The State of Consumer Tech in the Age of AI

The great thing about consumer is it's completely unpredictable and the best products emerge like out of nowhere.

We're living in this early era of AI where velocity is the model. In the

future, you're going to see consumer spend to be like food rent software. In

some ways, that's sort of like the peak value of AI enabling better human connection.

[Music] Guys, thanks for coming on for a state of consumer podcast. It it seems like every few years there was a there was a breakout starting from Facebook

Twitter Instagram Snap WhatsApp Tinder, Tik Tok. Every few years there was this sort of new paradigm, this new breakout and it feels like at some point that just a few years ago that just

stopped. Why did it stop or did it stop?

stopped. Why did it stop or did it stop?

Would you reframe how how would you think about that and um where do we go from here? I would argue probably chatbt

from here? I would argue probably chatbt was a was a huge consumer right like outcome and winner in the past few years and we've also seen a bunch of other ones in in various other like modalities

of AI um in like image and video and and audio companies like midjourney and and 11 labs and blackforce labs um now things like cling and vo um mo like

weirdly though a lot of them don't have the same like social or traditional consumer dynamics that you mentioned I think because AI is still relatively early and So much of the new products and innovation has been driven by

research teams who are like so good at training models but historically have not been amazing at creating the consumer product layer around them. So I

think the optimistic view is that the models are now mature enough and many are available either open source or via API um for people to build great more traditional consumer products on top of

them.

It's interesting that you asked that question because I was thinking about the past what 15 years 20 years where as you said like Google, Facebook Uber, all all the names and it it's

interesting because you know when you think about internet mobile cloud everything together there were all these amazing names and you ask like has that slowed down? I think um the cloud mobile

slowed down? I think um the cloud mobile all that had a lot of maturity baked in like the platform was around for like 10 15 years. every little nooks and

15 years. every little nooks and crannies that have been explored to some extent. The changes that people had to

extent. The changes that people had to adopt was Apple coming out with new features as opposed to changes that people need to adopt now is underlying

relentlessness uh relentless uh model updates. So I think that's one different

updates. So I think that's one different but the other thing is again just you touched on this but if I think about the past historical winners there's like information area like Google of the

world and now I think chach certainly doing that and they're the utility we missed out like box and dropbox of the world you know more consumer consumerry that people use where we also see a lot

of the companies uh attracting and going after that that use case expression creativity same thing the creative tools are endless and that's happening what I think is missing potentially is

connection like this social graph. This

thing hasn't rebuilt on AI yet and that may be just a white space or something that we we just uh continue to see what what develops there. It's interesting

because you know Facebook's almost 20 20 years ago at this point like the companies that you mentioned Justine you know aside from TGBT and OpenAI like are they going to be around for 10 20 like what is the defensibility of the

companies we're talking about and also the use cases of all the companies I mentioned um are they going to be disrupted by by these new players or in 10 years from now will they continue to be sort of the mainstream use case for

all uh or mainstream application for all those use cases that they serve? I mean

you could argue that Chad GPT has got way higher business model quality than the kind of analogous consumer companies from the last product cycles, right?

Their top skew is $200 a month. The the

top Google consumer skew is $250 a month. So, sure, there's a question of

month. So, sure, there's a question of defensibility, networks, all these other things. But that might have been a

things. But that might have been a response to the poor business model quality that would have occurred if you didn't have those things. Now, you can just charge people a lot of money. And

perhaps we'd been overthinking it previously. there was poor business uh

previously. there was poor business uh business model quality maybe stronger sort of retention or product market durability. Yeah. Like you had to have a

durability. Yeah. Like you had to have a story for how this was like compounding enterprise value in the absence of just making money right away and now these models and these companies are just making money right away. Yeah. I think

the other thing is Justine you talked about this like all the foundation models are kind of pointy in different ways. So you could say, look, you know

ways. So you could say, look, you know Claude and the ChachiBT horizontal model and the Gemini model, like aren't they interchangeable? And doesn't that mean

interchangeable? And doesn't that mean price pressure? But different people use

price pressure? But different people use them for different things and it seems like they're raising prices, not lowering them. So I think when you like

lowering them. So I think when you like zoom in a little closer, you see that there's there are like some interesting defensibility dynamics that are already there. Increasing price, not decreasing

there. Increasing price, not decreasing at an interesting point because monetization is clearly a different thing from previous era to AI era especially for consumer companies.

