Create a fertile ground for AI ‘solopreneurs’

Kim Young-tae
The author is a professor of venture financing at KAIST.

Artificial intelligence (AI) rapidly changes the essence of competition. Conventional production methods are clashing with revolutionary methods based on DNA — digital, network and AI — at digital companies. Capitalism and industrialization could bloom largely thanks to the birth and growth of modern corporations. Because such organizations could handle enormous transaction costs from myriads of individual agreements, cutting-edge products and services could hit the market.

But due to the fast advancement of AI technology, traditional production methods cannot match the “AI factory” using the automatic processing of decision-making processes through DNA. In nearly all industries, an AI algorithm swiftly replaces the entire process of detecting, creating and delivering customer value by taking advantage of big data.

Let’s look at Ant Group, a subsidiary of China’s Alibaba Group. The fintech company with just a few thousand employees provides its 1.4 billion clients with even more diverse services than the 100-year-old Bank of America whose 200,000 employees serve 67 million clients. In Sweden-based Klana International, a GPT algorithm has already replaced 700 employees and the company has a plan to dismiss 10 percent of workers around the world. The rapid shift to the AI era will most likely trigger a massive elimination of human jobs across the board.

In the early days of the Industrial Revolution, the Luddites ferociously fought against textile machinery. After automobiles appeared, stagecoach and locomotive industries vehemently resisted them through the introduction of the Red Flag Act. But they were swept away in the huge wave of scientific and technological innovations. In the AI age, frontrunners in innovations will take center stage. A gap between those who use AI skillfully and those do not will surely get bigger.

To make AI contribute to enhancing labor productivity in Korea, the government must remove various restrictions on industries and business activities as soon as possible. The government must urgently revise the Act on Fostering “Solopreneurs” to encourage AI-assisted startups to drive innovation in this country.

The act was legislated in 2011 as if lawmakers had predicted the advent of the coming AI era. It was aimed at “facilitating the emergence of solopreneurs armed with creativity and expertise to help them contribute to the development of the national economy.”

But it is questionable whether such a pre-emptive act can serve as a reliable stepping stone for solopreneurs to weather the tough challenges of the AI era. For example, the act defines the scope of business ineligible for financial support too broadly and ambiguously.

Moreover, the act raises concerns about excessive hurdles for solopreneurs in case they launch their business as a corporation — despite many advantages in attracting equity investments. For instance, the obstacles include tricky restrictions on establishing and running company organizations, accounting and mergers. The act also lacks government support for the construction of a DNA infrastructure to facilitate the use of AI services. The government office handling support for solopreneurs on the field also must do their job more effectively.

When the era of the internet arrived some 30 years ago, tech giants like Google, Facebook and Amazon emerged to help save massive costs for information searches. In the AI era, a new type of revolutionary enterprises will appear, as AI can cut the costs for decision-making significantly. If solopreneurs can use AI adroitly, they can make a fortune.

In other countries, solopreneurs selling AI services worth more than $25 million annually are expected to appear one after another. Korea should not be an exception. The government must create an environment fertile enough to breed such creative entrepreneurs. The time has come for the government and public corporations to take pre-emptive measures to overcome the challenges of the AI era and the country’s demographic crisis.

Translation by the Korea JoongAng Daily staff.