Those laid off today are the entrepreneurs of tomorrow

The wave of layoffs in high-tech creates a difficult sense of uncertainty, but a historical perspective reveals a different picture: shocks in the labor market can foster the growth of large companies. A study by the Kauffman Foundation found that more than 50% of Fortune 500 companies and hundreds of technology companies were founded during recession periods. The 2008 crisis, for example, gave birth to Airbnb, Uber, and WhatsApp. During booms, resources are wasted on disconnected dreams and artificial growth; in a crisis, companies are built out of an existential need for efficiency and solving real problems.

Data from Carta and PitchBook show that waves of layoffs have led to a surge in the number of new startups. Thus, experienced development, data, and product personnel are released into the market, finding themselves with the freedom, hunger, and urgency to build something of their own. What makes the current wave faster than before is the technological force multiplier of AI. McKinsey studies show that integrating Gen AI tools into software development shortens the time to reach a minimum viable product by 50%–60% and lowers startup costs. In the past, a developer who needed to test product feasibility had to raise hundreds of thousands of dollars, assemble a team of 15 engineers, and invest months in infrastructure. Today, a lean team of two or three entrepreneurs with a strong idea, using AI agents for coding, market research, and automation, can achieve in weeks what previously required much larger budgets. Starting a startup has become more accessible, faster, and cheaper.

But the advantage of AI does not stop at speed and cost. The entrepreneurs leaving large companies today do not carry the burden of legacy systems, technical debt, and cumbersome architectures that characterized their previous workplaces. While established organizations are forced to integrate AI into software layers built years ago, the new entrepreneur starts with a blank slate and can build a product that is AI-native from the ground up, based on a technology stack designed from the start around the capabilities of new models. The release from the burden of the technological past is an innovation engine in itself.

New companies can not only build faster and cheaper, but also differently, without some of the limitations that bind large competitors. For years, the brilliant talents in the industry were locked inside heavy organizational systems, focusing on feature optimization or bureaucracy. The current crisis has pushed some of them out, equipped with a deep understanding of the field and valuable practical experience. Companies born out of a crisis are not built on etiquette, luxurious offices, or disconnected cash burning. From day one, they develop a tough DNA of financial discipline, close listening to customers, and absolute focus on creating value quickly. A company that learns to survive and grow in challenging market conditions and uncertainty builds a healthy and stable infrastructure that will allow it to leap forward as soon as investments reopen.

As an investor who meets with dozens of entrepreneurs, I identify the first buds of this wave. The layoffs are difficult and frustrating on a personal level, but at the ecosystem level, it is a critical shift of resources from legacy products toward the innovation of tomorrow. For anyone considering their next step, do not rush to just look for your next job within the system. If you have an idea, drive, and partners for the journey, this is exactly the time to jump into the water. Israeli high-tech has always known how to grow out of challenges and crises. Those laid off today will not only find a job, they are the ones who will build the companies that will employ the entire industry tomorrow.

Avihai Nissenbaum is a co-founder and managing partner at lool ventures, which invests in early-stage startups.