10,000 Small Businesses

The case for lifestyle businesses in the age of AI

Last week, Y Combinator’s Garry Tan realised that experience is useful. 500K people saw his tweet and thousands piled on to agree. Paul Graham told people not to drop out of college, and instead gain some experience. It was a whole thing.

Garry’s right, “specific, weird, earned insight” from living inside a problem will help create real solutions. But the kind of personality who likes spending years inside a problem, is probably not the one that wants to spend the next 10 years fundraising, hiring, and optimising for a $1B valuation. AI will enable people with real insight to build things they previously couldn’t, and some of those will end up at YC. But as good a home for earned insight is a business that lets you keep doing the thing you already understand. I’m more interested in the thousands of lifestyle businesses this enables.

The obsession with scale

The entire infrastructure around business, the government funding, the incubators, the media coverage, the cultural narrative, is optimised for one outcome: scale. Governments provide funding and support for new businesses, but the system is designed to produce growth startups. One company worth a billion is a better headline than ten thousand companies each employing four people. The minister gets a photo op with the unicorn founder. Nobody gets a photo op with ten thousand small business owners.

The phrase “lifestyle business” tells you everything about how the system thinks. It’s technically neutral but nobody uses it as a compliment. It implies small ambitions, a lack of seriousness, a founder who couldn’t cut it in the real game. But a lifestyle business is a business that gives you a good life, employs people, solves a real problem for real customers, and it’s sustainable because it doesn’t depend on the next funding round to survive. For most people, in most situations, it’s both the more realistic and the more rewarding path.

Earned insight without the infrastructure

Earned insight is everywhere, and the people who have the deepest version of it are usually the ones furthest from the startup ecosystem.

The person who’s been running a small catering business for ten years understands her customers, her margins, her supply chain, and the specific dynamics of her local market in a way that no amount of market research can replicate. What she doesn’t have is a lawyer to review her contracts, an accountant to help her think about pricing, a marketing advisor to help her reach new customers, or a mentor who’s done this before and can say “have you thought about X?”

That’s the network that a business school graduate takes for granted. And it’s the network that a first-generation entrepreneur has never had access to.

The mothers who start a small food business because they know what their community wants to eat. The person who turns a practical skill into a service because there’s clear local demand. They don’t lack ambition or insight, they lack the infrastructure that makes it easier to start, to grow a little, and to sustain something that works.

The advisor you don’t have

AI changes this. The common narrative is about AI as a builder, letting people ship apps and products without knowing how to code. But building is only one barrier. For most people starting a business, the harder barriers are everything around the building: understanding regulations, structuring a contract, figuring out whether your pricing covers your costs, knowing what questions to ask when a potential partner puts a deal in front of you.

AI is the advisor you don’t have in your network. Not a replacement for a real lawyer or a real accountant, but the person you’d call at 9pm when you’re staring at a contract and you don’t know what you’re looking at. The friend who’s been through this before and can say “that clause is standard” or “walk away from that one.” Most people don’t have that friend. Now they have something close enough to change the odds.

The multiplier

Ten thousand small businesses employing four people each is forty thousand jobs. Forty thousand jobs where the employer knows everyone’s name, where people are hired from the community they serve, where the money circulates locally, where nobody’s optimising for an exit that renders the employees’ stock options worthless. A better outcome by almost every measure except the one we’ve decided to use.

A billion-dollar company is concentrated wealth, concentrated employment, concentrated risk. When it fails, it fails spectacularly and the community absorbs the damage. Ten thousand small businesses are distributed. Some will fail, because businesses do, but the community around them stays intact.

We celebrate the unicorn because it’s a simple story. One founder, one vision, one massive outcome. But the more interesting story, the one that actually improves how people live, is the one where a thousand people you’ve never heard of build something useful for the people around them. The tools to do that are more accessible than ever. What’s missing is the support structure, to get a small loan without a pitch deck, to find out whether you need a specific licence, and celebrating the idea that a business employing three people and making good money is a success, full stop.

We should probably stop calling them lifestyle businesses, as if wanting a good life is something to be embarrassed about.