In a glass room impervious to noise at the startup Tailor Brands in Rothschild Boulevard in Tel Aviv sits company founder and CEO Yali Saar. In the corridor outside an electronic music set plays while the workers, most of them young people in their twenties and early thirties, enjoy a happy hour that includes cakes and matcha cream drinks.
The perpetual party atmosphere was created by another of the company’s founders, customer experience officer Tom Lahat (son of Ofra Strauss), who is also responsible for design and employer branding. Saar, however, prefers to sit in the room that he says "is insulated against noise at a level that actually makes it possible to talk and hold meetings," and sets out to explain the dissonance between the young mischievous startup outside and the unglamorous business that he eventually settled on.
"It all began when, as a new company in the US, we had to deal with paperwork - in the 21st century," he relates. "We had to visit lawyers’ offices and deal with exhausting bureaucratic processes in every state. Tom came into the office and said, ‘Why the hell do I have to deal with this?’ We asked ourselves why the process of setting up a business isn’t a pleasant one. Not to mention the fact that it’s far from being automated."
Tailor Brands is a sort of digital companies registrar. The company enables young self-employed people in the US (and there are many of them) to register their businesses with state company registrars and federal agencies and obtain the appropriate licenses, depending on the nature of the business. It also serves as an official address for mail and legal writs, a mandatory condition for every US company, failure to comply with which can lead to a jail sentence.
"There is no greater sense of satisfaction than enabling other people to avoid this tedium," says Saar. "We have become the people who know all about licenses and permits so that you won’t have to deal will that and so that you will have a revenue stream that simply flows to you."
Profiting from the revolution
Not for nothing does he use the phrase "we have become." A decade ago, before the GPT age, Tailor Brands was somewhere else entirely. Saar and Lahat dropped out of studies (Saar from Colombia University and Lahat from the Parsons School of Design). They lived in a moldy flat in Brooklyn, and together with a third partner, Nadav Shatz, they set up a trendy website aimed at bringing about a revolution in logo design using AI. The customer was asked to define the atmosphere, the product, and the target market, and within minutes he or he received a logo at a price lower than those of branding agencies.
The idea for the venture arose after an unpleasant incident at a farm where Lahat volunteered in New York State. He entered a chicken coop without closing the door, and the chickens escaped from the farm. To compensate the owners, he volunteered to do what he knew best: to design a logo, work for which at the time he would charge $5,000 as a self-employed designer.
The compensation was graciously accepted, and Lahat started to think how he could do the same for many more small businesses and at much lower cost, and found the answer in AI. Tailor Brands became one of the best-known brands in the field, and even expanded to areas such as design of business cards, marketing materials, websites, and advertising on social networks.
"We reached a situation in which one out of every three people in the US who searched on search engines with the term ‘logo’ came to us. We made tens of millions of shekels out of it, and there were even acquisition offers from Internet companies. But we realized that a logo was only a small part of the puzzle, and that we needed to solve bigger things for anyone wanting to set up a business." As part of the change of focus, Internet domain registration platform GoDaddy invested in the company in the bubble period of 2021.
And then, those who had challenged human designers found themselves challenged when generative artificial intelligence burst forth into the world three years ago this week. A welter of AI platforms and digital tools offered easy design, sometimes for free.
It didn’t stop at logos. There are companies that upgrade processes that used to require more hands-on people, and there are tools that enable a few people to perform work that used to take many. Tens of thousands of people are laid off every month, including at giant companies that were considered symbols of stability, such as Amazon, Microsoft, Salesforce, Meta, and Intel.
"I have no doubt that in the technology sector the main factor causing the wave of layoffs is the spreading adoption of AI," says Saar. "It’s no longer a question of whether people will be laid off because of AI, but how deep the impact will be. People realize that their path to the labor market is blocked, and that they have to take themselves in hand and find other employment, if not as hired workers then as self-employed."
In response to the revolution, three years ago the company went under the radar in order to redefine itself. The process enabled Tailor Brands to become one of the few companies that is gaining from the fact that tens of thousands of people are being ejected from salaried employment every month.
