EVERY SPOKEN WORD
50 min read · 10,017 words- 0:00 – 0:56
Intro
- EBElena Burger
The most interesting big new trend is in personal agents
- JEJosh Elman
We're in this world where we're so excited by what ChatGPT did with turning things into conversation, and now these agents we can get in our messaging apps that turn them into more conversation. There's this incredible paradigm
- OMOlivia Moore
About half of Americans report using AI. Around 4.5% of US consumers are paying a subscription to an AI product. The top 1% user is spending $903 per month personally on their personal credit cards on AI.
- JEJosh Elman
The reality is people are now building software. They're building these really rich products. They might be using their agents to write some of that code, but when they're delivering this whole experience to a user, it is much more than just a shim on the model.
- EBElena Burger
Run rate that OpenAI has reached through advertising, what does that tell us?
- OMOlivia Moore
That would previously take a company years and years and years to get to, even after launching an ads product. What I'm fascinated to see in terms of the evolution of the ads product is
- 0:56 – 5:55
Inside the 7th edition
- EBElena Burger
Welcome to the a16z podcast. I'm Elena Burger, and I'm joined by Olivia Moore, who's the author of our ongoing Top 100 Consumer AI Apps report, and Josh Elman on our consumer team. Today, we're digging into the seventh edition of this report, who's paying for AI, why the big assistants are heading in different directions, and whether personal agents can turn everyday errands into the next big consumer business. Team, thanks so much for joining. Um
- JEJosh Elman
Thanks so much for having us.
- EBElena Burger
Olivia, let's just get right into it. I would love to hear, uh, your top takeaways from this report.
- OMOlivia Moore
Yeah. So this is the seventh time we've done this list. The very first time, we only ranked all global websites that were AI native by just traffic, like hits on the website. Uh, and that worked then because the way that almost everyone was using AI was, like, a prompt box product in a browser. We've had to evolve that a lot over the last few years as AI expands, so this list is our most expansive yet. Um, we added revenue data for the first time, so we worked with the Abitdata to get specifically consumer card spend data, so not accounting for enterprises or SMBs, uh, and we ranked products by what consumers are actually paying for. I think for me, the biggest takeaways from this report is on a traffic basis, it looks like a lot of these products are kind of settling. Um, we only had 11 new products across the web and mobile list combined, which is the least we've had in every, uh, in any of the prior editions of this series. But the spend data really introduced a lot of new variables because-
- EBElena Burger
Hmm
- OMOlivia Moore
... of those 50 that ranked for spend, 29 of them were not on either traffic list.
- EBElena Burger
Hmm.
- OMOlivia Moore
Um, and that also, I think, kind of works towards or connects into the other big conclusion of the report, which is just how much of a power user game consumer AI is right now.
- EBElena Burger
Yeah. Yeah. That's something that's funny. We, we also recently released our State of Markets, and something that Sarah Wang actually commented directly on, um, is she, she said, "Hey, there, there's such a power law game happening now. It's happening at the enterprise level, and it's happening at the consumer level." Um, so, uh, one thing that's probably notable is, yeah, we have the fewest number of newcomers on this list, and it seems like the space is ossifying. But I think the past few months, things have actually been picking up a little bit more, and I think, I think the most interesting big new trend is in personal agents. Um, so what are you seeing? What are the big shifts that are happening?
- OMOlivia Moore
Yeah. It's funny, the last report that we did, um, it ended right before the cutoff of when OpenClaw traffic would come in. So we had done kind of like a retro before we published the report, and we had found that it would have been very high up in the rankings. Um, and this time, actually, OpenClaw is nowhere in the rankings because-
- EBElena Burger
Hmm
- OMOlivia Moore
... the traffic has completely declined as... I'm-- I think that the team was acquired by OpenAI, so they're probably working on, you know, the agent assistant products there. But also, it's kind of been overtaken, I think, by some of the both other attempts at prosumer agents like GrokBot, um, Town has some fantastic agents, Dots now by OpenAI, which is new. Um, but also on the consumer side, we're finally seeing things that I would feel comfortable giving to a family member and telling them-
- EBElena Burger
Mm-hmm
- OMOlivia Moore
... that they can safely use. Most of those also because, to your point, this consumer assistant trend has literally been the last three weeks to a month. A lot of those didn't appear, uh, on the ranks yet, but we did pull the data to see what's happening with them, and it's been, um, very, very fast growth and yet still not quite reaching the mainstream user is what I would say.
