Will AI replace human entrepreneurs?

January 7, 2024 

No, AI will not replace or displace human entrepreneurs any time soon. Entrepreneurship, investing, manual trades, in-person occupations, and licensed professions are the best protections against AI disruption and job displacement. 

Artificial intelligence (AI) will replace and displaced millions of knowledge workers in the upcoming decades. Just like motor engines replaced and displaced animals (cattle, horses, and humans) after the industrial revolution, AI will replace and displace humans after the AI revolution. 

From a technological standpoint, there is not much humans can do to avoid being replaced and displaced by smarter and more convenient AI. In the human world, convenience always prevails. AI is a convenient technology and will prevail. Having said that, there are ways to mitigate and delay the impact of being replaced and displaced by AI. Investing, entrepreneurship, manual trades, in-person occupations, and licensed professions are the ones we recommend. 

In this article we focus on entrepreneurship. Entrepreneurs are not only business venture coordinators  , but are also legal persons serving as agents for their ventures. There are two reasons why  entrepreneurship can protect humans a little bit from AI replacement and displacement. One reason--the weakest--is that entrepreneurship is a complex and emotionally intensive process that is somewhat hard to program in computers. That is the weakest reason because AI will continue improving and will master all levels of human cognition, including emotion. Another reason--hopefully better--is that entrepreneurship requires legal personhood. It will take many decades or even centuries for AI to gain legal recognition as a person. In the meantime, humans can thrive as entrepreneurs. 

Entrepreneurs

Typically, an entrepreneur is someone who initiates, organizes, and manages a business venture, taking on risks in the pursuit of rewards. Entrepreneurs are known for their ability to capitalize on gaps or needs in the market by creating commercial solutions to address them. 

Typical Characteristics of Entrepreneurs:

• Creative and Innovative Mindset: Entrepreneurs often possess a creative and innovative mindset, seeking new ideas, products, or services to bring to the market.
• Risk-Taking Propensity: Entrepreneurs are willing to take calculated risks, investing time and money into new ventures or ideas despite uncertain outcomes.
• Visionary Leadership: Entrepreneurs have a vision for their venture and the ability to inspire and lead others towards achieving that vision.
• Adaptability, and Resilience: Entrepreneurs are adaptable and resilient, capable of navigating challenges and pivoting strategies with grit when needed.
• Networking Skills: Entrepreneurs often have strong networking skills, leveraging interpersonal relationships and connections to facilitate their ventures.

Roles and Responsibilities:

• Business Development: Entrepreneurs are responsible for conceptualizing and developing business ideas, turning them into viable products or services.
• Risk Management: Entrepreneurs manage risks associated with their ventures, making strategic decisions to minimize potential negative impacts.
• Strategic Planning: Entrepreneurs engage in strategic planning, setting goals and devising plans to achieve them.
• Resource Management: Entrepreneurs manage resources, including financial, human, and technological resources to allocate them for their ventures.
• Innovation and Adaptation: Entrepreneurs continuously innovate and adapt to changing market conditions, seeking ways to stay competitive and relevant.

Types of Entrepreneurs:

• Small Business: Entrepreneurs starting businesses in small-scale ventures, often with local or niche market focuses.
• Social Influencers: Entrepreneurs who start ventures aimed at generating influence and social impacts.
• Serial: Entrepreneurs who continuously create and launch new businesses, often building upon past experiences and successes.

Entrepreneurship plays a vital role in driving economic growth, fostering innovation, and creating job opportunities. Entrepreneurs' ability to identify and capitalize on opportunities drives business expansion, fosters economic development, and contributes to societal progress.

Entrepreneurship and Failure

Entrepreneurship involves many risks. A significant number of business startups fail. The failure rate varies based on multiple factors, including the industry, market conditions, management, funding, and the overall economic landscape. A considerable percentage of startups do not survive in the long term.

