In April 2025, Microsoft unveiled the concept of the “frontier firm”: a new type of AI-first organization in which AI agents execute and deliver core outcomes while humans oversee and orchestrate. Microsoft expects every organization to start turning into such a firm within the next five years. But the trajectory of organizational evolution isn’t likely to stop there. What lies beyond the frontier? A fully autonomous, AI-only firm—a network of hyper-specialized AI agents, coordinated by a central agent, operating entirely without human employees.

Imagine you are an insurance executive waking up to a jarring headline: a fully autonomous, AI-only private insurance company has just launched. This competitor has no employees whatsoever—not a single underwriter or claims adjuster. The firm touts 50% lower premiums, 24/7/365 service, and settlements in minutes. Within hours of the announcement, your company’s stock tanks.

We don’t know whether AI-only firms will become a reality in five years or 15. However, the scale of their potential impact—on competition, as well as on society more broadly, given the implications for large-scale job displacement and the erosion of human control over the economy—is sufficient to warrant serious consideration from CEOs today. This article focuses on how incumbents can reimagine themselves as AI-first players to compete with AI-only firms, which would represent an entirely new category of companies.