they're making money right away. And and

I what one thing that's always on my mind and Olivia tell me if you think that's not correct, but like the retention when we talked about retention on the consumer subscription model

before AI, it was I don't know if we actually try to make a differentiation between unique user retention and revenue retention cuz they were like kind of the same. Like you don't get to

change pricing that often. You don't get to upgrade. like it's kind of the same

to upgrade. like it's kind of the same thing as opposed to now we make a very clear differentiation between unique user retention and revenue retention

because people actually upgrade they actually have all these like credits and points they need to actually overages that they actually end up spending so

you actually see revenue retention being meaningfully higher than unique user retention which again like I haven't seen that before so yeah yeah I think before the average consumer subscription

was maybe $50 a year, if that. Like that

was kind of a lot. Like the

best-in-class consumer products would charge that. And now we have people very

charge that. And now we have people very happily paying $200 a month. Uh and even saying in some cases that they feel like they're being undercharged for that or they would pay more. How do we explain that? What value are they getting such

that? What value are they getting such that they're paying? I think it's doing work for them. Like consumer

subscriptions in the past were around things like I don't know personal finance, fitness, wellness, like things that entertainment. Yeah. But they were

that entertainment. Yeah. But they were things that ostensibly would help you help yourself, entertain yourself, like but you would have to invest a lot of time to kind of get the value from them.

And now with products like deep research, for example, that could replace 10 hours of generating a market report by yourself. And so that kind of thing is easily worth I think for many people $200 a month even on like one or

two generations. I mean, I think things

two generations. I mean, I think things too like VO3, like people are paying 250 a month. And I'm happy to pay that

a month. And I'm happy to pay that because it's like you have this suddenly like it it feels like a magical mystery box that you can like open it and get whatever video you want only for 8 seconds. But it's like incredible and

seconds. But it's like incredible and the characters can talk and you can make amazing things that you can share with friends, make like personal memes of of someone delivering a message to your

friend with their name in it. like

create full stories that people are posting on Twitter and Reddit and all of these different places. Like it's sort of like nothing we've we've seen before in terms of what consumer products can actually do for people. It seems like

every part of consumer discretionary spend is going to be overtaken by software and I think you know in the future you're going to see consumer spend to be like food rent software and that's kind of where we're going what

Justine's speaking to. And can you give some examples of that? Well a lot of it is what Olivia said right. I think all the entertainment is being subsumed by it. A lot of the sort of creative

it. A lot of the sort of creative expression work that you would do outside of software is now being subsumed by it. A lot of the sort of relationship intermediation which might have been a place where disposable

income spend is being subsumed by it. So

all of the aspects of our lives are going to be intermediated by the models and we're going to pay for that. Brian

you're saying what we're still missing is connection from from this new paradigm and and people are still relying on sort of Instagram, Twitter some of the other sort of social networks of of the past. What what's

going to get us to to something new here? It's funny when when I think about

here? It's funny when when I think about social, which is a category that I get so excited about.

Um, at the end of the day, a lot of it was status update, right? Facebook

Twitter, Snap. It's just like here's what I'm doing. And through status update, you feel connected to that person. And that status update showed up

person. And that status update showed up in different modality. Used to be here's what I am, here's what I'm doing to actual photos of where you are and what

you're doing to videos and short form videos now. So now people feel connected

videos now. So now people feel connected to others through reals and and what have you. So I think that has been one

have you. So I think that has been one era of feeling connected with others.

And then now now the question is how can AI help that? How can AI feel like you're connected to other human beings and know what's going on in your

friend's life? The truth is if I just

friend's life? The truth is if I just think of a modality of photo, video audio type things, I think a lot of it has been explored. Different versions

and and mutations of that uh have been explored quite extensively, especially on mobile. I think where we could get to

on mobile. I think where we could get to is it's funny. Um, I don't know about you guys, but I pour my heart and soul into Chhat GPT. It knows more about me

than probably Google potentially, which is an insane things to say. Like Google

I've been using using Google for a decade plus. And CHP may know more about

decade plus. And CHP may know more about me than Google because I type more. I

say tell it more. I give more context. What might connection feel like

context. What might connection feel like when that essence of me is sharable with others? And I don't know if that's the

others? And I don't know if that's the next version of feeling connected, but I can certainly see a world where that is that resonates with a lot of folks nowadays, younger generation, etc. that

are kind of tired of just looking at the surface level stuff. I mean we already see some examples of exactly that where like there's all these viral trends where people are like I ask my chatbt

based on everything you know about me write my five strengths or weaknesses or like make an image of like who you think the essence of me is or make a comic like about my life and and people are

sharing those everywhere. Um like I posted one the other day and within minutes I had dozens of people responding like with their own and sharing stuff people I didn't even know.

I think the interesting thing though is like so far the the social behavior that has come from like the AI creative tools largely but also things like chat is

still happening on the existing social platforms and not in the new AI platforms. Like Facebook now is like a lot of AI content potentially unbeknownst to some with audience.

Facebook is like the boo AI slop and then like Reddit and reals are like the younger people AI content. Yeah. No, I I agree. I think it's been a puzzle to me

agree. I think it's been a puzzle to me what the first AI social network is going to look like because we've seen attempts at, for example, like a feed of pictures of you that are AI generated.

