As startups increasingly bet on AI to drive rapid growth, experts argue that entrepreneurs hold the key to understanding the technology’s broader economic impact—especially on the workforce.
“If innovation comes disproportionately from startups—and it does—then startups are enormously important to economic growth, job creation, and opportunity expansion,” said John Dearie, president of the Center for American Entrepreneurship, a nonprofit that advocates for founders.
Recent data underscores this trend: a Mercury fintech survey of 1,500 early-stage founders in August found that more than 70% are increasing their AI and automation budgets. Dearie, who hosts AI roundtables with entrepreneurs nationwide, spoke with Quartz about how AI is reshaping startup operations—and hiring strategies.
AI reshapes startup operations—and entry-level hiring
Founders are turning to AI to automate and streamline the “energy- and human-intensive” parts of their businesses, Dearie explained. Carolyn Pitt, CEO of Productions.com and a participant in Dearie’s roundtables, noted that AI now supports core functions like sales, marketing, and operations. “It enables us to extend our bandwidth as a nimble team,” she said.
But this efficiency comes at a cost for certain roles—particularly entry-level positions. “Many startups face a choice between hiring an entry-level worker or using AI—and sometimes AI wins,” Pitt acknowledged. Her company currently has no interns, as AI handles tasks that interns once performed. While she doesn’t see this as a permanent shift, she concedes that AI can “facilitate many of those roles.”
This trend has sparked concern among workers, researchers, and even tech leaders like Anthropic’s CEO, who worry AI could hollow out entry-level pathways. Yet some see opportunity. As one Reddit user put it: “It pushes people to think more like entrepreneurs earlier—whether that means freelancing, starting a business, or stacking high-value skills.”
AI also creates new demand—for the right talent
Interestingly, AI isn’t just reducing headcount—it’s also driving new hiring. Founders told Dearie that by uncovering unmet customer needs through AI, they’re identifying fresh business opportunities that require more staff to address. Mercury’s data supports this: nearly 70% of AI-using startups are hiring, compared to just 13% of those not using AI.
However, the profile of the “ideal” worker is shifting. “Entrepreneurs want experienced, senior-level talent who understand AI and can manage AI tools to scale the business,” Dearie said. These hires often command higher pay but bring both strategic insight and fluency with emerging technologies.
Pitt emphasized that the most valuable employees blend human strengths with AI proficiency: “For me, it’s about finding people who bring incredible human capacity—the best in their field—who also embrace AI’s abilities and limitations.” She stressed that “empathy, creativity, and critical thinking can never be fully mimicked by AI.”
The rise of contract work
The breakneck pace of AI advancement also makes long-term planning difficult. “Founders tell us that any AI strategy they draft today will likely be outdated in 18 months,” Dearie noted. To stay agile—and avoid investing in soon-to-be-obsolete skills—many are turning to contractors.
According to Mercury’s survey, AI-adopting startups are significantly more likely to rely on freelance talent. Those heavily invested in AI are nearly four times as likely to say they’re “very reliant” on contractors compared to non-AI users. Dearie believes this trend will accelerate the gig economy: “AI is a further accelerant—it makes flexibility not just useful, but essential.”
In the end, while AI is transforming how startups operate and whom they hire, one truth remains constant: “Businesses still need people who can confront complex problems and devise creative solutions,” Dearie said. “AI is a powerful tool—but it doesn’t replace human judgment, vision, or ingenuity.”
🚀 Gen Z Founders Work '996' Hours Using AI to Revolutionize Government Infrastructure
A new wave of Gen Z entrepreneurs is reshaping how governments operate — working “996” hours (9 a.m. to 9 p.m., 6 days a week) and leveraging AI-driven automation to rebuild legacy systems that have been stagnant for decades.From streamlining public data systems to optimizing infrastructure planning and citizen services, these young innovators are proving that AI isn’t just for private tech giants — it’s becoming the backbone of public-sector modernization.
While critics argue the “996” culture is unsustainable, Gen Z founders see it as a temporary grind for long-term impact — building smarter, faster, and more transparent government ecosystems.
💡 The question isn’t whether governments will adopt AI — it’s who will lead the transformation.
For employees worried that AI agents could take their jobs, one of the field’s leading founders says the technology is still far from perfect. Andrej Karpathy, co-founder of OpenAI said it’s not the “year of agents”—and while he uses AI agent tools like Claude and Codex, they’re still way behind the work of humans.
“They’re cognitively lacking and it’s just not working. It will take about a decade to work through all of those issues,” Karpathy said, in an episode of the Dwarkesh Podcast.
“They just don’t work. They don’t have enough intelligence, they’re not multimodal enough, they can’t do computer use and all this stuff,” he added. “They don’t have continual learning. You can’t just tell them something and they’ll remember it.”
There is no isolated definition for AI agents, but they’re typically used as virtual assistants who autonomously perform workplace tasks with reasoning. Today, agents are used for tasks like customer service and IT support requests.
While many workers become increasingly anxious about the security of their jobs amid AI disruption, Karpathy says the tools have not been perfected just yet to perform without a person there guiding it.
“You should think of it almost like an employee or an intern that you would hire to work with you,” he said.
The tech guru further elaborated on his argument on X, saying workers should learn from AI, not be sidelined by it.
“I want it to make fewer assumptions and ask/collaborate with me when not sure about something. I want to learn along the way and become better as a programmer, not just get served mountains of code that I’m told works.”
AI agents are still on the road to perfection, with administrative tasks at the forefront of the revolution
Today, AI agents are being implemented for customer service, IT and administrative tasks, but many tech companies are actually scaling back their automation plans.
In fact, 50% of organizations who expected to significantly reduce their customer service workforce by 2027, are now abandoning these plans, according to Gartner, Inc. And 95% of firms who have implemented AI pilots have flopped.
Still, that hasn’t stopped AI companies from trying to work with these setbacks. For example, McKinsey built an AI agent using Microsoft’s Copilot Studio software that can monitor an email address for incoming project proposals from potential clients. While a human must check what the agent produces, it has cut the time required to review projects from 20 days to two.
On the flip side, in India, a company called “LimeChat” is still insisting on cutting customer-service jobs, saying it will use generative AI agents to enable clients to slash by 80% the number of workers needed to handle 10,000 monthly queries.
While the long-term impact of AI agents on the workforce is still unfolding, experts expect