Sean Ammirati has been teaching entrepreneurship courses for over a decade.
Ammirati is a professor at Carnegie Mellon University and has groups of mostly PhD students start companies from scratch over the course of the spring semester. Some of the startups his 49 students founded this year were classic examples of this type: a dating app for couples in long-distance relationships, a personalized fitness app.
But Mr. Ammirati also noticed something unusual.
“I know pretty well how fast students should progress in a semester,” he said. “In 14 years, I have never seen students make as much progress as they have this year.”
And he knew exactly why that was. For the first time, Mr. Ammirati had encouraged his students to use generative artificial intelligence as part of their process — “Think of generative AI as your co-founder,” he remembered telling them.
Students began sharing their use case ideas in a dedicated Slack channel, using generative AI tools like ChatGPT, GitHub Copilot, and FlowiseAI to help them with tasks like marketing, coding, product development, and getting their first customers.
Towards the end of the course in May, venture capitalists flocked to the campus of Carnegie Mellon University in Pittsburgh.
“It felt to me like the mid-2000s when cloud and mobile emerged simultaneously,” said Mr. Ammirati, himself an entrepreneur. Generative AI, he believes, could similarly change innovation “by an order of magnitude.”
For all the excitement about the potential impact of generative AI tools like ChatGPT, it is not yet clear how or when this technology will have a measurable impact on economic activity. Many companies, especially smaller ones, are still trying to figure out how to use this technology effectively.
But for some entrepreneurs, generative AI is already a game-changer. It helps them write complicated code, understand complex legal documents, create social media posts, edit copy, and even answer payroll questions. The result, they say, is that AI has enabled them to build their businesses faster and more efficiently than would have been possible without it.
The consequences could be profound. Startups are an important source of job growth and economic resilience. By driving innovation, they also contribute to higher productivity – one of the key promises of generative AI.
The technology “gives you stilts to overcome an obstacle – to cross a minefield,” says Steven Bright, who recently founded Skitenz, a company that makes colorful covers for gloves. “You get from one point to another faster.”
Mr Bright said he got the idea for Skitenz in late 2022 on a skiing trip with his wife when they noticed everyone was wearing regular black ski gloves. Wouldn't it be cool, they thought, if you could put a piste map or other colorful cover over your gloves instead?
Mr. Bright, an emergency room doctor in Golden, Colorado, thought he had a good business idea, but he didn't know what to do next. “Most of my colleagues and friends are doctors or in the medical field,” he said. “I didn't even know where to start to get help.”
So instead he turned to ChatGPT, which was attracting a lot of attention at the time. He started by using the technology to answer simple questions, like how to use a certain type of dye for glove skins, and eventually had the tool handle more complicated tasks, including creating a survey for customer feedback, translating patent documents into understandable terms and deciphering legal agreements for trade shows.
Although the company is not yet profitable, Mr. Bright said using ChatGPT gave him the confidence he needed to start Skitenz without having to pay lawyers or other experts. “It's scary when you take your life savings and put it into a new idea without being sure,” he said. “But being able to bring the full power of the internet to bear on a conversation gives you some peace of mind.”
There is currently little data on how many startups are using AI and whether the technology is helping them hire faster and, ideally, become profitable. That's partly because the intersection of entrepreneurial activity and generative AI has only recently become an area of research for economists.
However, research suggests that newer companies are at least more likely to experiment with the technology.
According to a working paper published in April by the National Bureau of Economic Research, AI usage was higher among young companies. Applications such as generative AI could be attractive to young and small companies, the paper's authors wrote, because they are “general-purpose technologies” that are inexpensive to use.
And Gusto, a payroll and benefits platform for small businesses, found that about a fifth of companies founded last year used generative AI to more efficiently perform tasks such as market research, contract reviews, accounting and job postings. Liz Wilke, chief economist at Gusto, believes its use could change the startup landscape.
“There is every reason to believe that this is the likely path – that companies will become profitable faster, grow faster and that they will actually end up being a little more stable,” she said.
Jamie Steven, an entrepreneur from Greenwater, Washington, seems to be on that path.
Mr. Steven used generative AI to learn some of the basics of business management when he tried to build an application last summer that would show users the quality and health of their internet connection in an easy-to-understand interface. He asked ChatGPT questions about topics like equity in startups and payroll. Although the technology sometimes provided suspect or nonsensical answers, leading him to adopt the mantra of “don't trust and don't verify,” the technology's ability to provide succinct summaries helped him feel more informed before speaking to experts.
“I feel like I can ask the chat tool stupid questions without feeling embarrassed,” says Steven, who previously held senior positions at Ookla, the operator of the popular websites Speedtest and Downdetector.
He and his engineers have also used GitHub's Copilot to more quickly write code for the app, called Orb.net. This move, he says, has been instrumental in building the business faster. He recently hired several people, raised $700,000 from angel investors, and plans to launch the app publicly in the next few months.
“Could I have done this if I didn't have access to these tools?” said Mr. Steven. “Probably not.”
One area of the startup landscape that is showing more significant changes due to artificial intelligence is the boom in AI-related startups. Investors are pouring billions of dollars into AI startups, and some research has shown that companies that have emerged from AI-related new business applications over the years have had greater potential in terms of job creation, payroll, and revenue than others.
But many entrepreneurs are also using artificial intelligence to turn their ideas into viable business concepts. Erik Noyes, a professor of entrepreneurship at Babson College in Massachusetts, said the technology actually gives start-up founders the opportunity to multiply their intelligence cost-effectively.
“Entrepreneurs never have enough resources,” he said. “You could think of this as bootstrapping technology – doing more with less.”
E. Darren Liddell worked for years as a nonprofit financial coach, helping low-income people make good financial decisions. He always wanted to start a business, and last summer he finally did it: He founded My Money Story, a financial coaching company for low-income people of color.
One of the company's programs matches users who help each other achieve their financial goals. Initially, users were matched manually. But about six months ago, Liddell, who lives in Brooklyn, became curious about using artificial intelligence to match the couples. He and his small team would then review the matches before making a final decision.
Although there were some privacy issues to resolve related to how the AI technology would integrate user information, the idea was a success, Liddell said. Most importantly, the tool saved the company time and meant it didn't have to hire an intern or entry-level employee to do the matching.
“We're a start-up, so our financial resources are pretty tight,” he said, “and every dollar really counts.”