean AI startups with fewer than 10 full-time employees as part of our Tiny Teams series. Everyone agrees that the biggest advantage AI brings is speed. But with that speed, they say they need to work harder to channel creativity, hire the right candidates and minimize potential mistakes.
Below are three founders who shared the biggest benefits and challenges brought by AI and their small teams. Their words have been edited for length and clarity.
The hardest part of small teams is balancing fast execution with meaningful creativity.
Nathaneo Johnson is the 22-year-old CEO of Series, an AI social network based in Chelsea, New York.
Many CEOs of older companies are in the relatively tough position of having to lay off a significant number of employees in the wake of AI automation.
In the age of AI, speed is everything, and lean and professional teams thrive, but the most difficult part of the day-to-day is limiting meetings without losing time for creative brainstorming. This was also the time when my co-founder and I started Series, so there was no need to hire at scale when you had AI agents for virtually everything. But creativity and vision are always human wins.
In small teams, there’s always a competition between encouraging creativity and collaboration or being more head-down. If we don’t talk at all and just work in Slack all day, we can end up with a company that looks optimized for productivity. On the flip side, a brainstorming meeting can turn into 10x more ideas, and we don’t want to lose that.
In the next five years, we won’t need anyone to be a heads-down specialist. We need someone who is creative or visionary.
Strength helps sustain profits, but finding the right talent is becoming increasingly difficult
Sidhant Bendre is a 26-year-old co-founder of Oleve, an AI-driven consumer software portfolio company based in New York.
Keeping our team small was born out of our desire to be profitable. For us, the fastest path to growth was finding tricks and hacks to leverage AI to do more with fewer people. But with small teams, there’s no middle management to catch sloppiness, and there’s no room for people who aren’t thinking about what their work will lead to next.
If everyone is a specialist and acts quickly with real initiative, one bad outcome doesn’t mean one bad outcome. It develops into a completely bad system. This raises the bar for individual contributors and makes them harder to hire.
The need to vet potential employees more closely meant creating a more complex engineering hiring process. We’ve all seen take-home tasks from job seekers where someone clearly typed a prompt into ChatGPT and submitted exactly what was returned without thinking critically.
Using AI to fully drive results is a skill, but it can be temporary if you lack the depth of knowledge needed to solve the problems that arise.
Continue reading the Tiny Teams series
The sooner you act, the higher the risk that junior employees will make mistakes
Charles Swann is the 44-year-old founder of an AI startup based in Boulder, Colorado.
I founded a startup about two years ago and have one full-time employee. My business is in the marketing technology field and needed someone with a deep connection to modern culture and social media. So we hired a 24-year-old neighbor from our neighborhood to be our growth and brand specialist.
You don’t need a large team of founding engineers, each with a six-figure salary, to launch a product. AI can be used to empower junior employees to perform senior-level tasks.
AI, especially Gemini, acts as a middle management layer, helping her level up the work she produces. But relying on AI to give employees years of experience in seconds is always a risk. Lack of experience in knowing when to redirect can lead to hallucinations and feedback loops.
What I’ve done to keep us safe is create a collection of prompt starters that you can copy and paste into your chats to save time and help the AI focus on the relevant context.
I may encounter potential mistakes and illusions, but I would rather those mistakes come to the surface and force me to correct course than be stuck at my current pace.
Have a Tiny Teams story to share? Contact this reporter, Agnes Applegate: aapplegate@businessinsider.com.