Being Bold: Overcoming "Creative Destruction" and Thriving in the AI Age

The Savvy Startup Advisor™ Enabling the Zero-to-IPO™ Journey Edition # 74 Topic: Innovation in the Age of Intelligence

Sever the Arm, Save the Corpus. What is often required for a dominant company is doing the unthinkable: cut off the arm to save the body. That strategy is now as relevant as ever, considering the massive influence of new technologies threatening to challenge the formidable moats of entrenched companies.

Conquering the World of Giants. The world has always been dominated by giants, the Goliath which so obviously cannot be vanquished by a singular figure slinging mere rocks. Nonetheless, akin to the sudden extinction of megafauna of 10,000 years ago, many of the 1980s stalwarts quickly found themselves in the trash heap of corporate history after dot.com newcomers realized the potential of the Worldwide Web and challenged these incumbents with better tools and systems. Despite their size, many stalwarts of the pre-Internet era found themselves tied to their past, roped helplessly to the ground like Gulliver as smaller, nimbler companies captured the full potential of the WorldWide Web.

How so? Is this fate inevitable? Can it be evaded?

800lbs Gorillas. In the business world, we commonly refer to those counterparties with unassailable advantages as “800 pound” gorillas. Their features are easily discernible: economic moats, substantial cash piles, embedded products, and deeply seeded connections with leading governments, partners and customers.

It is quite curious the fervor which energetic politicians thrust into attacking these corporate giants. From time to time, governmental regulators succeed in disrupting them, such as the uprooting of oil giant Standard Oil in the early 1900s and AT&T in the early 1980s. In truth, these legal outcomes temporarily alter the terrain, but regulatory actions rarely unseat the corporate giants. In most cases, self-inflicted wounds and other external forces prove more fatal. Indeed, what is more frequently the culprit is the sheer force of creative destruction – new technologies and markets uncovered by newcomers – entrepreneurs challenging the status quo with new, better ways of doing things.

Are the Waves of Creative Destruction Stronger? Quite honestly, doesn’t it seem like the forces of creative destruction are coming with ever great frequency and ferocity?

Is it tied to the wave of money flowing into private capital over the past several decades? We now live in times of 1,200+ unicorns. Seas of early-stage capital. A far cry from the environment traversed by early-stage companies of the 1960s like Nike, whose founder, Phil Knight, bootstrapped his “Shoe Dog” dream for more than a decade without access to the “easy money” (early-stage venture funds) available to founders today. Safe Superintelligence, Inc. (SSI), the brainchild of former OpenAI Chief Scientist, Ilya Sutskever, raised $1 Billion during the summer 2024 with a team of 10 people -- based primarily on Sutskever’s unique vision for artificial intelligence – and it raised even more funds in February 2025, despite the absence of a finished product. All things being equal, robust private capital markets are a real game changer for newcomers with big, disruptive ideas.

But isn’t there an ingredient even more important than ease of access to capital? Look at the number of companies building astonishingly large markets with relatively small teams. In addition to SSI, consider other examples, such as Telegram, which recently crossed over 1 billion users, with a team of approximately 30 employees. The ability to hyperscale new technologies across multiple industries is a big factor in the “creative destruction” conversation. Now more than ever, the impact of the “next big thing” is more powerful. Technology’s leaders are paying close attention.

Along Comes AI. With the coming out party of ChatGPT in 2022, today’s technology and other corporate leaders understand all too well that an extremely disruptive Tsunami is approaching their shoreline. As Satya Nadella, CEO of Microsoft, proclaimed, “AI is the defining technology of our time. We are infusing AI across every layer of our tech stack.” (FN1) Microsoft has committed over $13 billion to OpenAI and continues to integrate its tools into Azure and Microsoft 365. Andy Jassy, Amazon’s CEO, echoed this urgency in his 2024 shareholder letter: “We continue to believe AI is a once-in-a-lifetime reinvention of everything we know … the demand is unlike anything we’ve seen before.” (FN2) Sundar Pichai, CEO of Alphabet, stated bluntly: “AI is more profound than fire or electricity.” (FN3) Under his leadership, Google has reorganized internal teams to prioritize AI-first innovation across Search, Cloud, and YouTube. Even Meta’s Mark Zuckerberg has pivoted his once Metaverse-obsessed company into an AI-forward trajectory, saying: “Our single largest investment is advancing AI and building it into every one of our products.” (FN4)

