Adapt or Fade: The AI Shift Every Startup Must Face

Genya Smagin

Senior Manager, AI Strategy & Partnerships at SK Telecom

Co-founder of the ‘Digital Twins’ Podcast (Co-founder: Oleg Smagin)

Q1. How is AI transforming startup operations?

Genya Smagin: AI has made it possible for startups to be built and scaled with just one or two people-team. In the past, launching a startup required at least two to three key executives, who would be in charge of different parts of business. Now, thanks to AI, an ultra small founding team can develop everything from a prototype (MVP) to a revenue-generating product with significantly fewer resources. And in many cases it can keep running and scaling the product without hiring more people.

The rise of AI-driven automation tools is reshaping how startups operate:

👨‍💻 CTOs can manage a larger scope of coding tasks with fewer engineers.

📊 CEOs can leverage AI-powered tools to handle marketing, pitch decks, product design, and proof-of-concept (PoC) validation independently.

As a result, startups can now operate in a leaner, more agile, and cost-efficient way.

Beyond startups, companies across industries are accelerating AI adoption to streamline operations and reduce workforce dependency.🌍 In the U.S. and Europe, businesses are shifting away from manual workflows toward AI-driven automation strategies that optimize efficiency and minimize operational costs.

Ultimately, AI isn’t just changing startups—it’s redefining how businesses operate, enabling organizations to do more with fewer people while driving greater efficiency and scalability. 

Q2. What are the key strategies startups are using to leverage AI?

Genya Smagin: Many startups are incorporating AI elements into existing products as a way to reposition themselves in the market.With investor interest in AI growing, more startups are asking:"How can we integrate AI into our product to enhance its positioning?"

However, this approach often leads to common pitfalls:

❌ Industries with little connection to AI may add AI features just to claim they are an "AI startup," which often fails to convince investors.

❌ Founders eager to follow AI trends sometimes force AI integration in ways that undermine their core business or add little real value.

For AI to be a meaningful differentiator, it must enhance the business model and product in a way that delivers real value, rather than being a superficial addition.

Q: How do investors evaluate AI startups?

A: Investors differentiate between AI-native startups and companies that have simply added AI features to existing products.

✅ AI-native startups → Companies built from the ground up with AI as a core component of their product and strategy.

⚠️ Existing businesses integrating AI → Companies that haven't fundamentally changed their model but have added AI APIs (e.g., GPT) to rebrand themselves.

Investors are increasingly looking beyond whether AI is being used and focusing on how AI is creating tangible, transformative value in the market.

Q3. What strategic approach should startups take in the AI-driven market?

Genya Smagin: Some startups are moving beyond simply adding AI features to existing products and are instead redesigning their businesses with AI at the core.

📌 Rather than just incorporating AI into an existing model, these teams are rethinking how AI can fundamentally reshape their approach to solving problems.

🤖 Even within the same industry, startups are exploring ways to leverage AI to drive deeper innovation and differentiation rather than just incremental improvements.

Ultimately, success in the AI-driven market isn’t just about adopting AI—it’s about strategically redefining how AI can create real value and transform industries.

Q4. What is the most critical factor in startup investment?

Genya Smagin: When evaluating a startup, execution capability is often more important than the business model itself.Technical expertise and a great idea are not enough—investors prioritize founders who can bring a product to market, scale it effectively, and navigate challenges strategically.

✅ Even if the business model isn’t perfect, a strong, execution-driven team can create significant investment value.

❌ Conversely, a well-crafted business model won’t succeed if the team lacks the ability to implement it effectively.

📌 A solid business model means little without strong execution.

📌 On the other hand, a founder with exceptional execution skills can often refine and adapt an imperfect model into a successful business.

At the end of the day, startup success hinges less on having the "perfect" business model and more on the founder’s ability to execute, adapt, and scale effectively.

Q5. How does South Korea’s startup environment differ from that of the U.S.?

Genya Smagin: While some teams in the U.S. secure seed funding, the sheer number of startups means that many early-stage founders have to rely on bootstrapping (self-funding) in the beginning. However, the financial burden can be significant, preventing some from starting at all and leading others to drop out before gaining traction.

In contrast, South Korea offers a different landscape:

✅ Government support programs and funding opportunities are more readily available, reducing the need for bootstrapping.

✅ This structure has led to a steady rise in new startups, contributing to a more vibrant and dynamic startup ecosystem. 🚀

Q6. What strategies are startups in South Korea using to grow without seed funding, and how is the investment landscape evolving?