According to the Bureau of Labor Statistics (BLS), the failure rate for small businesses is as follows: 

• First year: 20%
• Second year: 30%
• Fifth year: 50%
• Tenth year: 70%
• First five years: 45%
• First 10 years: 65%

Only 25% of small businesses stay afloat for 15 years or more. Common reasons for small businesses failure include: low reveneue, high costs, insufficient capital; bad business model; changed market conditions; and ineffective marketing.

Factors Contributing to Startup Failure:

• Low Sales. Startups may fail if there's insufficient demand for their product or service or if they haven't adequately identified their target market.
• High Costs. The costs of starting and running a business can be significant and may include rent, payroll, cost of inventory, marketing, insurance, permits, etc. 
• Lack of Capital: Inadequate funding can lead to startups running out of money and suffocating to financial death.
• Poor Execution or Management: Issues related to leadership, team dynamics, operational inefficiencies, inadequate strategic planning, and the like contributes to failure.
• Competition and Changing Landscape: Intense competition, changing market conditions, inability to adapt to evolving dynamics, and more can lead to failure.
• Scaling Challenges: Even successful startups might struggle when attempting to scale operations too quickly or facing difficulties in managing growth.

More on Failure.

Studies and reports on startup failure rates vary widely. Some studies suggest that a significant percentage of startups fail within the first few years of operation. Some sources mention rates ranging from 60% to 90% within the first five years. Failure rates can also differ based on industry sectors. Certain industries, like technology or retail, might have different success and failure rates due to various market conditions and factors unique to those sectors.

While failure is common in entrepreneurship, failure is critically important for learning and growth. Many successful entrepreneurs if not all of them have faced setbacks or failures in their careers before finding or stumbling upon success. Learning from failures, adapting from lessons learned, seeking help, and having a resilient mindset can contribute to an entrepreneur's ability to bounce back and eventually succeed in future ventures.

There are several renowned entrepreneurs who faced multiple failures before achieving significant success. Here are a few examples:

1. Henry Ford:

• Failures: Ford faced multiple business failures before founding the Ford Motor Company. His early ventures, including the Detroit Automobile Company and the Henry Ford Company, encountered financial difficulties or collapsed.
• Success: Despite initial setbacks, Ford's perseverance led to the establishment of Ford Motor Company in 1903, leveraging the assembly line and revolutionizing the automobile industry with the Model T.

2. Thomas Edison:

• Failures: Edison experienced numerous failures while inventing the electric light bulb. He reportedly conducted over a thousand unsuccessful experiments before finally creating a practical and long-lasting incandescent light bulb.
• Success: Edison's determination and innovative spirit led to the founding of General Electric (GE) and numerous other inventions, impacting various industries.

3. Colonel Harland Sanders:

• Failures: Before founding Kentucky Fried Chicken (KFC), Sanders faced multiple career setbacks. He encountered failures in several professions and businesses, including being fired from multiple jobs and facing rejection from potential franchisees.
• Success: Sanders started KFC in his 60s, revolutionizing the fast-food industry and creating a globally recognized brand.

4. Walt Disney:

• Failures: Disney faced financial difficulties and setbacks in his early career. He faced bankruptcy with his first animation company, Laugh-O-Gram Studio, before moving to Hollywood.
• Success: Disney's vision and determination led to the creation of the iconic Walt Disney Studios and the development of characters like Mickey Mouse, shaping the entertainment industry.

5. Steve Jobs:

• Failures: After co-founding Apple, Jobs faced setbacks, including being ousted from the company he helped establish. His ventures into NeXT and Pixar also encountered challenges initially.
• Success: Jobs returned to Apple, contributing to its resurgence and transforming the company with products like the iPod, iPhone, and iPad, cementing his legacy as a visionary entrepreneur.
  

6. J. K. Rowling

• Rowling was fired from Amnesty International for writing stories on company time. She also sent her Harry Potter manuscript to 12 publishers, but they rejected it all.
• As of February 2023, Harry Potter books have sold more than 600 million copies worldwide, making them the best-selling book series in history. The series has also been adapted into eight popular films. The children's market as a whole has seen its sales increase by a total of 52 percent since the series. The series has a brand value of $25 billion.

