Why the Companies Most at Risk of Disruption Are Usually the Most Successful

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributor Rachel Warren talks with Jeffrey Cole -- founder of the World Internet Project, director of USC's Center for the Digital Future, and author of Disruptors at the Gate -- about:

The patterns that repeat every time an industry gets blindsided.Why most CEOs are structurally prevented from doing what it takes to survive disruption.What investors should be watching right now as AI, quantum computing, and a wave of landmark IPOs reshape the landscape.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

This podcast was recorded on Oct. 18, 2026.

Jeffrey Cole: The disruption of the retail business should have come from Walmart or Target, not an upstart bookseller in Seattle. The disruption of the taxi business, my God, was anything more right for disruption in taxis and just should have come from Yellow Cab or Hertz or Avis, not a bunch of computer nerds in the Silicon Valley who knew nothing about transportation, but knew a lot about algorithms to make things happen.

Rachel Warren: That was Jeffrey Cole, one of the world's leading voices on media, technology and the digital future and author of the new book Disruptors at the Gate. I'm Motley Fool analyst Rachel Warren. Jeffrey founded the World Internet Project, the longest-running global study of online behavior, and has spent more than three decades advising presidential administrations, the FCC, and the Department of Defense on exactly the kinds of changes that blind side companies and investors alike.

In this conversation, we get into why disruption almost never comes from where an industry is watching what the history of AI, the Internet, and Kodak all have in common, and why the executives best positioned to fight disruption are almost structurally prevented from doing so. We hope you enjoy.

Welcome back to Motley Fool Conversations. I'm Motley Fool analyst Rachel Warren. Today, I'm delighted to be joined by Jeffrey Cole.

Jeffrey is one of the world's leading voices on media, technology, and the digital future and has spent more than three decades tracking change and anticipating what comes next. He founded the World Internet Project. That’s the longest-running global study of online behavior spanning 27 years in 35 countries, and now directs the Center for the Digital Future at the USC Annenberg School.

Jeffrey has advised four U.S. presidential administrations, the FCC, Congress, and the Department of Defense, along with global government leaders.

His industry clients include Microsoft, Sony, Time Warner, AT&T, CBS. He also co-founded the Global Disruption Investment Fund and is the co-author of the upcoming book Disruptors at the Gate: When Visionaries, Trailblazers and Two Guys in a Garage Turned the World Upside Down. Jeffrey, so excited to have you on the show.

Jeffrey Cole: Rachel, I'm really thrilled to be here and thank you for such a nice introduction.

Rachel Warren: Of course. Maybe to set the stage for our audience, for your book and its core themes. Tell us about what led you to write this book, but also what are the major sectors and companies that you think are most deeply exposed to structural disruption in the coming years?

Jeffrey Cole: Well, as far as why I wrote it, I had been a television guy, and the most powerful medium ever invented when it began in the ‘40s. I watched as the Internet came along. I got a hunch.

This is where the World Internet project came from. But the Internet was going to be pretty darned important. Turned out to be a lot more important than I or anyone could have predicted.

But I watched how people responded. The Internet was a threat to a lot of businesses. In the book, I list about 100 companies or industries that have disappeared because of the Internet, starting with the yellow pages encyclopedias and going on, and yet no one really understood the nature of the threat.

They doubled down on their behavior. They refused to acknowledge that something was changing because disruption, unlike innovation, which is just a change, which may lead to increased market share, disruption is something that comes from unexpected places, turns business models upside down, changes everything.

Historically, what I call master disruptions, disruptions that lead to dozens or hundreds of other changes, the Internet being one of those, but also the Industrial Revolution or the introduction of the automobile, that kind of disruption tends to occur about every 100-150 years. We're living through the third massive master disruption in 25 years. Started with the Internet.

COVID, the unique thing about COVID, it was the first time that everyone everywhere at the same moment was disrupted. The way we did everything went online. I wrote a little piece during COVID, asking, what would the pandemic have been like if there were no Internet?

The answer was a lot worse. Then AI is now the third in 25 years. We can already see the next one quantum computing, coming up the driveway.

