The tech-focused investment firm ARK Invest says AI could eliminate one business risk and boost an entrepreneur’s odds of making it.
In a new post on X, ARK Invest CEO Cathie Wood predicts an entrepreneurial explosion in the next five to 10 years, as AI lowers the barriers to new business entry.
Wood cites an article by ARK research analyst Varshika Prasanna, who notes that almost 50% of small businesses shutter their doors in just a few years.
“Data from the U.S. Bureau of Labor Statistics shows ~20% of businesses fail in their first year, and nearly half fail within five years. The causes are predictable: cash flow problems, overwhelming operations, and bad early hires.”
Prasanna specifically looks at bad early hires, highlighting that they can make or break a new business.
“That last one is more costly than most founders expect. The U.S. Department of Labor estimates a single bad hire costs roughly 30% of that employee’s first-year wages. The Society for Human Resource Management (SHRM) estimates the total damage could reach $240,000 when you factor in lost productivity, damaged morale, and replacement costs. A CareerBuilder survey estimates that 74% of employers say they have made a bad hire. For a business on a limited runway, that is not a recoverable mistake.”
The ARK analyst also says AI assistants eliminate the need for businesses to hire someone early on. Prasanna mentions two AI tools specifically designed to help retail business owners.
“Shopify’s Sidekick is designed to function as an AI co-founder for merchants. With access to store data and a deep understanding of commerce workflows, it provides context-aware guidance rather than generic advice. Merchants can ask questions in plain language and get insights across sales, inventory, and customer behavior. Sidekick is also proactive, flagging risks and surfacing opportunities before the merchant thinks to ask.
Block is taking a complementary approach with its AI assistant for Square sellers, currently known as Square AI and expected to evolve into ManagerBot, powered by Goose. Where Sidekick leans into insight and recommendations, ManagerBot leans into execution. It helps sellers manage schedules, monitor performance, and automate routine tasks across payments, staffing, and operations in a single interface.”
Prasanna concludes that AI will do something more than just spark a new wave of entrepreneurs.
“The question is no longer just whether AI will create more entrepreneurs. It is whether AI makes those entrepreneurs structurally more likely to survive. If Sidekick and ManagerBot can help founders make faster decisions, avoid costly mistakes, and fill the operational roles they were never equipped to play, the answer is starting to look like yes.”
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