Noah Smith
· Noahpinion
· June 29, 2026 at 09:16
· ⏱ 13 min read
| Read on Substack ↗
Summary
AI has ambiguous effects on outsourcing: it may further lower transaction costs and accelerate solopreneurship, but could also increase verification costs due to AI-driven fraud and agent unreliability, pushing firms toward larger in-house structures. The market implication is that the net effect on corporate concentration and employment models is uncertain, with a possible bifurcation between many solopreneurs and a few giant firms.
•New business creation surged post-pandemic and remains elevated, partly due to technology enabling 'solopreneurs' with zero employees.
•Stripe Economics reports solopreneurship has been rising since 2008, accelerated by pandemic, Obamacare, tax changes, and internet tools.
•AI agents can replace specialized human roles, allowing single individuals to run businesses that previously required teams.
•Transaction cost theory (Coase, Williamson) explains outsourcing decisions; the internet lowered costs and increased outsourcing.
•AI may increase transaction costs by enabling fraud and making long-term trust between AI agents expensive to verify, pushing activity back in-house.
•The article hypothesizes a future with both a 'vast horde of solopreneurs' and a few monster companies with many wage earners.