And I think the problem there is that to work a social network has to have like real emotional stakes. And if you can generate the content in a way that you like it and you always look amazing and you always look happy and you're always

in a cool background, like it doesn't have the same sense of stakes. Um, and

so I don't think we've seen the version of what a groundup AI social network would be. You use the words cumorphic. A

would be. You use the words cumorphic. A

lot of the AI social products that mimics Instagram feed or Twitter feed was bots and AI. Is that that feels cumoric? Like that feels like this is

cumoric? Like that feels like this is what it used to look like. We're going

to do it but with AI and maybe that's not really the form factor. And you know there's additional hurdle in my mind that a true consumer product probably

needs to leave it mobile and for AI products to work really really well. I

think there's still a little bit of work where the cutting edge models can do to live on edge live on the device side of things to really enable that. So I'm

also excited to see what happens there.

It see it seems like people recommendation is the is the obvious use case at some point like who would be good for me to start a business with who would be good for me to be friends with?

who would be good for me to date we have you know these platforms get all this information about us you know I mean I think an interesting area that's you know maybe inform like where this all

goes is if you look at the um AI native LinkedIn efforts a lot of like the observation is that LinkedIn is a pointer to what you know instead of actually containing what you know and with this tech we can create a profile

that actually contains what you know so I can talk to synthetic you know ET and get all of your wisdom perhaps that's what future social looks like as well.

That's what you're talking about Justine, right? If the models already

Justine, right? If the models already know who you are, then is there like a synthetic you you can deploy in an interesting way to interact with people?

I don't know. Yeah. One one thing I heard you guys say is that you wouldn't surprise that you guys as sort of realized was that enterprises are sometimes adopting these these products first before consumers which feels

different from from previous era or maybe not what we expected. What can we say there? Yeah, that has been

say there? Yeah, that has been fascinating and BK and I saw that a lot with 11 Labs which um we uh were relatively early. I think we invested we

relatively early. I think we invested we did the series A like a month or so after the initial launch and I think what we saw was first the um early adopter consumers got on board and they

were making memes they were making fun video and audio. They were cloning their own voices. They were doing game mods.

own voices. They were doing game mods.

Um but then I would argue it hasn't even gone in many cases to the true mainstream consumer. Like it's not yet

mainstream consumer. Like it's not yet like every single person in America or most have 11 Labs on their phone or have a subscription, but the company has these massive enterprise contracts and a

ton of huge customers across like conversational AI, entertainment, tons of different use cases are are using 11.

And I think we've seen this across a bunch of AI products, which is like there's an initial consumer virality moment and then that actually leads to lead generation in enterprise sales in a

way that we did not see with the last generation of products. like enterprise

buyers, there's so much of a mandate to have AI now, an AI strategy and use AI tools that they're watching places like Twitter and Reddit and all of the AI newsletters and they're saying like

"Hey, this is some random looks like a random consumer meme product, but I can actually think of a really cool application of that in my business and like become the hero for having our AI

strategy." I've also heard of like

strategy." I've also heard of like similar to that on that vein really exciting use cases of AI where you know you you start with consumer virality.

So, you know, from a company side, you get all these Stripe, you know, payment um data. You look at all the Stripe

um data. You look at all the Stripe cells and you basically put it in an AI tool to go try to find where they work.

And then when you find out X more than X number of people working in that company, you reach out and say, "Hey, by the way, looks like 40 people, 40 plus people are using our product. What's

up?" Just you you rattled off a list of products and companies in the beginning of this this conversation. What I'm

curious is do do you think just as examples are they sort of the MySpace or Fster? Are we in sort of that era or are

Fster? Are we in sort of that era or are they you know the list of companies I I rattled off that are still relevant you know 20 years later like where are we right now? I mean I think our hope

right now? I mean I think our hope always is that every big consumer AI company now that we see and love and use all of the products which which we all do sticks around. I think unfortunately

that's not always going to be the case.

Um, I think maybe the interesting differentiation in AI versus the last era of consumer products or even two eras before is like the model layer and the capabilities are still improving.

Like we have really not even I think in many cases scratched the surface of what these models can do. I think we've seen that in things like the the V3 launch where it's like you can suddenly have multiple characters talking, you can

have native audio, you can do all of these things like all of these modalities. Um, I don't know, maybe we

modalities. Um, I don't know, maybe we could argue about this with the tech people. The LLMs are more mature, but

people. The LLMs are more mature, but have the opportunity to just keep improving capabilities as they scale.

And I think what we've seen is like as long as a company stays at what we say is sort of like the technology or the quality frontier. So, as as long as they

quality frontier. So, as as long as they sort of have a state-of-the-art model or are integrating one or or something like that, um they won't become like the MySpace or Fster or whatever, like they

just keep you fall a little bit behind.

