It’s our job to understand the disruptive trends that we are seeing in the market and help our clients and partners spot opportunities for growth. As part of our Field Notes series, our partners share what they heard at key industry events.
Last week, Daniel Shani attended a private dinner hosted by Harman (a subsidiary of Samsung), in collaboration with GP Dinners. The event featured Siddharth Garg, NYU professor and leading AI and cybersecurity researcher, who shared insights on the future of AI, and brought together a small group of innovators, investors, and strategists for an exchange of ideas around the future of AI and digital transformation.
Here are some of the key takeaways and forward-looking insights that surfaced:
- The Energy Challenge of AI at Scale:
Garg remarked on the unseen energy costs of AI. Every AI interaction—whether it’s a chatbot query, image generation, or model training—demands significant processing power. It’s hard to estimate exact energy consumption (based on the model, query, etc) – a single AI-written response can consume as much as 0.14 kilowatt-hours (kWh) of energy, comparable to keeping 14 LED bulbs lit for one hour. Globally, data centers already account for about 2% of total electricity consumption. Garg posed the thought experiment: If every Google search today were powered by generative AI models, the energy consumption behind those searches (est. 700+ TWhs per year) would more than double data center energy consumption.
However, Garg argued that scenario is unlikely – given we’re already seeing smaller, more efficient models published, and he believes the world is headed toward highly verticalized models tailored for specific tasks. Specialization and optimization are not just nice-to-haves—they’re existential necessities for a sustainable AI future. How will your company adapt?
- Specialization as the Next Growth Frontier
Even as AI models grow more capable, the interim period—where models are very good, but not yet perfect—offers a major strategic window.
The best opportunities (and greatest returns) will likely go to those who:
- Specialize: Build and deploy more focused, task-specific models and agentic workflows rather than relying on generalized large models or singular systems.
- Leverage Proprietary Data: Own unique data assets that can give their specialized AI solutions a durable competitive advantage.
- Dominate Verticals: Focus deeply within specific industries where precision and domain expertise matter most.
This is where innovation, speed, and tight problem-market fit will create outsize returns. How and where can you carve out your specialization?
- Private Equity’s Appetite for Growth: A Playbook for Innovation
The dinner also surfaced pointed insights about PE risk appetites over time based on fund lifecycles:
- Pre-Acquisition: Value-creation (i.e. growth) strategies are a critical ingredient baked into diligence and deal terms.
- Immediately Post-Acquisition (Years 0–2): PE firms show the greatest appetite for speculative, growth-oriented strategies. This is the window where they are most receptive to fresh ideas and new initiatives to drive growth and multiples.
- Mid-Hold (Years 3–5): Focus shifts toward execution, hitting numbers, and preparing for an exit. Innovation becomes harder to prioritize unless directly tied to short-term returns.
Overall, there was general consensus that the larger the PE firm/fund, the more established the execution playbook was – down to preferred vendors, value-creation strategies, and timelines. Perhaps smaller growth equity players may have more appetite for new innovation partners and more disruptive value-creation strategies?
In this vein, some innovative service providers to PE firms are successfully implementing risk-aligned models—covering the upfront cost in solutions in order to capture the majority of upside through savings or growth gains immediately post-acquisition (where PE firms are less sensitive to bottom line) and a decreasing share of upside over time (as PE firms are maximizing metrics for exit). How might similar models open new doors for venture builders and strategic advisors in your field?
If you need help solving a complex problem, building a new solution, or unlocking new ideas for good growth, reach out to the team.