Small Is the New Big
As the most entrepreneurial generation, we are the most qualified to start solo and small companies. And unlike traditional employment, no one can tell us we can’t do it.
We may be caught in the longevity squeeze, but that doesn’t mean we’re helpless.
While advances in lifespan and healthspan mean we need to work longer, most companies have yet to recognize they need the experiential wisdom and institutional knowledge of older workers.
Instead, the twin dynamics of artificial intelligence and ageism make us especially expendable to employers. We hear the bad news daily now, and it will only get worse.
Here’s the thing: As we’ll see below, big companies do, in fact, need fewer people than before, and this reality will only accelerate. The mistake is that companies, in most cases, should keep older workers and eliminate younger ones, but of course, that’s bad for our kids.
That means we’re being forced into entrepreneurism by the ageism component. And yet the flip side of big companies needing fewer people to succeed is that we can start tiny, highly profitable companies that let us earn everywhere and live anywhere.
As the most entrepreneurial generation, we are also the most qualified to start these solo and small companies. And unlike traditional employment, no one can tell us we can’t do it.
Which is nice.
And yes, it’s true that we’re in the midst of so many shifts that it can be head-spinning. But this particular shift at the intersection of relentless technological innovation and rapid societal change is redefining what “small business” means, and in our favor.
By that I mean we’ve entered the age of 7-figure small in the last 15 or so years. It’s not just that you can start a tiny expertise-based business and survive the turmoil. You can succeed perhaps beyond your wildest expectations.
Consider this: According to the U.S. Census Bureau, there was a 33% increase in businesses with no employees that earned between $1 million and $2.49 million in revenue between 2011 and 2015.
The trend caught people’s attention, and it kept accelerating. The number of no-employee businesses earning between $1 million and $2.49 million in revenue hit 41,665 in 2018, up from 39,494 in 2017, according to the next update from the U.S. Census Bureau.
Then came 2020. The Covid-19 pandemic accelerated the “virtualization” of life and business, which led to a startling surge in these powerful tiny businesses the next time census data was released:
The number of million-dollar businesses without employees, often powered by just one person, reached an all-time high, essentially doubling from 2021 to 2022 for the first time ever — in what may be an indicator of what’s still to come.
There were 116,803 nonemployer businesses that reached $1 million or more in revenue in 2022, the most recent data available. That’s up from 57,222 in 2021.
The largest category of million-dollar, one-person businesses — professional services (just one form of expertise-based business) — grew to 16,279 businesses in the $1-2.49 million category, up from 13,576 in 2021. Another 2,465 hit $2.5 to $4.9 million, up from 871 in 2021.
This is promising, to say the least. But let’s not lose sight of the bigger picture.
The same forces that enable these tiny high-income companies also affect larger companies, meaning they need far fewer employees. And due to the aforementioned ageist attitudes, that means you’re likely to lose your job well before you’re ready to retire.
In other words, if you’ve been thinking about going out on your own, the prospects have never been rosier. And if you haven’t been thinking about it, it’s time to do more than start thinking.
We’re so accustomed to employment with massive corporations that we accept it as the way it’s always been, which makes what’s happening seem radical. But in reality, these large institutions are a historical anomaly of recent invention — you just have to zoom out a bit to see the context.
While it seems like a business revolution, in many ways what we’re seeing is more of a reset. A return to things as they were before massive transnational corporations rose to dominance, and a time before mass media created a shared universal culture.
In this newsletter, I’m going to explain why the 20th-century norms that inform our perspectives on business are a relatively short-term aberration.
This is important, because just about all of our conceptions about how business works have been shaped by what happened last century. Engaging in business-as-usual thinking can be a severely limiting mindset when it comes to starting a powerful small business in 2026 and beyond.
To fully grasp what’s happening in the world of small business, we have to look first at how large companies came to be. This requires us to touch on economic theory and the history of mass media a bit.
Don’t worry, I’ll make this as painless as possible.