You ship the new update, suddenly you're number one again and you keep moving.

The interesting thing now though too is um we're starting to see even segmentation in that. So, like in image for example, there's not just one best image model. There's like best image for

image model. There's like best image for designers, there's best image for photographers, there's best image for people who can only pay $10 a month versus the people who can pay $50 or

$100 a month. Um, and so I think there can be just because like Anish mentioned, people are spending so much there can be multiple winners that persist over time as long as they keep shipping. I absolutely agree. I mean

shipping. I absolutely agree. I mean

even in video, it's like different video, but ad video and then even in ad video, I saw a post yesterday. I'm like

this is best for uh you know product shots and this is what best for pe was with people and it it goes on and on and on and each of those do I think is a very large market. Yeah. Say more about how we I know we talk a lot about

defensibility and moes and how that has changed in this era how how we've changed how we consider that that that topic. I've I've gone through a little

topic. I've I've gone through a little bit of a come to Jesus moment on that uh especially recently. I think moes always

especially recently. I think moes always been very important right the gold standard this network effect um you know being part of the workflow being system of record and these are all very very important moes and I will posit that

that's still very important but funny enough like I would say the companies or investments that I've reviewed with this moat first um theory has not really been

the winners and the winners in the category that that we look at has always been the ones that break the mold move really fast, have these incredible model launches, have these incredible product

generation speeds. And I've sort of come

generation speeds. And I've sort of come around that in that in we're living in this early era of AI where velocity is

the mode. And whether that's, you know

the mode. And whether that's, you know in distribution, which is incredibly important and hard to break through noises these these days, but also followed with product velocity, that's

what wins the game because that what leads to mind share. And frankly, right now mind sharing users and traffic that actually converts to real revenue that gives you

more ability to continue that journey.

Yeah, it's interesting. Ben Thompson, I think a decade ago at this point had this blog post called Snapchat's gingerbread strategy where he was basically saying, "Hey, anything Snap

can do, Facebook can do better, but Snap is just going to keep sort of coming up with the next sort of innovation, and if they can just keep doing that, maybe that's their moat." and he called it the gingerbread uh you know strategy. I

think distribution and network effect ultimately kicks in, right? Um and Snap has that too on its own where it sort of has a corner of like Gen Z and the younger users as like a core messaging

platform. How do we think about network

platform. How do we think about network effects with these new products? We're

not there yet where you know I think it's because it's mostly creation efforts right now. There isn't really a closed linked closed loop with creation consumption, network effect, social

network. So I think we're still a little

network. So I think we're still a little early before, you know, a network effect kicks in, but I think we see that in we see a different type of mode form in the likes of a level like I said like

because it moves so fast because the product is very good. It gets to go into enterprise and it gets to get locked in into the workflow. So I think that version of mode we're starting to see I think the true network effect we're

still you know looking out for. I think

11 is an interesting example. I was

making a an AI generated video the other day that I needed a voice over for and 11 now because they had a head start.

They had the best models which then, you know, more people were using the product. They can make the models

product. They can make the models better. All of these compounding

better. All of these compounding advantages, they now have a library of people who have uploaded their own voices and their own characters. And so

for me, when I was looking across a bunch of voice providers, if I needed like a very specific like old wizard mystical voice, like 11 had, you know 25 options for that that fit what I need

where another platform might have, I don't know, two or three. And so I do think it's early. That's interesting.

Um, but we're starting to see to see signs of that. But they're more like traditional network effects that we saw with old marketplaces. They're not

necessarily something like completely new. I I want to go deeper in on on

new. I I want to go deeper in on on voice as we talk about sort of new paradigms and and and form factors. We

we got excited about voice pretty pretty early on or were the first frame that I that I saw sort of you know have uh sort of you know sort of a thesis around it.

Anish, why don't you talk about what what got you so excited about voice in this new paradigm and and what sort of what sort of played out and and what hasn't yet and and where do you think it's going? The original observation

it's going? The original observation that got us started was that voice has intermediated human interaction since the beginning of time and yet it's been you not a not a substrate on which technology has been applied because we

just the tech never worked. You know

there's all these previous efforts voice XML and voice apps and it it just it simply didn't work. The technology

wasn't ready yet. And even then there was these pockets of you know Dragon Naturally Speaking and all these products from the '90s. So there was always interest in voice but it it never made sense as a technology substrate.

And now with the generative models, you can just use voice as a primitive. So

it's sort of unexplored yet so critical to our day-to-day lives. It feels like a

day-to-day lives. It feels like a perfect area where you'll see a lot of AI native efforts.