That I got interested in this massive change and why government leaders, and we're seeing that right now with a discussion over AI, why government leaders, why business leaders, and why people rarely are able to adapt very easily. The biggest disaster and disruption is denial.

Rachel Warren: One of the interesting things to think about right now in the age of the AI Revolution, which obviously there were many precursors to that, and it's been coming for a long time, but it seems as though everything has sped up all at once. I think there's been a lot of debate as to whether what we're seeing now in terms of its disruptive potential. Is this like nothing we've seen before? This is the first time something like this is happening or can we trace it through line to other disruptions?

Jeffrey Cole: We have seen disruptions that change, I mentioned, the Internet changed everything. But AI does take it to a new level. Look, the discussion we're having right now, literally as we speak, is AI going to end humanity by the end of the decade?

I don't see that quite yet or hopefully ever. But the stakes have risen. Even if that turns out to be hype or fear mongering or there's nothing to it, the level at which AI is going to change.

We know employment's one of the few areas I don't see a hopeful, easy outcome, but the way it's going to change access to information, it is unprecedented. We always want to think we're living in the middle of the biggest thing that's ever happened. But I thought the moment AI appeared, incidentally, AI, the joke within scientific laboratories and universities for 60 years was AI has a great potential, and it always will.

Well, that changed when Chat was introduced at the end of 2022.

But AI, the moment it was introduced, I thought was as important a disruption as the beginning of the printing press. I now really do believe it's the most important disruption of all time. That's not hype, whether it can be the best thing that ever happened or the worst, or it looks like both, but certainly, an interesting distinction with the Internet.

The Internet started with so much hope and optimism that it would connect people that anyone could be a journalist. Then we learned the dark underside of hate speech, bullying, misinformation. AI started with nothing but fear.

Within three months of Chat being introduced, the OpenAI guys who created Chat were on stage at South by Southwest, which is probably the biggest tech bros conference where Twitter came out of, and they were talking about the benefits of AI. This is three lines after it came out, and they were booed offstage. Now, at graduations this year, you have speakers who foolishly are telling graduates living through the worst job market for graduates in the last 70 years in fear that there are no jobs.

They're telling them all seize the opportunity, learn AI, and it's booing and jeering. The stakes are big.

Rachel Warren: It seems as though disruption almost never comes from where an industry or a company is watching, and I wonder, is there a discipline for auditing a company's vulnerability or an industry's vulnerability to these disruptive changes rather than just scanning the horizon?

Jeffrey Cole: It's darn tough because as you said, innovation comes likely from your competitor. Figures out a better way to do what you do and may gain market share. Disruption comes from completely unexpected places. The disruption of the retail business should have come from Walmart or Target, not an upstart bookseller in Seattle, and the disruption of the taxi business, my God, was anything more for disruption in taxis and just should have come from Yellow Cab or Hertz or Avis, not a bunch of computer nerds in the Silicon Valley who knew nothing about transportation, but knew a lot about algorithms to make things happen.

The disruption of the automobile business should have come from Toyota or General Motors, not from a South African immigrant who didn't know much about transportation. It does come from all these unexpected places that we use it in the subtitle of the book, but everybody knows this as two guys in a rage. You can eavesdrop or spy, not literally spy, on your competitor and try to get a sense of what they're doing.

But how do you eavesdrop on two guys in a garage you've never heard of? That is very difficult. But one of the things we try to do in the book is the book goes through all the examples and lessons, but the last chapter is a battle plan.

What do you do when the disruptors are at the gate?

The first stage is expect to be disruptive. Live your life as if you're going to be disruptive. When Larry Page and Serge Brin created Google in a Garage in Mountain View in the late 90s, they knew they didn't invent search.

They had already been out to Vista and Ask Jeeves, and, of course, Yahoo. They knew they just did it so differently and better that the first moment anyone used Google, they didn't want to use anything else. It was as if Google could read your mind.

Sometimes they would tell you with your search, did you mean to say, and it could read your mind. They knew they didn't invent search. They from Day 1 ran that company as if they were going to be disrupted.

They had mechanisms in place. It happened, but it took 23 years, and by the time it actually happened, they had gotten complacent, as well. The disruption was AI in everything they were afraid of.