Old-School Scale Through Three Industrial Revolutions
Let’s go back to the fundamentals of classical economics, starting with Adam Smith’s 1776 book The Wealth of Nations. Smith was a proponent of extreme decentralization, which he felt led to equal opportunity thanks to the “invisible hand” of the market.
Economists who followed Smith effectively maintained that there was no reason for big companies to exist. A large firm was a form of centralized planning that was unnecessary and undesirable.
Why? Because there should only be producers of goods and services, customers who purchased them, and the pricing and information mechanisms of the market itself as the intermediary between the two.
In other words, a truly efficient market would operate via networks of self-employed people. There would be no need for any individual entrepreneur to permanently hire people instead of contracting out on an as-needed basis.
While these great economic minds pondered markets, the first industrial revolution was in full swing between 1760 and around 1840, leading entrepreneurs to contravene classical economic theory, whether they were aware of it or not. After all, steam-powered factories required more permanently employed workers to operate than the agrarian operations that preceded them.
At the dawn of the 20th century, the second industrial revolution was sparked by electricity, the assembly line, and mass production, leading to even larger firms both in terms of line workers and management. It was now fairly clear that classical economic theory was missing something important.
Enter a young economist named Ronald Coase, who realized why the idea of pricing being determined solely by the market was wrong. There were good reasons scaling a business with lots of people made sense, up to a point.
In 1937, Coase published an influential article titled The Nature of the Firm. In it, he identified transaction costs as the element that Adam Smith’s “invisible hand” did not account for. Transaction costs include price discovery, negotiations, contracts, and disputes, which make the true cost of goods and services much higher if you rely only on the market.
What this boils down to is that a company naturally grows to the size where doing business internally costs less than buying from the market. In other words, scale –– measured by headcount –– becomes a clear competitive advantage.
It’s only when overhead and bureaucracy result in “decreasing returns to the entrepreneurial function” that a company will halt growth and downsize.
Now, let’s add in the emergence of mass media and broadcast advertising. An extension of Coase’s observations meant that technology that reduces transaction costs, such as telephone and cheap air travel, will result in even larger companies. Now imagine if you could broadcast your marketing message worldwide.
Businesses had discovered how to scale production, and now they needed to scale demand. During the 1920s, the advertising industry became increasingly sophisticated in terms of understanding and activating the psychological motives that underlie what was once thought to be rational purchasing behavior. This led to the emergence of sponsorships and radio advertising spots in the 1930s.
By the 1940s, ever-larger companies were using consumer research to build brand loyalty. In the 1950s, television advertising triggered a business boom as consumer culture flourished. With only three broadcast networks creating a near-universal shared experience, big brands established seemingly permanent positions in consumers’ minds.
During the second half of the twentieth century, companies pushed the envelope of size and scale. Multinational corporations rode the wave of the third industrial revolution, this time powered by the semiconductors and mainframe computing of the digital revolution, which eventually expanded to personal computing and the internet.
And that became the beginning of the reset. Even as multinational corporations used their scale to become transnational firms that operated both globally and locally, in the 21st century, transaction costs began to decline to the point that hiring more people was not only unnecessary, it was a liability.
The Industrial Devolution
So what happens when the adoption of advanced digital technology and new business models reverses the tyranny of transaction costs?
Can economic performance increase with radically fewer people?
The answer takes us right back to classical economic theory, which says that there’s no reason for companies to be as large as they’ve been in the recent past.
That means that Ronald Coase’s insight from 1937 is driving the revolution in reverse. The dominant business practices of the 20th century are becoming less attractive, given that traditional ideas of scale are now more expensive, not less.
For example, American Telephone and Telegraph Company (AT&T) was the largest corporation in the world for much of the last century. It was so dominant as a monopolistic force that it was broken up by the U.S. Department of Justice in 1984.
In 1962, AT&T had a market cap of $20 billion that required 564,000 employees to achieve. It was a prime example of the big, dominant firm of the 20th century.
Or think of Detroit, once considered the hub of U.S. industry. In 1990, the three biggest companies headquartered in the city had a combined market capitalization of $36 billion, revenues of $250 billion, and 1.2 million employees.