This AI arms race is no longer theoretical. Microsoft’s $13 billion-plus partnership with OpenAI has redefined enterprise software, embedding AI deeply into products like Microsoft 365 Copilot and Azure. Google is doubling down on Gemini—its next-generation LLM built by DeepMind—and has made a substantial investment in Anthropic as part of a multi-front AI strategy. It continues to pour billions into infrastructure, including custom TPUs and its Vertex AI platform. Amazon is aggressively scaling its in-house AI chips, Trainium and Inferentia, to remain competitive in the cloud compute battle. It is also enhancing Alexa with generative AI capabilities. Meanwhile, Meta is investing tens of billions annually into its AI ambitions—spanning massive GPU clusters, custom data centers, and open-source LLMs like LLaMA. In its most recent earnings release, Meta bumped its 2025 AI spend forecast to $72 Billion. These tech giants aren’t just experimenting with AI—they are aligning their long-term strategies around it.

The market has taken notice. xAI’s recent secondary offering reportedly values the company at over $113 billion, factoring in its acquisition of X. Meanwhile, Anthropic—backed by both Amazon and Google—has surpassed a $60 billion valuation. These soaring valuations and capital inflows signal a broader recognition: even the industry’s Goliaths sense the ground shifting beneath them.

Meanwhile, the computational demands of modern AI systems are staggering. AI-powered search engines, such as those utilizing large language models (LLMs), require significantly more energy than traditional search engines. For instance, each ChatGPT query consumes approximately 2.9 watt-hours (Wh) of electricity, nearly ten times the 0.3 Wh used by a standard Google search. (FN5). This disparity stems from the intensive computational processes involved in generating AI responses, which necessitate thousands of high-performance GPUs operating in tandem. As AI applications become more prevalent, addressing their energy efficiency is crucial to ensure sustainable scalability. (FN6)

The escalating energy demands of emerging technologies extend beyond AI to encompass cryptocurrency mining, which consumes approximately 138 terawatt-hours (TWh) annually—comparable to the electricity usage of Poland. This substantial consumption is primarily due to the continuous operation of specialized ASIC hardware required to secure blockchain transactions.​ (FN 7)

Automated vehicles (AVs) are in their early stages. For example, companies like Waymo, whose robotaxi services are gaining wide adoption in a few markets, are in the very early innings. AV’s probable electricity demand will be high. As we accelerate toward high-energy usage from electric vehicles (EVs), automated vehicles (AVs), and AI-driven data centers, leading American tech giants are making significant investments in nuclear energy to meet these demands:​

• Microsoft has entered a 20-year agreement with Constellation Energy to restart Three Mile Island’s Unit 1 reactor, aiming to supply 835 megawatts (MW) of carbon-free power to its AI data centers.​ (FN8)

• Amazon acquired a 960-MW data center campus adjacent to the 2.5-gigawatt (GW) Susquehanna nuclear power plant in Pennsylvania, ensuring a direct supply of nuclear-generated power for its operations. (FN9)

• Google has partnered with Kairos Power to develop and deploy a fleet of small modular reactors (SMRs) with a total capacity of 500 MW by 2035, marking a significant step toward sustainable energy for its data centers. (FN 10)

• Oracle is exploring the construction of a gigawatt-scale data center powered by three SMRs, reflecting its commitment to integrating nuclear energy solutions into its infrastructure. (FN11)

💡 All of this adds up to a clear signal: today’s mega-cap tech leaders aren’t just reacting to the latest innovations—they’re making foundational bets to ensure tomorrow’s compute revolution doesn’t decouple their core franchises from the future. In short, fortify today with a vision for tomorrow to ensure you’re still in the game when the crest of the wave hits the shoreline.

Why Legacy Giants Fail and How the Bold Survive the AI Age. The AI Revolution presents serious risks and challenges to not only these tech legacy leaders but to all companies operating in today’s economy. Some will win, some will lose; the bold will not merely survive, these will likely thrive in the new era. This trend is nothing new. My Fair Lady isn’t a new plot; we’ve seen this musical before. At a minimum, business leaders should recognize the contours of a familiar, creative destructive wave in the AI Revolution.