Now, of course, Google's surviving AI. It's surviving beautifully.

But there is one big difference that's happened to Google. You look at Search. Google was over 90% of search in every country on the Earth with a couple of exceptions like North Korea and Iran. They had over 90% market share. When AI shakes out between Anthropic and Claude and Chat and Grok from Elon Musk, Google's going to probably end up at about 35, 40% market share, a great percentage. They may even be higher than almost anybody, but it's not 90. They did expect, so expecting to be disruptive. Looking around, not being complacent, understanding the whole thing can change in a moment. Those guys in a garage, trillion dollar industries can be created or destroyed.

Rachel Warren: You know it's interesting because I think there's been, as you noted, a lot of criticism as we're watching the AI Revolution. There's been some concerns of people trying to trace a feared AI bubble to what happened during the dotcom meltdown, which as you mentioned, was chiefly related to businesses that didn't have really underlying core operations. What do you say to people that raise those concerns, tracing it back to the current era?

Jeffrey Cole: It's a different situation with what we're seeing with AI now, but already market analysts are saying AI and what they're calling the AI bubble, was the only thing keeping the stock market growing, and it is ripe for collapse. The valuations, we're about to see the IPOs of Anthropic and OpenAI. Unless all this fear about the end of humanity slows that down, I suspect it won't.

They're going to be at least a $1.5 trillion. It has become speculative.

It's based more on reality, I would argue than crypto. Crypto, in my opinion, will never go anywhere when it is primarily the tool of terrorists, money launderers, drug dealers, and get-rich speculators. For crypto to ever have a chance, it has to become a real currency.

Actually this great potential for a new currency that doesn't require currency exchange. But AI, it could put us into a major recession if it is a house of cards. I think AI is based on a foundation of real things and will sustain itself.

But we are going to see all of a sudden, I don't think we've ever seen this before. We're going to see two companies become IPOs that are immediately going to make them among the six or seven largest companies on earth

Rachel Warren: Of course, the question is whether they can support those valuations once they're in the public market. Switching back to a different industry, you briefly mentioned quantum computing earlier, and I'd like to talk a little bit more about that. Obviously, this is further out in terms of seeing a lot of the practical growth there out in the real world. But it's potentially as significant as AI, if not maybe more so. What industry should investors be watching now, even if disruption is a long ways away?

Jeffrey Cole: I agree that it is potentially as significant. We see more of it, and you can see the signs more of it ahead of time than you do with most other disruptions. I mentioned AI had been around for 60 years, so we know it's coming.

There's heavy investments in quantum. Quantum, of course, means a change from the digital foundation, and digital technically means ones and zeros. It's the ability to look at not a binary but a system that can do multiple digits, multiple bytes at one time, taking computing speed to a level never imagined before.

Like AI, it can be used, I don't know, for evil purposes, there will be no such thing as a code that can't be cracked, particularly under quantum, including nuclear launch codes, and that's something that's directly going to have to be addressed.

But really where it may have overwhelmingly positive is the industry we just talked about, pharmaceuticals. The ability to really with the prediction is, and I think there's a good basis for this, we're going to see diseases begin to be treated and then disappear at a speed we've never seen before. We may see major diseases and major variations of cancer.

Already, we're seeing just in the last two years, the one cancer that has still always been almost an absolute death sentence has been pancreatic, and there's real progress being made there. I think quantum may take it the rest of the way. Quantum can do enormous amount in medicine.

But also in business organization, in transportation logistics, what Quantum is capable of is really pretty darned exciting. Except for cracking codes, it's not quite clear where the negative or dark side of Quantum might come from. I'm sure people will find it.

Rachel Warren: When we're thinking about, an industry that might be vulnerable to disruption, but specifically companies, and obviously, there's a few examples you've given, what are the early warning signs that a company might be vulnerable that investors-

Jeffrey Cole: First, one of the most in, you would think that disruption would come when a company is weak and vulnerable. It doesn't. It actually, most companies are disrupted at their most successful point.

Talk about the music industry, an industry that has always fascinated me, an industry that the consumers wanted to be disrupted because most of us grew up, with a music industry whose business model was extortion. You want two songs? Great.