Now, compare that to Apple in January of 2026, with a staggering market cap of $3.65 trillion and only 164,000 employees. Apple generates roughly $22 million in market value per employee, which is an extraordinary ratio.
Plus:
Meta generates $21M in market value per employee
Google/Alphabet generates $11M in market value per employee
Netflix generates $29M in market value per employee
It’s easy to brush this off and say that these are technology companies, and the normal rules of business don’t apply to them. But that would be a mistake.
Apple sells electronic hardware just like Sony, which dominated the industry in the 1980s.
Google sells advertising services, which is the same revenue model the big three U.S. television broadcasters employed to dominate media in the 20th century.
Netflix not only put Blockbuster out of business, it also made Blockbuster’s peak revenue per employee of $72,000 look barely worth the effort.
The more reasoned conclusion is that “tech” companies simply use digital technology better than most firms and therefore have the ability to disrupt legacy industries that don’t.
And this is also true of solopreneurs who start digital businesses. When you see these businesses making $20M per employee, it’s not surprising that a one-person business can make $1M-2M or more annually.
Let’s now look in detail at Uber as a great example of a transportation company, which is an industry as old as roads. Truth be told, however, Uber doesn’t provide transportation services; it handles dispatch, logistics, fees, and automated billing on behalf of independent drivers who provide transportation, all for a cut of the transaction.
If you look at Uber as simply a replacement for taxis (in reality, it’s a much bigger enterprise than that already), you’ll see how algorithmic software –– powered by a mobile application tied to the internet –– replaces the entire central office of not just one traditional taxi company, but all taxi companies.
The people who would otherwise provide dispatching, accounting, and human resources services to drivers in the taxi industry are effectively replaced by algorithmic functions. And that’s not even counting the taxi drivers themselves, who are replaced by independent contractors driving their own vehicles.
Uber now has more (non-employed) drivers providing transportation services than the entire taxi and limousine industry. By the way, Uber’s annual revenue is $49.6 billion with a market capitalization of $177 billion, and the firm employs only 31,100 people.
The adoption of similar technology is happening across all industries, to the point that being a “tech company” will simply come to mean “company.” Artificial intelligence and automation are two primary keys to staying competitive both today and tomorrow, and that means fewer employees will be necessary… by a lot.
That’s why the recent wave of tech layoffs signals what’s coming for every industry. Add in a recession or financial crisis as the initial catalyst, and things will get truly ugly.
This will be catastrophic for many people at midlife. But you don’t have to be one of them.
Avoid Disaster and Also Live the Dream
The Fourth Industrial Revolution is shrinking companies, whether you like it or not.
Apple doesn’t need 600,000 employees like GM once did. Your company doesn’t need your department anymore, because AI and a few younger hires handle it for much less.
But here’s the silver lining: The same technology and market dynamics that make you expendable to them make them expendable to you.
You don’t need their infrastructure. You don’t need their capital. You don’t need their permission.
One person plus artificial intelligence, automation, and a network of freelancers/consultants can now generate what used to require venture funding and a 50-person team.
The sovereign startup is a strategic response to inevitable displacement, not just a lifestyle upgrade. It’s cold, hard logic in the face of what’s already happening, not a midlife crisis disguised as pursuing a dream.
And yet, making this essential move can provide you with location-independent economic and personal freedom that makes the typical retirement scenario look silly. You can thrive, not just survive.
All it requires are small, consistent moves to get yourself into position. For a step-by-step roadmap, join us today in Further Premium.
Keep going-
further: flashback
🎶 Green Day - American Idiot, American Idiot, 2004 🎶
Welp, my Denver Broncos won’t be at the Super Bowl, but our Gen X brethren in Green Day will be there performing at the opening ceremony. What are the odds we hear American Idiot with some choice lyrical changes to annoy certain authority figures? These days, it’s hard to say what will happen. (YouTube)
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Brian, this is so good! I will share this with The Midst community.