Genya Smagin: In South Korea, an increasing number of successful startups are operating without relying on government grants.While government support is available, the administrative burden of compliance and reporting has led many founders to prioritize private investment instead.

To sustain growth without seed funding, these startups typically adopt the following strategies:

✅ Developing a strong business model → Establishing a revenue-generating structure early on to minimize reliance on external funding.

✅ Accelerating product development and market validation → Quickly testing customer response and securing product-market fit (PMF).

✅ Focusing on private investment → Raising capital from VCs, angel investors, and global investors rather than seeking government grants.

✅ Minimizing administrative burdens → Government funding requires continuous reporting and compliance, so many startups choose to focus on business growth instead.

As a result, South Korea’s startup investment landscape is gradually shifting from government-led funding to a more private-sector-driven model.Industries such as AI, deep tech, and biotech are seeing increased startup activity, and VCs, PEs, and corporate venture capital (CVC) investors are becoming the preferred funding sources due to their flexibility and speed.

That said, the government continues to allocate funding to 1–2 key focus areas each year (e.g., AI, carbon neutrality, biotech). However, startups that secure government funding often face ongoing administrative requirements to maintain eligibility for future grants.

Ultimately, South Korea’s startup ecosystem is evolving toward a model where companies prioritize sustainable revenue generation and private investment over dependence on government support.

Q7. Why do people fear new technologies, particularly AI?

Genya Smagin: Throughout history, there have always been people who resisted change and innovation.In 19th-century Britain, the Luddites opposed industrialization by destroying machinery, fearing it would replace their jobs.Similarly, many people today worry about AI because they fear they won’t be able to keep up with the technology.However, in many cases, this fear comes not from a lack of ability but from a reluctance to engage with and learn about new advancements.

📌 Regardless of age, maintaining a willingness to learn is essential.

📌 Innovation has historically driven positive change, and AI is likely to follow the same pattern.

Q8. How will AI impact the labor market and economic structures?

Genya Smagin: As AI advances, repetitive and manual labor-intensive jobs will gradually decline.

⚙️People who choose not to adopt AI may still work in manual roles, but the value of such jobs will continue to decrease.

On the other hand, those who understand and integrate automation will create more value,leading to greater opportunities and a competitive advantage.

📌 The gap between those who effectively use AI and those who do not will continue to widen.

📌 Similarly, businesses that successfully implement AI will gain a significant edge over those that rely on traditional methods.

Q9. Why is human-machine communication important in the AI era?

Genya Smagin: AI today operates primarily through natural language processing (NLP), enabling it to engage in conversations rather than just executing basic commands.

We are now at a point where interacting with AI no longer requires complex coding skills—instead, people can communicate with AI using everyday language.As AI continues to evolve, it is becoming more intuitive, faster, and easier to use, a trend that will only accelerate.

However, those who struggle to interact with AI effectively may find themselves at a disadvantage.While having a deep understanding of technologies like Large Language Models (LLMs) is valuable, AI is already designed to be accessible and user-friendly, even for those without technical expertise.

📌 Rather than seeing AI as complex, it's important to gain hands-on experience with it in practical ways.

📌 Even basic familiarity with AI will provide a strong competitive advantage in an increasingly AI-driven world.

Q10. What inspired you to start a podcast as an AI expert?

Genya Smagin: My twin brother and I launched an AI-focused podcast last October.Since my brother also works in AI investment in South Korea, we wanted to explore a new approach to AI-driven content creation.

Our podcast is one of the first AI-generated podcasts, where AI not only produces the content but also refines it through fine-tuning.It utilizes voice cloning technology to generate the episodes,while we focus on scripting and overall content direction.

The goal of this podcast is not just monetization but rather:

✅ Demonstrating how far AI has advanced and providing educational value.

✅ Offering a format that is distinct from traditional, human-hosted podcasts.

For now, it remains a passion project, but our main objective is to help people better understand the practical applications of AI.While we’re not sure how it will evolve, we see this as an opportunity to showcase the real-world potential of AI technology.

📢 We release weekly episodes on Apple Podcasts and Spotify, and some have reached several thousand to over 10,000 listeners.Our audience is primarily in their 20s and 30s, and since it's a global platform, we attract listeners from the U.S., the UK, and other countries.

With Season 2 on the horizon, we look forward to continuing to share insights and experiences with our global audience, alongside my twin brother, Oleg.

Key Takeaways

AI is not to be feared but embraced. Growth comes from learning and adapting.

AI is not just a trend—it’s a fundamental shift. Startups must integrate it for real value.

Execution beats ideas. A strong team is the key to winning investors and customers.