AI encounters of the SME kind

One of the biggest pieces of business news in the past few weeks was Meta announcing it would cut 10 per cent of its workforce, as it spends more on artificial intelligence. It will spend a staggering $135bn on AI this year. Mark Zuckerberg has spoken about witnessing how AI is making teams far more efficient, meaning more can be done with fewer people. "I think that 2026 is going to be the year that AI starts to dramatically change the way that we work," he has said.

It’s one of many examples of publicly listed companies reducing headcount and giving AI as the reason (think Block, Snapchat, Atlassian).

But when I speak with SME leaders, I hear a very different story around AI adoption, which is less pessimistic for workers.

A good example is Martin Ott, whom I met up with in London recently. He leads Taxfix, a fintech start-up platform designed to help sole traders and small businesses navigate tax compliance. It’s a unicorn valued at more than $1bn in a recent Series D round. It was founded in Berlin, Germany in 2016, but recently acquired London-based TaxScouts, gaining a large UK presence.

To understand how AI can improve the service his business offers, he has to get the team to embrace it. That’s why he’s started weekly ‘AI Days’ in the office for his 400-strong workforce.

“It’s not just engineering, it’s marketing, it’s finance, it’s the human resource team,” explains Ott, “all of them sitting together in small pods and then they start trying out the [AI] tools together. They try to write prompts to see what’s working and what isn’t, they rebuild workflows.”

Not everyone is an early adopter, but these dedicated team days mean people can help each other. “There are people who inspire others because they are more progressive, others who learn from them, so it's a learning journey,” says Ott. As a result, some colleagues have rewritten their job specs. Despite losing a day’s work, Ott also believes the AI Days have, in fact, led to an overall increase in productivity.

You are not starting your company from scratch with AI, he points out; rather, as a CEO, you have to have the mindset that you are essentially pivoting it. This pivot means an evolution in your workforce, but not necessarily a reduction in headcount.

As we heard on our panel discussion on AI at our recent Business Leader Summit, other companies are also trying out this ‘AI Day’ concept.

Not that many British entrepreneurs can say they bootstrapped a tech start-up from scratch to a £240m exit.

But that’s what Kai Feller did with his company Bark.com, which has been described as “Amazon, but for services”. It’s well-known amongst the British SME community because it helps freelancers, sole traders and small businesses to find clients – or at least leads.

In this latest episode of our Business Leader podcast, Feller explains in detail to Sir Richard Harpin how he and his co-founder scaled their winning business idea.

Feller still advises Bark, but is now working on a new start-up called Cyberstaff. He too sees the potential of AI to help small businesses. Once again, he’s building a platform to help them capitalise on it.

“Genuinely [it feels] there's been a new piece of technology invented for the first time in my lifetime,” says Feller, “and everything is going to be disrupted and it's so exciting.”

From the archive

If you want to hear an interview with another successful business leader scaling a digital platform for SMEs, with the help of AI, then check out my interview with Kuo Zhang, who leads Alibaba.com. I caught up with him at its CoCreate conference.

And if you want the story of how a well-established magazine was turned into a thriving digital marketplace, then check out our interview with the CEO of Autotrader.

Guess the company

• It was founded by a British billionaire in 1998
• It operates 148 sites across 26 countries
• It employs 9,000 and achieves annual revenues of €14.2bn (£12.2bn)
• It's made up of 28 individual businesses
• It's a global petrochemicals manufacturer but is more recently known for an "uncompromising" 4x4

You'll find the answer at the bottom of this page

What happened this week?

1. Store losses and closures outpaced new retail development last year for what experts believe is the first time since the Second World War. According to data from property analytics group CoStar, at the peak in 2015 and before the pandemic boosted the popularity of online shopping, almost 14 million sq ft of net retail space, defined as new retail development minus demolitions and conversions, was added across the UK. Last year, a net 800,000 sq ft of shop space was lost across the UK.
2. The end of the cheap laptop, the bargain phone and affordable games consoles may be on the horizon. Not because new models are more hi-tech, but because the cost of computer components has shot up. The root cause is a shortage of memory chips, which the tech press has dubbed “RAMageddon”. But it isn’t a conflict or lack of materials causing the shortage, it is the growth of AI and the datacentres the technology relies on. Memory chips are crucial to just about every modern piece of electronics and are also used in other important components, such as graphics cards, creating a knock-on effect.
3. Anthropic CEO Dario Amodei revealed this week that the company’s latest model, Mythos, has already uncovered thousands of vulnerabilities in software used by banks, tech companies and governments. He also predicted that the first one-person $1bn company will be built by the end of the year as entrepreneurs use artificial intelligence tools to automate functions from marketing to data analysis.
4. Long-term UK borrowing costs have reached their highest level since 1998 as the Iran war continues and concerns rise over political uncertainty in the lead-up to local and national elections. Government bond markets for major economies have all fallen since the US-Israeli conflict with Iran began, meaning the effective cost of borrowing for governments has shot up. 
5. Retail investors are putting more money into opaque private credit instruments that are subject to heightened risk and default rates, a global watchdog has warned. The Financial Stability Board (FSB), a global body that monitors financial risks, said predominantly American retail investors have become a fast-growing source of new funding for the private credit industry, which has surged in value to about $2 trillion since the 2008 financial crisis. The share of assets held by retail investors in private credit instruments has grown from virtually zero to 13 per cent in the last decade, and they are a fast-growing source of new funds for the industry, the FSB said.

Weekend reading

🌟 Celonis, the tech firm using ‘European values’ to take on Palantir

As Europe races to reduce its dependence on US tech giants, German software scale-up Celonis believes it can become a key player in the continent’s push for digital sovereignty. With governments and corporates expected to spend hundreds of billions building European technology capabilities, the $13bn company is expanding rapidly in the UK public sector, taking on rivals such as Palantir and positioning its AI-powered “process mining” platform as a transparent, homegrown alternative rooted in European values.

💣 Can Britain’s star tech investor dodge the SaaSpocalypse?

London-based buyout group Hg’s long-awaited plan to float accounting software giant Visma in London, which was once tipped as the UK’s IPO of the decade, has been derailed by an AI-driven rout in software valuations. The FT looks at how this setback not only clouds the future of one of Europe’s most valuable tech companies, but also raises deeper questions about the private equity industry’s reliance on debt, lofty valuations and delayed exits in an era where AI is rapidly reshaping the software sector.

And finally

Sabastian Sawe’s new world record of 1 hour, 59 minutes and 30 seconds at this year’s London Marathon captured the world’s attention. It seems nearly impossible, something a human being could hardly achieve.

But it wasn’t the only awe-inspiring record being set that day.

Alice Braham ran the marathon in 2:36:25. She is 50-years-old and smashed the previous best time for a British woman over-50 by nine minutes.

Her achievement has started to be picked up by several athletics magazines and social media websites.

Here I have to confess a (slight) connection. Alice’s children (she has four) went to the same primary school as mine, so I met her that way. She is a former journalist turned fitness trainer and a couple of years ago I did a one-hour session with her as part of my birthday present! I’m sure her prices as a trainer have gone up as a result of her supreme achievement!

She can be found running local Parkruns every Saturday in west London.

It just shows what you can achieve in sport at any age if you are determined and train hard. Age is no excuse.

The answer to our question is INEOS.