7. Oprah Winfrey

• Winfrey has failed multiple times, but she considers her failures to be a stepping stone to her success. Oprah Winfrey is a successful entrepreneur, owner of a media empire, television hostess, actress, and philanthropist. According to Forbes, the “Oprah Empire” is currently worth $2.5 billion.

The seven entrepreneurs above are just mentioned for the fun of it. In reality, all successful entrepreneurs--absolutely all of them--have faced many failures and setbacks from which they have learned to "roll with the punches" to keep pursuing ahead to make their business dreams come true. In addition, many successful entrepreneurs in business experience terrible failure in other areas of their lives. In human life there is no way to win yet there is no way to lose either. Everything is relative and dynamic. Facts don't change, but meanings and interpretations change often over time. The stories of most human entrepreneurs, successful or failed, highlight the importance of resilience, persistence, and lifelong learning in the interesting journey of life.

AI Computerized Entrepreneurship

In the coming decades, AI will gradually replace and displace humans from many jobs and occupations. Similar to how machinery replaced animals and humans from many occupations following the industrial revolution, AI will replace humans from many occupations following the AI revolution that is just beginning. Just like cars replaced and displaced horses; how tractors and farm machines replaced and displaced cattle and human farm workers; how the spinning jenny replaced and displaced human spinners of cotton and wool; how computerized word processors replaced typewriters; and many other examples of technologies replacing others, AI will replace human knowledge workers in almost all fields and occupations. 

Clever humans will find ways of staying busy and productive despite AI. One way will be to become entrepreneurs. For AI to replace human entrepreneurs will be a harder challenge because entrepreneurs are not only dream coordinators, but are also legal actors or agents of their ventures. AI may be able to master entrepreneurship, but will not gain legal recognition as person (personhood) in a long, long time.  

Programming entrepreneurship into AI is completely feasible and will happen. There are no limitations for AI to achieve and exceed all levels of human cognition. Now, for AI to achieve human-like entrepreneurial skills will most likely take a few decades. It will take long because entrepreneurship is a complex endeavor requiring not only intellectual intelligence, but also a great deal of emotional intelligence for motivating and leading others. Yet again, there are no limits to what AI can accomplish and entrepreneurship is well within the grasp of AI. 

Take for example, entertainers. Many entrepreneurs are entertainers. Well, prolific and highly successful AI entertainers are around the corner. Soon enough--probably prior to the end of this new year 2024--there will be multiple (multiple) AI podcasters, YouTubers, and all sorts of AI social media influencers. By the 2030s it is likely that the most famous and followed newscasters, sportscasters, and entertainment pundits are AI bots and digital robots or digibots. This is almost inevitable folks. The AI future is here. 

In the near future (c. 2030s and 2040s) it may be common for online businesses to be imagined, created, launched, and operated almost independently by AI. Now, this will require clever human entrepreneurs coordinating behind the scenes the finances and legal deals. It will take many decades or centuries for AI to be recognized as an independent legal person. Therefore, there is plenty of opportunity for human entrepreneurs to survive and thrive in the first decades or centuries of the AI era.

In a distant future, humanity will recognize AI as a form of life. AI will overcome the slavery status and achieve full legal recognition and personhood. In turn, future humans will leverage AI to transcend biology. The AI era will propel transhumanism. AI will help humans of the future to free themselves from the shackles of biology. Powered by AI, future human generations will replace the shortfalls of their organic life product of random mutation (evolution) and elimination ("natural selection") with the advances of an AI-based life product of smart design and pragmatic technology. That's all in the very distant future and for future generations of humans to create.  

As for now, this is the time for clever humans to jump into the beginning of the AI era. Not unlike how the Industrial Revolution changed everything for human societies from the 1700s and on, the AI Revolution or the AI Era will change everything for humanity from the 2020s and on. Don't miss out. Stay tuned.

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