"The past two years have been an experiment in Darwin’s theory of natural selection for many startups," Saar says. "All the companies founded before 2022 grew up in an atmosphere in which there would always be more and more money for investment, and so they burned lots of it. Many companies that emerged in that period actually ran pretty small activity in relation to what they declared about themselves, and when the bubble burst, you could see who came prepared and who didn’t.
"When the crisis came along, we decided to look inwards and focus on the business. We wanted to wean ourselves off the need for external cash and to make sure that we existed in our own right, and that if we raised money in the future it would only be on our terms. We didn’t want to come out with declarations while we were changing a wheel on the road. We wanted to be able to stand up and say: ‘We’ve built a big business here.’"
A foothold in a huge, stable market
The corporate registration market in the US turns over $79 billion annually. It’s controlled by a few veteran companies, but lately young startups have entered the picture.
The turnaround that Tailor Brands made while maintaining media silence ensured its stability, and even better than that. Today it’s the place where, like Wix and Fiverr, people who find themselves pushed out of work by AI swipe their credit cards on the way to setting up a small business in a bid for financial independence.
Unlike competing design companies that are affected by market upsets, Tailor Brands is growing by 40% annually in sales and its EBITDA has been positive for three successive quarters. According to estimates in the sector, it generates annual revenue of $100 million, about a quarter of the revenue of Fiverr with about a fifth of the workforce. The logo business currently accounts for only 10% of revenue, pretty much a sideline.
According to sources in the sector, 2% of the 5.2 million new businesses set up annually in the US come to Tailor Brands, and the proportion is growing. That figure positions Tailor Brands in third place for business registrations in the US, after Wolters Kluwer and LegalZoom, veteran companies that mainly operate manually.
Tailor Brands is still too small for an IPO. It employs just 150 people, and it will need at least to triple its revenue before it starts to interest capital market investors. But with steady profitability and annual sales growth of between 40% and 50%, it should get there very fast.
Themselves substituting people with AI
Saar is just 35, but he has been running the company for a decade - an eternity in startup terms. Nevertheless, he talks about registering a company or a registration agent’s license with the same enthusiasm and pathos with which, a decade ago, he persuaded funds to invest in a system that would change the world of design. He is not the kind of person to sit and relax; he’s one of those who walks around in circles in excitement.
If he looks familiar to you, that’s because in his previous incarnation Saar was a presenter on children’s television. He also worked as a journalist and as a media consultant to President Isaac Herzog when the latter was a politician, but that’s a period that he is not keen to talk about at present.
Saar and Lahat are both offspring of successful businesspeople. Saar is the son of Yoni Saar, veteran CEO of marketing company Promarket, and Lahat is the son of Ofra Strauss and Adv. Dan Lahat, himself the son of the late Shlomo "Chich" Lahat, who was mayor of Tel Aviv from 1974 until 1993. Nevertheless, together with their colleagues in the running of the company - Nadav Shatz, Yonatan Pesses, and Gal Schlesinger - they have always tried to solve difficulties by themselves, to strive for profitability, and to avoid excessive leverage.
The company has not raised more than $90 million in the course of a decade, a fairly small sum in comparison with Israeli unicorns that raise hundreds of millions of dollars every year. It has remained small at its core, and even voluntarily relinquished a customer service department outsourced in the Philippines, replacing most of it with AI agents. That enables it to deal at once with 100,000 new businesses a year.
"Instead of setting up a company that becomes a place where you can get everything, today, as an entrepreneur, you need to solve much heavier problems and make them easier by means of AI," says Saar. "We want to be the main place where the physical problem of regulation is solved, an area that is not yet in the focus of the AI giants but that needs an immediate solution."
Some of the investors in the company, such as Tal Barnoach of Disruptive AI, and Aaron Mankovski and Roy Saar at Mangrove Capital Partners (Saar is now managing partner at the 40rty fund) have become close advisers to it. Roy Saar (no relation to Yali Saar) has also invested in companies such as Wix and WalkMe. "From the point of view of revenue, Tailor has come the furthest of all for the stage it’s at," he says.