I think we first got excited about voice from more of a consumer perspective like the idea of an always on like coach or therapist or companion in your pocket that you can talk to and that has started to play out. I would say there's

lots of products where that's working. I

think what surprised me at least is as the models got better, like real enterprises have picked up voice so quickly um to replace human beings on the phone or to augment what human

beings are doing on the phone, even in really kind of sensitive and critical categories like financial services cuz previously they were using offshore call centers that also had lots of compliance

issues and had 300% annual turnover and were really difficult to manage. Um, and

so I think we're still waiting to see in many ways what the what the first great truly net new consumer voice experience will look like. There's some early

examples. I think people are pulling

examples. I think people are pulling chat GBT advanced voice mode into fascinating directions. We've seen

fascinating directions. We've seen products like Granola blow up because they allow people to finally for the first time do something valuable with all of the things that they're saying all day. Um, but the great thing about

all day. Um, but the great thing about consumer is it's completely unpredictable and the best products emerge like out of nowhere. Otherwise

they've already been built yet. They

would have been built already. So, I'm

excited to see what happens in consumer voice in the next year. For sure. I

mean, it feels like voice is the AI insertion point for the enterprise period. And I think the thing that

period. And I think the thing that everybody is missing right now is that the sort of mental model many folks have is that the low stakes conversations will be AI voice, you know, the customer support, etc. But what we've talked

about is like the most important conversation that happens in a business in a given day, week, year is going to be intermediated by AI because AI will just do a better job with the negotiation or the sales pitch or the

persuasion or the friendship.

What's going to be sort of the first use case where people are going to be talking to synthetic versions of of ourselves like in in a sort of consistent relevant way? Like why are they going to be talking to sort of AI

Justine or or AI Anish or AI me? I mean

we've seen a little bit of that with there's companies like Deli that sort of create AI clones of people who have like a big knowledge base that they can go and reference and you can like get advice or get feedback or things like

that. Um, I think Bri and Brian sort of

that. Um, I think Bri and Brian sort of alluded to this earlier. There's this

really interesting question of like what if you allow not just like thought leaders or experts to have this AI clone that you can talk to via text, voice maybe even video one day, but what if

you unlock that for everybody? Um I

think like one of the things we think a lot about in consumer is um there's a lot of people who basically have had some sort of skill or insight or knowledge whether it's you know your

friend from high school that's like insanely funny and you always thought they should have like a comedy cooking show but like they just never were able to to break through or get it or you know someone your your guidance

counselor who had incredible advice.

like how can we enable those people to essentially scale themselves in a way that they never could before having an an AI clone or an AI persona. Um I think

like what we've seen thus far is a lot of that has been either thought leaders or experts or on the other like total other end of the spectrum like characters that people already know and like. We saw early versions of that with

like. We saw early versions of that with character AI, which added a voice mode where like there's this pull, especially when you're trying out a new technology to have some sort of familiarity of like, I'm talking to this character from

my favorite anime series that I already know and love. But I think we'll start filling in everything in the middle that's not just like a character, a fictional character, not just like a human thought leader, but like all of

the real people in between. Yeah. I

mean, I think people learn in in different ways and like AI voice products play really well to that.

Masterclass launched kind of an interesting beta where they take people who have already recorded courses on the platform and turn them into voice agents where then you can ask questions that

are really specific to you. And from my understanding, it basically does rag on everything they've said in the course.

And so, you know, returns a fairly customized and accurate result. And that

for me is interesting because like I'm a fan of them as as a company, but I've never had the attention span or the time to sit down and watch like a 12-h hour master class, but I've had some really interesting conversations with the masterclass voice agents where I can

talk to them for two or three or five minutes. And so I think that's an

minutes. And so I think that's an example of where we'll see kind of real people turn into AI clones uh in ways that are useful.

It's also though like do you want to talk to a synthetic version of a person that you find interesting or is there a you know or is there an entirely synthetic person that doesn't exist in the real world that is a perfect match

for your interests and maybe that's a more interesting question. What does

that person look like? Cuz they might even exist in the world but if you don't meet them you don't meet them and now they can be you know sort of brought to life with this technology. Yeah, it's

interesting to think about what are the what are the set of use cases for which we're going to want to have a human or someone we we think is a human uh you know sort of doing the activity versus where are we going to be more open to

that like I think Olivia's point is you know with the masterclass thing there's already this parasocial relationship so there's you know there's value in feeling like you're talking to a specific instance of a person versus

talking to the abstract most interesting person you may ever meet where you don't need to have that pre-wired which maybe GPT Wasn't there like a viral tweet that someone recorded in a New York subway?

Like this person was fully talking to Chat GPT as if they were talking to a girlfriend. Yeah. And there was another

girlfriend. Yeah. And there was another one where the other day where um this parent posted they had lived through 45 minutes of their son asking questions about Thomas the Tank Engine and they

couldn't do it anymore. So they gave him the phone. They put voice mode up and

the phone. They put voice mode up and and forgot about it and went to do something else and came back two hours later and the kid was still talking to Chachi BT about Thomas the Tank Engine.