You have to buy 12 songs and spend $17. But Napster came along in 2000 or so. 1999 was the most successful year in the history of the music business.

Everything was going right. Of course, people were being forced to pay for music they didn't want. But everything was going right.

They had never been more pleased. They got completely complacent. They thought no one could challenge them.

Incidentally, looking at Napster, customers didn't want to steal music. I mean, there were a few wanted to, but they didn't want to steal. They just wanted to pay for the music they wanted.

They wanted to pay $1 or two per song. The music industry wouldn't do that for them because they were making too much money. They only went to Napster reluctantly.

What did the industry do rather than saying, good times, it may be changing. We've got to begin to give the customer what he or she wants. They double down.

They refused to believe that this was a threat. They went after Napster and sued it. Then they began suing people who downloaded from Napster.

It's never a good business model to sue your customer, and then went further and tried to have the customers of Napster arrested. It's a slow response. It's a refusal to acknowledge that change is coming, and it is simply doubling down.

Sometimes, to an extreme, having your disruptor made illegal, which is what the taxi companies did with Uber, although Uber actually succeeded. What the automobile dealers did to Tesla, who was selling their cars directly to the consumer, and the automobile dealers who had strong local government connections. They had been in communities, in some cases for 100 years, made it illegal to buy a car directly from a manufacturer, although there's no good reason and still illegal in seven states, and the funeral business.

Even the funeral business has been disrupted. The biggest, most expensive item in a funeral is a casket, and some of them costing thousands of dollars. A lot of the viewers may not know, you even go to Walmart or Costco online, and you can buy a casket.

Nobody wants a casket delivered a week from now to their home, but that's not the way it works. It's delivered overnight to the funeral home you designate at about an 80% discount. The funeral home saw their biggest, most lucrative item, threatened, and went to court and tried to have it made illegal to buy a casket from anyone other than a licensed funeral home.

They lost. Anyone can buy it. Most people, of course, buy it just the moment they need it, but I've been in the home of a guy.

This was funny. Some small number of people are buying caskets ahead of time, putting them in their garage, using them as storage. I went to this guy's house, and he said, you want to see my final home?

Rachel Warren: It's interesting because I think one of the questions that comes to mind, discussing all of this is, when we're looking at companies that are vulnerable to disruption, is that vulnerability often, a function of the business model, an inability of leadership to change, or is it really a confluence of different factors?

Jeffrey Cole: It's all of those things. It's not listening to what your customers want and are unhappy about or not caring. That was the music industry.

It was burying your head in the sand. That was Kodak. It was lack of leadership.

But I learned a pretty valuable lesson about leadership. I was interested in banking, and I believe banking would be and will be completely disrupted. It already has gone on for 30, 40 years.

It started. The first real change was the ATM card. From the '70s, where all of a sudden you didn't have to go into the bank.

You only had to go to the outside wall of the bank, and that quickly moved to supermarkets and place in malls where you didn't even have to go to the bank. Then online banking, where you could do all of your banking with few exceptions. The only thing you couldn't do was get cash and cash was completely disrupted from COVID.

We're very close to a cashless society. But all of a sudden, with online banking and ATMs, those eradicated the differences between banks. There was no difference between being at Wells Fargo or being at BofA.

Banks, there's all these new fintech companies that are starting banking without the got-you fees that bank customers hate so much. They should be listening to that. We really dug into disruption in banking.

I'm fortunate I got to share my views with CEOs of big banks all over the world. They had nothing to do with the work, but they knew me, and they wanted me to come in and tell them what I found, which I don't like just studying things. I like rolling up my sleeves and fixing things.

I went in and talked to these guys, they were really smart. Rather than resisting me and denying it, you said, we agree completely. You're absolutely right.

Everything you're telling us we should do we know we should do. There's just one problem. If I do what you tell me to do, I will be gone in 12 months because it will disrupt profits.

They said, keep in mind the average tenure of a bank's CEO is three years, and they say, to a one, they say, I have no ability to focus on anything beyond the next four quarters. I can't do what's in the best interest of this company in 20 years and 30 years. D that's probably what happened to Kodak in the 1960s.