💡 While the size and shape of this new wave is different than the ones accompanying the Internet, is it not merely the modern adoption of Pygmalion?

The Arc of Communication: From Gutenberg to GPT. For centuries, communication technologies evolved slowly. Gutenberg’s printing press revolutionized literacy, but it didn’t immediately displace the monks who hand-copied texts. Over the past 150 years, new waves of communication sped up – telegraph, telephone, and broadcast – but the disruption didn’t take place overnight. It still took decades.

Things are changing more quickly in the 21^st century. In the 1990s, the Internet brought disintermediation and scale. The early 2020s marked the rise of AI, particularly generative AI, and it’s compressing disruption timelines even further. With the advent of artificial intelligence, we’re no longer just replacing communication tools. We’re now replacing the function of communication itself—synthesis, interpretation, and even judgment. While the printing press didn’t kill off the use of monks to scribe texts overnight, AI holds the potential of re-writing your business model in a single cycle.

Are you already on the cliff of obsolescence?

The Fall of Titans. Let’s consider the case of some falling communication titans and their reactions.

NTT DoCoMo led the mobile internet revolution in Japan. The company clung to its proprietary systems, but its walled garden lost its edge with the emergence of the smartphone and open platforms, such as the Android offerings.

France Télécom hit the market with its pre-Internet digital system, Minitel, in the early 1980s. An analog to an early version of the Worldwide Web, Minitel became a hit with French consumers, who enjoyed many of the early-stage advances of the internet for a decade before other western consumers started enjoying the internet. The company doubled down on the proprietary, closed system which supported Minitel. Despite the company’s early-starter advantage, its demise was sealed by its own failure to pivot with the rise of the Worldwide Web.

AT&T and Bell Labs gave the world the transistor, Unix, and much, much more. Unfortunately, AT&T’s bureaucracy failed to commercialize Bell Labs’ technology breakthroughs.

These leading companies weren’t caught unaware. They were leaders in the communication field and couldn’t possibly miss the coming changes. Yet, each refused to let go of the present to reach for the future.

💡The future doesn’t reward invention. It rewards reinvention.

Why Communication Disruption Hurts the Most? Communication systems are foundational to modern societies. Indeed, they’re enablers of every other function in our society. A disruption to communication isn’t cosmetic. It’s fundamental to the ways we cognate, collaborate and control society.

Over the past 20 years, we saw communication shift from analog to digital under the reign of the Internet. Artificial intelligence is now shifting communication again. We’re moving from explicit (saying what we mean) to implicit (where AI models infer, generate and decide). That shift potentially changes who holds power, who can create value and who is indispensable.

The Necessity of Severing the Arm. The cost of adaptation is often a high one, but so is the cost of refusing to adapt. To survive disruption, today’s successful company must consider radical shifts, including cannibalization of existing, successful channels. Think about the implications of these cannibalizations:

· Amazon built AWS, knowingly disrupting its own infrastructure model and retail dominance,

· Netflix phased out its successful DVD service to become the world’s leading streaming service,

· Microsoft restructured its business around cloud and artificial intelligence, pivoting from its legacy software, and

· NVIDIA, despite surging demand in gaming, bet big on AI, and changed the trajectory of the entire tech sector.

When it mattered most, others didn’t take the giant leap:

· Bell Labs innovated without granting the power to commercialize,

· Xerox PARC invented modern computing tools, such as GUI, but failed to capitalize,

· Kodak shelved its own digital camera tech to protect film revenues.

Such innovation without any sacrifice to the existing business is mere decoration.

Paid Content. What are the implications of the AI shift and the move towards replacing the Internet as the next great indispensable toolset? In this new era, who are the adapters? The laggards? Who will not merely survive, but thrive, in this new era?

We stand at the edge of a generational transformation—one as profound as the birth of the Internet. But this time, the shift is deeper: from connection to cognition.