Uh, and it's like in that case like the kid has no idea who the character on the other end is. They just know it's a person who wants to go super deep on their interests. Yeah, I can see I mean

their interests. Yeah, I can see I mean if we go to chat GBT or Claude right now for therapy or coaching I could see another I'd prefer to go to my sort of AI clone you know therapist or coach and maybe in the future we record our

session so that they have the data or or the therapist or coach has like so much content online that we could just re recreate them but um but yeah and to your question to your point of like in

in five 10 years from now will the top artists be sort of new versions of Lil Michaela I sort of AI generated people or will they be sort of Taylor Swift and

her just arm for me of AI uh you know or a duet. Yeah. Um a little bit of both.

a duet. Yeah. Um a little bit of both.

And similarly on Twitter this the social characters that that we follow the next Kim Kardashian is that you know a real person or is that AI generated? Do do

you have a hypo hypothesis on that? I

have been thinking about this a lot for a couple years cuz I think we all followed Lil Michaela closely. Then we

followed some of the like K-pop bands that I think were the first to start introducing like AI hologram based type characters. This is sort of tied really

characters. This is sort of tied really closely into photorealistic image and video because we're now seeing people create these like influencers who get a ton of attention and followers largely

because they now look realistic enough that you don't know if they're AI or not. And there's a lot of debate around

not. And there's a lot of debate around that. I I my take is probably there will

that. I I my take is probably there will be fragmentation into like two types of creators or celebrities. One type is like a a Taylor Swift type where like the human experience of it I think

matters in some ways. like a lot of people not only love her song but like resonate with the things that have happened to her in her life and her her stories and her live performances and like all of those things that AI cannot

yet replicate. There's another type of

yet replicate. There's another type of celebrity or creator who is more like interest based sort of like what we were talking about with chatb talking about like Thomas the Tank Engine. It sort of doesn't matter if that person has like

lived the real human experience or not.

It just matters if like they can be interesting talking about or sharing content around a certain topic. Um, and

so if I had to guess it, we'll still have both. Yeah. This kind of gets back

have both. Yeah. This kind of gets back to the great like AI art debate that always rages on, which is like, yes anyone can generate art now, easier than ever before, but it still takes an

enormous amount of time to make great AI art. Like we hosted an event with a

art. Like we hosted an event with a bunch of AI artists last summer, and many of these people when they walked you through their workflow of making an AI movie, it actually probably takes just as much time as it would have to

kind of film that. but but maybe they didn't have the skill set so they'd never be able to do that before. And so

I think we've seen yes an explosion of like influencers that are AI but still very few of them have like risen to the top and become the little Michaelas.

There's only been a couple. So I think we're going to see something similar happen where we're going to have pools of AI talent and pools of human talent and the very best of each is going to rise to the top and it's going to be a really low conversion rate on both which

is probably how it should be. or

non-human talent. Like I think what like AI unlocks, one of the interesting things we've seen in V3 is like street interview, that street interview format but like the person being interviewed is

like an elf or like a wizard or like a ghost or like you know these furry blob characters that Jenz loves talking to.

Like those could all be AI. Like that

sort of thing is very interesting. I

mean I think we see this in music too. I

think a lot of music the the problem is that the music that the AI generates is it just feels very mid, you know, and definitionally these things are averaging machines and culture is

supposed to be at the edge. So I think it's more of a problem with bad art versus bad artists and we're, you know we're conflating those two things and saying it's AI. It's not the AI that's

the problem, it's the bad art that's the problem. So if the art was at the same

problem. So if the art was at the same level, you don't think that there's necessarily any um that people would just want to hear from humans? 100%.

Well, potentially. And then I also think this is where we start to get a more philosophical debate, which is if you trained, you know, a model with all the music, you know, up until but just prior to hip-hop, would it like infer hip-hop?

I don't think so. Because music is the intersection of past music and culture and culture is critical to it. So you

sort of need something that is at the edge and outside of the training data to create new interesting music and you know that sort of definitely doesn't exist in the models. Fascinating. So some of my

models. Fascinating. So some of my closest friends who are some of the most talented people I know are working on a gay AI companion app which the 2015 version of myself would upon hearing that statement would have been like

what? Um that's a thing but one of the

what? Um that's a thing but one of the things they were saying is that on our list 11 of the top 50 apps were were companion apps. So let's reflect on like

companion apps. So let's reflect on like are we just at the beginning of of that trend? Is there going to be all these

trend? Is there going to be all these different vertical companion app? Like

what is sort of the the future of of this? How do we think about that? Yeah

this? How do we think about that? Yeah

we've spent an enormous amount of time in in like every facet of companionship from the like therapy, coaching, friends all the way to the like not safe for work, AI girlfriends. Like we we've

looked at basically everything. And

interestingly, I think like it was probably the first mainstream use case of LLMs. Um, we like to joke that like literally any chatbot, whether it's like your car dealers, customer support or or

whatever, people will try to turn into their therapist or their girlfriend.

