Hi Reader,
Greetings from Birmingham, Alabama! The Alabama Capital Network brought together an awesome group of founders and investors over the last few days, but the best part of my trip was a strategy session with the founders our amazing portfolio company, Croux. Croux is an on-demand hospitality staffing platform that uses AI to connect local talent with businesses needing staff.
Our strategy session got me thinking about something I’ve been noticing across our portfolio: there’s a massive difference between founders who are “integrating AI” and those who are building businesses that simply couldn’t exist without it. The parallels to the mobile revolution are striking. And honestly, a little unsettling.
The timing feels critical right now for founders to really be thinking about what the shift to AI really means for their businesses and I wanted to write down some thoughts about me all might think about this moment.
Write back and tell me what you’re seeing in your world – are the best founders you know adding AI features, or building something entirely new? How do we help companies that aren’t AI native adapt in what feels like a critical moment for AI and startups?
Until next time,
-Shruti
The Platform Shift Every Startup Should Understand
In the fall of 2008, while cramming for sophomore year finals, I unwrapped a birthday present that would change how I thought about technology forever: my first iPhone - still new enough that my Blackberry-wielding peers looked at it with mild confusion.
That original iPhone launched without an App Store. But within months, Apple opened the floodgates and something magical happened. Over the next few years, the platform exploded with experiences that had never existed before - Angry Birds that used the phone's accelerometer, Instagram that turned terrible phone cameras into social currency, Foursquare that made location sharing a game.
These weren't mobile versions of desktop software. They were native to the platform. They were only possible because millions of people suddenly carried GPS, cameras, and the internet in their pockets.
A few years later, starting my first job in tech, I watched the great mobile scramble. Most companies built "mobile-friendly" websites - desktop experiences crammed onto smaller screens. They were technically mobile, but strategically dead.
Meanwhile, the winners weren't adapting to mobile. They were born mobile. Uber reimagined transportation around location data. WhatsApp rebuilt communication for always-connected devices. DoorDash created an entirely new market by combining GPS, payments, and real-time coordination.
Today, watching the AI landscape unfold, I'm getting that exact same feeling.
The Mobile Playbook is Repeating
Most companies today are in "AI integration mode." They're adding chatbots to websites, using GPT to draft emails, automating existing workflows with machine learning. It's 2008 all over again - they're building the equivalent of mobile-friendly websites.
But the real opportunity isn't making current processes 10% more efficient. It's asking a fundamentally different question: What becomes possible when intelligence is abundant and nearly free?
The companies that will dominate aren't adding AI features to existing products. They're building businesses that could only exist in an AI-native world.
Climate: Instead of using AI to optimize existing energy grids, imagine systems that predict demand across entire regions and automatically orchestrate thousands of distributed energy sources in real-time - creating smart infrastructure that manages itself.
Healthcare: Beyond AI-assisted diagnostics, picture platforms that continuously analyze patient data streams, understand complex medication interactions, and predict health crises before symptoms appear - transforming healthcare from reactive to predictive.
Fintech: Moving past fraud detection, envision financial infrastructure so intelligent it becomes a true co-pilot - understanding spending patterns, optimizing cash flow, and making investment recommendations that adapt to your changing life circumstances.
These aren't incremental improvements. They're entirely new categories of solution with different unit economics, user experiences, and competitive dynamics.
Building in Reality, Not Science Fiction
Here's the thing: AI in 2025 is far from perfect. Models hallucinate. They struggle with nuanced reasoning. They absolutely cannot handle high-stakes decisions without human oversight.
But this has never stopped transformative companies before. The first iPhone couldn't copy and paste text. Early mobile networks dropped calls constantly. Instagram launched when phone cameras produced grainy, terrible photos.
The winners succeeded by building for technology's strengths while architecting around its limitations. Today's AI-native companies need the same approach:
Design for AI's superpowers: Pattern recognition across massive datasets, generating contextually appropriate content, synthesizing complex information, understanding conversational nuance.
But architect around the gaps: Always maintain human oversight for critical decisions. Build explainable systems that can be audited. Start with low-risk, high-frequency use cases before moving to life-and-money scenarios.
For regulated industries - healthcare, fintech, climate - this balance becomes even more critical. The opportunity is enormous, but so is the responsibility. Companies that solve AI-native experiences while meeting stringent compliance requirements won't just succeed - they'll build massive competitive moats.
The climate paradox deserves special attention: AI's energy consumption can directly conflict with environmental goals. The winning climate AI companies will be those that prove their solutions save more energy than they consume, building efficiency into their core architecture.
The data advantage is already emerging as the key differentiator. While everyone accesses the same foundation models, companies with proprietary datasets - your patient records, transaction patterns, energy consumption histories - create AI that can't be replicated by competitors.
The Stakes Are Higher Than You Think
The mobile revolution taught us that platform shifts can create winner-take-all dynamics. Companies that understood mobile early didn't just grow faster - they redefined entire markets and made previous solutions obsolete.
This AI moment carries the same dynamics, but compressed. While most companies are still figuring out how to add AI features, the next generation of category winners is already building AI-native from the ground up.
They're not coming for your customers. They're coming for your entire business model.
The question isn't whether this shift will happen - it's whether you'll be the one building the future or scrambling to catch up to it.
For founders building today, this means making a choice: Are you adding AI to check a box, or are you designing something that couldn't exist without it?
The window to be AI-native from the start is open right now. But it's closing fast. The founders who build businesses that become impossible without AI will create tomorrow's category winners. Everyone else will eventually become obsolete.