If the Internet democratized access to information, AI is now democratizing insight. It doesn't just connect us to data; it empowers us to interpret, synthesize, and act instantaneously. What once required teams of analysts, hours of research, and manual coordination is now being compressed into a single prompt and a decision-ready output. The result? A new infrastructure is emerging—not for communication, but for thought itself.

This isn’t about a tool—it’s about an evolution. The web was your phone line. AI is your brain.

Learn more about the shift to the era of Intelligence in the Paid Content below.

About the Author: Kevin R. Davis is a seasoned legal operator who focuses on developing and leading legal teams for equity sponsored businesses. A “serial” General Counsel for sponsored businesses, Kevin advises operators seeking to optimize their businesses, undergo transformations and manage liquidity events. Earlier in his career, Kevin worked as a corporate attorney with Kirkland & Ellis, LLP in Chicago, Illinois and as a legal executive with Publicis Groupe in Paris, France. Kevin is a graduate of Northwestern University’s Pritzker School of Law.

Illustrations by Juliette Davis. Help tip the scale in favor of our talented illustrator, a graphics design student, Juliette Davis: https://buymeacoffee.com/savvystartupadvisor.

Nothing contained in this article should be construed as legal or investment advice. This article does not create an attorney-client relationship between any reader and its author. Neither the author nor the publisher is responsible for updating this publication to consider any changes in applicable laws. Nothing in this article is based upon the author or publisher’s experience with any specific individual or organization; any resemblance to actual persons, places, or events is purely coincidental. If legal advice or other professional assistance is required, the services of a competent professional should be sought.

References

FN1/ Nadella, S. (2023, April). The future of work with AI [PDF]. Microsoft. https://news.microsoft.com/wp-content/uploads/prod/2023/04/Satya-Nadella-The-Future-of-Work-with-AI.pdf​

FN2 / Jassy, A. (2024, April 11). 2024 Letter to Shareholders. Amazon. https://www.aboutamazon.com/news/company-news/amazon-ceo-andy-jassy-2024-letter-to-shareholders​

FN3 / Nolan, B. (2023, April 17). Sundar Pichai says AI technology could be more profound than fire or electricity. Business Insider. https://www.businessinsider.com/sundar-pichai-google-ai-bard-profound-tech-human-history-2023-4

FN4 / Zuckerberg, M. (2023, March 14). Update on Meta's Year of Efficiency. Meta. https://about.fb.com/news/2023/03/mark-zuckerberg-meta-year-of-efficiency/

FN 5 / RW Digital. (2024, October 30). How Much Energy Do Google Search and ChatGPT Use? Retrieved from https://www.rwdigital.ca/blog/how-much-energy-do-google-search-and-chatgpt-use/

FN 6/ Kanoppi. (2024, October 30). Search Engines vs AI: Energy Consumption Compared. Retrieved from https://kanoppi.co/search-engines-vs-ai-energy-consumption-compared/

FN 7/ Polytechnique Insights. (2024, October 16). Bitcoin: electricity consumption comparable to that of Poland. https://www.polytechnique-insights.com/en/columns/energy/bitcoin-electricity-consumption-comparable-to-that-of-poland/

FN 8 /Constellation Energy. (2024, September 20). Constellation to Launch Crane Clean Energy Center, Restoring Jobs and Carbon-Free Power to The Grid. https://www.constellationenergy.com/newsroom/2024/Constellation-to-Launch-Crane-Clean-Energy-Center-Restoring-Jobs-and-Carbon-Free-Power-to-The-Grid.html

FN 9/ Electrek. (2024, March 5). Amazon just bought a 100% nuclear-powered data center. https://electrek.co/2024/03/05/amazon-just-bought-a-100-nuclear-powered-data-center/​

FN 10 / Kairos Power. (2024, October 14). Google and Kairos Power Partner to Deploy 500 MW of Clean Electricity Generation. https://kairospower.com/external_updates/google-and-kairos-power-partner-to-deploy-500-mw-of-clean-electricity-generation/

FN 11 / Data Center Dynamics. (2024, September 10). Oracle to build nuclear SMR-powered gigawatt data center. https://www.datacenterdynamics.com/en/news/oracle-to-build-nuclear-smr-powered-gigawatt-data-center/​