Like you talk to these companies and you look at the logs of the chats and it's like a ton of people just want someone or something to talk to. And the fact that you can now have a computer be talking back in a way that's like

immediate, always available, and feels human is just like a massive unlock for so many people who could never get that before or felt like they were just yelling or talking into the into the

void. Um, I would argue we're just at

void. Um, I would argue we're just at the beginning, especially because the products today or the products that have existed were largely very horizontal and

came from or were exclusively from the base model providers. like people were using chatbt for all of these things it wasn't designed for. We've already seen a bunch of cases where like you know an

individual company can create a personality for a character and embody it in some like digital avatar and prompt it and create a game or a world around it uh that gets a ton of

engagement. Companies like Tolen that

engagement. Companies like Tolen that are doing this for for teenagers and college kids. Whereas a totally

college kids. Whereas a totally different company, which I would also call a companion, is like allowing you to take a photo every time you eat something. It pulls out and analyzes all

something. It pulls out and analyzes all of the data. Um, and then it gives you all this information about how you're doing nutrition-wise and allows you to to talk to it and get emotional support

because for a lot of people like food and eating issues are tied into kind of emotional emotional issues or things they would traditionally go to therapy about. Um, and so I think it's what's

about. Um, and so I think it's what's really exciting to us is like the definition of what a companion is has evolved so quickly from like either a friend or a girlfriend to like anything

any sort of advice or wisdom or entertainment or counsel you could have gotten from a human before. Um, and

we're going to see even more vertical companions moving forward. One thing I thought about is um you know having worked at a social company there is a very clear trend of average number of

friends that you can talk to over time going down. I think the youngest

going down. I think the youngest generation something above one. So I think the need for companion

one. So I think the need for companion as a use case will absolutely be there.

It'll be an enduring use case. It'll be

something critical for actually a lot of people. So I think I'm very excited

people. So I think I'm very excited about the companion use case and as Christine said I think it branches out into different things but the need for having a close connection to talk to

will endure and and perhaps you know we talked about how maybe connection is a missing area white space but maybe this is filling that in right like as we as we say maybe you just need to feel connected to something it doesn't need

to be human a lot of people upon hearing this conversation of companions just think oh man people are going to have less friends people aren't going to you know, anymore and people are depression is going to go up. Uh

suicide is going to go up. Fertility

you know, going to continue to go go down. I don't think so. This reminds me

down. I don't think so. This reminds me of my favorite post of all time on the character AI subreddit, which I've spent an immense amount of time on, which is okay. And to set the scene, so there's

okay. And to set the scene, so there's all of these like high school or college kids who had their formative years during COVID, and they weren't really in person with other kids or teenagers or learning how to talk to people. And I

think it really ended up impacting a lot of them. And one of those kids, I think

of them. And one of those kids, I think he's in college now, had been posting on the Character AI subreddit about his AI girlfriend for a while. And then one day he posted that he found a 3D GF, so a

real life girlfriend, and that he wouldn't be returning to the subreddit for a while. And he actually credited character for teaching him how to talk to other people, especially teaching him how to talk to girls, like how to flirt

how to ask people questions, how to engage with them about their interests.

And I think that like in some ways that's sort of like the peak value of AI is like enabling better human connection and just less weird. Yeah.

Were people happy for him or did they call him a traitor? People were

extremely happy. I mean there were a few I think jealous souls in there who had not found their 3D GF yet. But I have hope for them. I think that's real though because I we've even seen studies

like um I think of the replica product where like uh actual studies were showing depression and anxiety and kind of suicidal ideiation were going down in users. I do think there's this trend of

users. I do think there's this trend of like a lot of people don't feel understood and don't feel safe. And so

then it's hard for them to be in the real world doing real things. And so if AI can help them and and maybe they don't have the money or the time to go to therapy and and make all of these changes in their lives and so if AI can

do that for them, they can emerge kind of a transformed person that's then more able to do things in the 3D world as that character. You're talking to techno

that character. You're talking to techno optimists here.

The the thing that really got me sort of aware of how big these companion apps are were were when we did the first interview with the founder of Replica is amazing. Um after they turned off she

amazing. Um after they turned off she turned off the NFW stuff and the subreddit for Replica and the comments in our video were basically a lot of people being like, "Hey, this is like my

wife when we stopped having sex, you know, like like I already have this this sort of neuter."

