Then came Claude Opus 4.5. The AI model, released by Anthropic in late November and trained on specialized data that taught it to complete long running agentic tasks, such as software engineering and administrative work, marked a step change in AI capability, according to multiple entrepreneurs and AI researchers who spoke to TIME. Suddenly, Handley found that the AI could replicate the enterprise software he used to run his business. “I was like, ‘oh, the game has changed. You can clone a billion-dollar company’s [software] with no human intervention,’” he says.
While attention has focused on mass layoffs at large tech companies, some economists and entrepreneurs believe the most significant AI-driven workplace changes could emerge first in small firms, which can reorganize around new technology more quickly. “AI adoption is faster in smaller firms, including startups,” the Harvard economist David Deming wrote in 2025. If that’s true, splashy headlines about large tech firms laying off thousands of employees could miss the effects of AI on the roughly 46% of Americans employed by small companies.
The question is complicated by the fact that small firms come in many different stripes. New companies in the Bay Area saw a 16% drop in headcount between 2023 and 2024, while those outside of tech hubs saw almost no change. In the economy as a whole, there’s no evidence of widespread job displacement, says Bharat Chandar, a researcher at Stanford’s Digital Economy Lab.
It’s possible that we have yet to see the full impact of the technology on the job market—AI is advancing faster than most companies can adopt it. The U.S. Census Bureau report found that less than a fifth of firms are using AI in any business function, and a March 2026 study from Anthropic found that its AI models were being used for only a “fraction” of the work-related tasks they are already capable of. “It takes highly skilled workers to diffuse new technologies,” Anton Korinek, faculty director of the economics of transformative AI, told TIME last year. “If AI becomes smart enough … it can actually also help with the diffusion,” he added. Whichever companies are fastest to adopt AI could become canaries in the coal mine for the rest of the economy.
Less work, or more?
Economists call this phenomenon the “Jevons paradox,” named after the English economist who observed, in 1865, that the increasing efficiency of coal use was leading to more coal consumption, rather than less—the falling cost of coal-fired furnaces caused demand to spike, increasing the amount of money spent on coal overall. Some jobs could be affected similarly. “Anything that people currently would want but can't afford is a potential product with a high elasticity of demand,” says Klein Teeselink. Job postings for software engineers, which collapsed after the release of ChatGPT as AI models made it easier to write code, appear to have rebounded.
Alongside Sonora, Handley has started running classes on how to use AI agents. He calls the series of classes “pioneer species,” named after the first life forms to recolonize disrupted ecosystems after a disruption. “History will tell us if this was all a good idea or a terrible idea,” he says.
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