I'm going to be gone before this happens, and he was. It's the exception to that, there are more than just the major exception is the tech companies because they're controlled in most instances by their founders. We know in 30, 40 years, Mark Zuckerberg if Meta survives, and boy, they're in some real trouble now when you're compared to the tobacco companies, but Neto will be running 30 years by Zuckerberg.

Jeff Bezos, who's trying very hard to live forever, maybe he'll succeed he. We'll be running Amazon, not on a day-to-day. Larry and Sergey will be running Alphabet.

As I mentioned earlier, but for his illness, Steve Jobs would still be running Apple. They can do that. Rupert Murdoch could do that.

He's one of the ones in the non-tech world.

But when you have a CEO who stays for a couple of years, they can't do the painful things, and fighting disruption can be painful. Sometimes it means disrupting yourself. Jobs did that.

the product that really turned Apple around when he returned was the iPod. Knowingly stabbed the iPod in the back when he created the iPhone. He knew that it had to happen.

He knew that if he didn't disrupt himself, somebody else would. That's real leadership, disrupting yourself, taking the pain, but most leaders can't. I'm sympathetic to the But leadership is a very important issue.

No clouding your head. When you run a really successful company, you not only are hugely well paid, but you're also on the cover of magazines. You're on The Motley Fool.

You're invited to lecture in business schools and to speak at graduations. It's a pretty heady experience. I think sometimes they take their eye off the ball also.

Rachel Warren: One of the things that I think that I'd like to hear thoughts on as we close out today's discussion. Looking at this pace of innovation and disruption from your vantage point, what worries you the most and what excites you the most about what you're seeing?

Jeffrey Cole: The worry is, I think we're developing an anti-technology and anti-innovation mentality. We're starting, we may have some cause with AI, but we're seeing in a lot of places, crypto, things that disappeared, NFTs, that we thought were just stupid. I think we're beginning to not welcome innovation and always focusing on, this is going to hurt us, this is bad for us.

I think technology has done miraculous things to wildlife. The very fact that we're communicating the way we are at this moment. I mentioned what would COVID have been like if there had been no Internet?

Almost nothing would have happened. That's my fear is we're becoming anti-tech. The excitement, the hype is real.

These things do change the world. The power that I have, but I'm not special, the power that anyone has sitting in their home or with a SmartBook, they don't have a smartphone, they don't even have to be in their home.

The power to have an impact on the world, to build networks, to build networks. They can be used to build networks to do evil things. But to build networks to change the world, rally people.

I believe, while the Internet and social media have really been used to divide us and to create this partisanship, I really believe my friends sometimes think I'm much too optimistic, but I believe this country and this world wants to be brought together. What we need really effective leadership. I think if we had that, the things we could do, there wasn't a problem we couldn't solve using technology and common sense.

I think AI, I think the Internet, I think all this technology really could achieve its ultimate optimistic purpose. But also, as we know, some people think, not much more evil than ending humankind. Although I've been asking a question, I got trying to get an answer.

Maybe one of your readers or to one of your viewers can help me. I'm not doing this for effect. I really I'm trying to get the answer.

Assuming AI does kill us all. I don't assume that. I mean, I don't think that's happening, but assuming it did, doesn't AI need electricity?

Doesn't it basically shut down?

Rachel Warren: That's a good point. I think the fear of taking over, autonomous systems that would be adverse to humankind is probably what people are thinking about, but I think that's a.

Jeffrey Cole: Would it exist for the next thousand years without people? I doubt it. I'm trying to get an answer to that. Maybe somebody can help me. Maybe there's something simple I'm missing.

Rachel Warren: I think you've given our listeners and viewers a lot to think about, and I wish we had more time. But to those who are watching or listening, check out Jeffrey's new book Disruptors at the Gate: When Visionaries, Trailblazers and Two Guys in a Garage Turn the World Upside Down. Thank you so much for joining me today for this discussion.

Jeffrey Cole: Thank you, Rachel. I really enjoyed that.

Rachel Warren: To see the full interview, go to our Motley Fool Conversations YouTube page. As always, people on the program may have interests in the stocks they talk about. The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Hidden Gems Investing team, I'm Rachel Warren. Thanks for listening. We'll see you next time.