AI Drives Tech Layoffs Towards Startups

The Rush to AI Draws Workers to Startups

A new startup boom is emerging, with commercial application requests nearing record levels. AI is creating new opportunities as layoffs and the return to the office push workers toward entrepreneurship. Six former employees of major tech companies share why they decided to start their own businesses despite the risks.

Last year, Nicole Landis Ferragonio and Joe Luchs decided to leave Amazon to launch an AI startup. They had planned this transition for months, but for Ferragonio, the tipping point was Amazon's return-to-office mandate in January 2025. "It raised questions about the level of autonomy you really have in big tech companies and what would be possible on your own," she said. Luchs highlighted the rapid rise of "revolutionary" AI technologies, which he believed had a limited window for capitalizing on. By September, both had resigned and launched an AI data refinement company.

Over the past year, I interviewed more than a dozen Americans who have recently started businesses, sometimes leaving their jobs to focus on them full-time. Their experiences reflect a general increase in entrepreneurship: for the last full year of data, up to March, Americans filed nearly six million new business applications — the highest total for a 12-month period since data collection began in 2004. But unlike the pandemic-era startup boom, this wave is shaped by a different set of forces, including the rapid rise of AI, return-to-office mandates, and a tougher labor market.

The Forces Driving Americans Toward Entrepreneurship

For some workers, entrepreneurship has become a way to pursue opportunities — particularly in the field of AI, where rapid advancements are opening doors to new businesses.

In 2024, after eight years at Google as a technical lead, Jason White decided to focus more on AI. Later that year, he accepted a position as a machine learning engineer at Meta. But by 2025, he considered going even further: launching an AI startup to help households manage their finances. He resigned from Meta in September.

For others, the appeal lies more in reevaluating life in corporate settings. A slowdown in hiring and promotions, along with highly publicized layoffs in sectors like technology, has made entrepreneurship seem less risky.

Last June, Taylor M. LaSane faced a career crossroads: stay in her six-figure managerial role at Google, or accept a severance package and fully commit to her coaching business. She said the uncertainty regarding her job security at Google made the latter option easier to choose. "Layoffs in big tech companies are happening everywhere, so staying there wasn't necessarily more stable than leaving," she said.

After joining Microsoft as a senior software engineer in 2022, David Chong struggled to get promoted. By 2025, he was still in the same role and felt increased pressure regarding productivity and in-office work. "The management's message seemed to be that we needed to adapt because times were changing," he said. Chong resigned from Microsoft in September to start an AI sales agent business.

While some entrepreneurs left their corporate jobs, others launched businesses out of necessity after frustrating job searches. In March, more than a quarter of unemployed Americans had been looking for work for 27 weeks or more, compared to about 18% three years earlier.

Since being laid off by Wells Fargo in April 2025, Robin Peppers Daniel has struggled to find full-time employment. She said she now spends less time applying for jobs and more time developing her web design and skincare businesses.

More Workers Are Going Solo — But It's Not Without Risks

The entrepreneurship boom highlights the trade-offs of self-employment: more flexibility and autonomy, but also greater financial uncertainty. Last year's study on the quality of American jobs found that 46% of self-employed workers — who make up 14% of the U.S. workforce — had "quality jobs," compared to 39% of employed workers. The report defined "quality jobs" as those offering fair pay and benefits, safe and respectful work environments, growth opportunities, a voice in decisions, and sustainable hours. The results were based on a Gallup survey conducted with over 18,000 American adults in early 2025.

Alyson Isaacs is familiar with the allure of entrepreneurship. After graduating with her bachelor's degree in 2021, she "completely exhausted" her savings on a startup that didn't work out for her. She then joined Meta as a product manager in 2022 but never gave up on her entrepreneurial ambitions. Last July, she resigned from Meta to focus full-time on her new startup, an "agentic AI solution for personal well-being." "There are ways to be entrepreneurial," Isaacs said about working in big tech companies, "but it's not the same at all."

Starting a new business is risky. Only one-third of private sector businesses created in March 2013 were still operational a decade later, according to the Bureau of Labor Statistics.

Many entrepreneurs are not blind to these risks — and have taken steps to prepare their finances before launching their businesses. Before leaving Meta, Jason White said he saved enough to cover a year of expenses. Chong said he felt comfortable leaving Microsoft because he had several years' worth of savings and no dependents. Isaacs said she lived well below her means — including living in a less expensive area — to build a financial cushion.

White said his colleagues at Meta reacted to his departure with a mix of surprise, support, and jealousy. He noted that some had considered starting their own businesses but hadn't done so, citing financial risks. But White didn't want those concerns to hold him back. "At the end of the day, I want to take my shot," he said.