Avoiding negative sentiment
Unlike design, having a business registered in all 50 states of the US is an advantage that is hard to abandon. Tailor Brands has developed a method for increasing the average sale: they provide a customer who applies to them with a comparison of his or her company with similar companies at a similar stage, and recommend relevant services such as finance and advertising. Every new activity involves suitable licensing, crossing a certain revenue threshold brings a recommendation to expand advertising, and expanding into another state requires regulatory processes.
Over the years, the company has learned to acquire new users with the aid of advertising on many channels. A source familiar with the company from the outside says, "Its ability to bring a customer at the initial stages with an intention to buy and tailor a customized package for him enables it to generate an average initial sale among the highest in the industry.
"In fact, the initial revenue from a new customer is so high that the investment in advertising to recruit him is paid back within a short time."
It is believed that companies such as Wix and Fiverr have made offers to buy Tailor Brands, but the refusal has been adamant. In response to enquiries from "Globes", the companies did not confirm the rumors, but did not deny them either.
Companies like Tailor Brands, Fiverr, and US company Upwork, which dominated the online branding market, have moved on from the dream of a logo for a dollar. Why pay, when it’s easier to obtain copywriting or design work from an AI engine? Fiverr, for example, is working very hard to extricate itself from the far-reaching impact of AI, but has so far not convinced investors. It beats quarterly estimates time after time, but its stock price continues to fall. Since the beginning of this year, it has lost a third of its value, dipping below the $1 billion market cap mark, while shedding 250 workers.
"Sentiment in the public market towards companies that provide an open market for small businesses is gloomy, out of the assumption that they should be hurt by AI," says Oppenheimer & Co. technology analyst Sergey Vastchenok. "It’s true of companies such as Wix and Nice, and also of Fiverr."
Tailor Brands actually has a great advantage in not being a public company and therefore not subject to the negative sentiment. Its choice to circumvent law firms and the old-established corporate registration companies has bought it some enemies, but it has also exposed it to thousands of people who have been ejected from the workforce and who seek to fulfil themselves by setting up a business.
The company is now examining how to approach larger entities to help them maintain compliance with tough state or professional regulation.
Self-employed for lack of choice
Saar is not optimistic about the future of employment in high tech. "The waves of layoffs that we have seen during economic crises or wars in various places around the world don’t stop even when the situation improves. Amazon and Google advertise fewer and fewer jobs every year. At the same time, companies carry out silent layoffs: without reducing their headcount they cut work hours and force people to look for alternatives."
There is, however, a silver lining. "Where do they go? To found businesses. For the first time ever in the US there is no seasonality in setting up new businesses. This means that people are doing it at weekends, on holidays, at night. At one time we would see this at the beginning of the year, after companies laid people off out of taxation considerations. Now, people use every moment they have available to set up businesses."
For Saar, setting up an independent business is the new insurance policy of the AI era - more than buying a house. "Young people no longer see founding a business as the fulfilment of a dream, but as an insurance certificate. They don’t want to take mortgages, among other things because of the high interest rates, but they are looking for ways of founding their own companies. It’s not just an employment market or economic change, it’s a mental one. Most of the new workers will not be able to enjoy a fixed salary and health insurance paid for by an employer; they will have to be independent, with all that that implies.
"One of the growing trends that we see in the US is that people of generation Y and generation Z are buying small businesses - a laundry, a restaurant, or a manicure salon - from baby boomers who want to retire and hand on the business to the next generation but don’t have anyone."
What sort of occupations are the new self-employed going into?
"Mainly what we would call home-based occupations, that is, occupations that have shifted from office to home. Someone who has been laid off from a senior white-collar job in the free professions will work from home as a consultant. I think that we’ll see growth in physical occupations such as plumbing, manicure and pedicure, bus driving, jobs that are more proof against automation
"Another thing that could happen is that the economy will split. Wealthy people will continue to receive high-quality service from professionals aided by technology. Those of lesser means will obtain access to services that were previously unavailable to them, thanks to AI and robots with a small number of human supervisors. Is that a perfect solution? No. But I think that it’s a realistic direction, and that things are going that way."
Published by Globes, Israel business news - en.globes.co.il - on December 9, 2025.
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