And like so many people were just like my life is like and I'm like oh my god I didn't realize how big of a role this app was playing in people's lives that is bringing out an activity that people

have done for a long time like people have had these like internet chat room discord relationships like the the use the zoomers are or have like discord girlfriends and boyfriends. Um, in our

day there was like this anonymous postcard website where you would go and send anonymous postcards back and forth and develop these like really deep relationships with like people you would never meet or you didn't know who they

were if they were pretending if they were the person they were pretending to be. And I think AI just makes that like

be. And I think AI just makes that like a deeper more engaging experience. Well

so this is where I think an important point though is that the AI not be too agreeable because people in real life I mean there's a give and a take to human relationship and like highly agreeable AI does not set you up well set you up

well for that. So I think there's sort of a a fine balance between being just agreeable enough to help you like engage and get better at this versus being so agreeable that you're actually worse at

this. I I want to close with what's uh

this. I I want to close with what's uh what's possible going forward. So, so

maybe let's speculate on new platforms or form factors that could be gamechanging. OpenAI just acquired

gamechanging. OpenAI just acquired Johnny Johnny Ives company. Um, you

know, Brian, I've heard you talk a bit about glasses and why you're still excited about that that form factor.

Maybe we could start there, but I want to hear from the group on what they could imagine as uh something that's additive or even disrupting some of the mo use cases. There are 7 billion of of

mobile phones out there. there aren't

that many devices at all that actually uh gets to that level. So my thought process is either it will live in mobile and for that there's many different ways

to think about the future where there's a privacy wall around it or is a local uh local LLM or local model that helps you sort of really contain all the things that you want to contain in in

your device level. So I think I'm still very much excited about the model development layer to get to that and I think that's what I'm actually most excited about. And then you know if you

excited about. And then you know if you think about always oness as Olivia you said like mobile we have always on but there are other things we also have always on and what does that look like

when there are net new devices or what have you or appendages if you will that like actually attach to things that you always have that actually can enable that. Any speculation from you guys? Is

that. Any speculation from you guys? Is

there a piece of hardware or or something that we're going to be wearing or carrying around or using that's either attached to the phone or separate from the phone that could enable us? I

think AI has scaled for consumers tremendously well given it's mostly been textbox in, you know, some some output in a web browser out. And so I love the idea of AI kind of actually being with

you and seeing what you see. It's funny

now when I go to tech parties like a lot of the under 20s are wearing pins that record what they're saying and doing and they find like real value from them.

That's one example. We've seen a new wave of products that can see what's happening on your screen and take action for you, help you um coach you, other

things like that that I also find really really exciting. Um, and I think as also

really exciting. Um, and I think as also the agentic models get even better, it goes beyond just like suggestions to actually doing work for you, sending

emails for you. Um, which is very exciting for me. I think I think yeah the human insight layer of that is big too. Like often we have no way of

too. Like often we have no way of measuring ourselves compared to other people or sort of where we exist in the world. So, if an AI can hear all of your

world. So, if an AI can hear all of your conversations and see everything you're doing online and say, "Hey, look, like if you spend five more hours a week doing this, you would actually be a world expert in this topic and like based on this vast network of other

people I'm serving, like you should connect with these three other people and like this person could be an amazing co-founder. You should like date this

co-founder. You should like date this person." Like that sort of thing. That

person." Like that sort of thing. That

to me is the ultimate Yes. like sci-fi

vision of which comes from AI being with you all the time and something that's not just like a chatbt text box.

Totally. I mean, the the device that has been most widely adopted post phone is the AirPods. So, that feels like the

the AirPods. So, that feels like the thing that's hiding in plain sight. And

there's a whole bunch of like social protocol questions around it cuz it's weird to have your AirPods in at dinner.

No one does that, right? But there may be a way that you can integrate AI and also fit the current social protocols around AirPods. It would be interesting.

around AirPods. It would be interesting.

Yeah. You you said something that we glossed over, but young people at parties are recording their convers like Yes. in the future is everything is

Yes. in the future is everything is everything going to be recorded like you think that generation is already growing up with that norm to some degree or yeah I think there'll be new social norms developed around this behavior because I

think it's like real and it's valuable and so it's like scary I think for a lot of people that this is happening but I think it's a wave that started and is not going to stop and I think the context matters too like I think a lot

of what you're talking about is like the SF networking parties where like work and personal stuff like really blurs we we talked about this you could do that in SF do that did that party and brought

a pin in New York canled. Yeah. But I

think that's why there'll be like a new set of cultural norms like when the cell phone was introduced like there's places where it's rude to take a loud call like this the same set of things will emerge around these recording devices. Yeah.

Well, it's let's end on the on this idea that we're that we're very early. Uh

guys, this has been a great great conversation. Thanks so much for coming

conversation. Thanks so much for coming on.

[Music] Super. down.

Super. down.

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