- JEJosh Elman
You know, I think we're in this really interesting era that did really change at the end of last year, beginning of this year with OpenClaw, that AI went from something that we were using as a tool to enhance our productivity, to maybe search for us faster, something that would actually get things done for us. And I think OpenClaw was an incredible pioneer to do this, and I know they're still doing a lot of work through their open source-
- EBElena Burger
Yeah
- JEJosh Elman
... foundation to continue to advance that. But it really turned a lot of heads on, "Wait, what can these products actually be?" And we were seeing people buying Mac Minis. We were seeing people-
- EBElena Burger
Heck
- JEJosh Elman
... to like run all their own data with their own local OpenClaw, and there was a huge run on that. But it was really inspiring to kind of feel this new energy of what is possible. And, you know, like most trends, you know, that spark happens. It takes a little while for those first products to get built. It takes a little while for the momentum to then start getting those even released in the market for users to see them. And so, you know, in some ways, though, this report is showing Like, that's what we're talking a lot about, you know, on our podcast in Silicon Valley. But this really does a great job representing what's happening in the broader world, and, and that, you know, I do think the truth is [chuckles] AI really is showing up everywhere. Even if there's not a lot of new entrants, all the entrants are all getting so much bigger.
- OMOlivia Moore
Yeah.
- EBElena Burger
Yeah.
- 5:55 – 9:14
Muse and Instinct's launch numbers
- OMOlivia Moore
I think probably the biggest things on... When we talk about pure consumer assistance, uh, the biggest developments have been Muse and Instinct, I would say. Although there's many other fantastic products that we kinda list in the report that have also... You know, Poke was a very early pioneer here.
- JEJosh Elman
They were a pioneer of this, yeah.
- OMOlivia Moore
Exactly. Tomo is-- it has a very big audience and is doing incredibly well.
- JEJosh Elman
Yeah.
- OMOlivia Moore
Um, Instinct had announced, like, 100,000 users growing 10% day over day. Uh, they'd announced, like, 40% of users connected a credit card in the first three weeks, and they were spending, you know, over $1,000 on average in their first month. Um, Muse is interesting because, uh, in many ways, very successful launch, especially within the tech community. I think the number was, like, 500,000 downloads and 250,000-
- JEJosh Elman
Yeah
- OMOlivia Moore
... active users in the first 12 days or so. But if you look at it versus Threads [chuckles]
- EBElena Burger
[chuckles]
- OMOlivia Moore
... which was another, you know, somewhat recent big, splashy Meta launch, um, it just p- it still pales in comparison-
- EBElena Burger
Mm
- OMOlivia Moore
... uh, in terms of appeal to the average person who doesn't work in tech. Yeah, so if you look at the, the downloads, um, Muse is still only US and Canada, so we grabbed the Threads US and Canada downloads only.
- EBElena Burger
Mm-hmm.
- OMOlivia Moore
In the first 22 days or so, Threads had had about 16 million downloads, and Muse is still sitting around five million-
- EBElena Burger
Interesting
- OMOlivia Moore
... over that same time period.
- EBElena Burger
Is the distribution mechanism different? Like, I remember with Threads, y- it was already tied to your Instagram account-
- OMOlivia Moore
Yes
- EBElena Burger
... and there was kind of this, like, very natural distribution. Is... Are they trying a similar strategy with Muse, or is it just a different distribution strategy too?
- OMOlivia Moore
I mean, from... I'd be curious what Josh thinks. But from my point of view, it's not as aggressive, for sure. Uh, and also part of that is because there's a much higher cost to serve these users-
- EBElena Burger
Yeah. Yeah
- OMOlivia Moore
... so they don't want it to get too big too fast.
- JEJosh Elman
Well, and, and I also think Threads very much had a critical mass effect, which is if they didn't get a lot of people on it communicating quickly, you don't actually get to that leverage of a new network starting to form.
- EBElena Burger
Yeah.
- JEJosh Elman
'Cause Muse is still such a personal tool that, you know, they're pushing it and they're-- it's very exciting to kinda even see this early just adoption and people having these experiences. And again, if you were using OpenClown in January, you were having incredible experiences-
- OMOlivia Moore
Yeah
- JEJosh Elman
... of using Grok Bot when that first launched earlier this summer or spring, you were having these incredible experiences, and now we're seeing, as, you know, I think Olivia said, you know, our moms, our families, you know, people who don't just live on the tech what's-next-in-AI cycle. And I think that's what's really exciting about this consumer. I, I assume when we do this again next time, we're gonna see massive adoption.
- OMOlivia Moore
Yes.
- JEJosh Elman
But I think it hasn't needed to push as hard to have that early network effect. But then I also think about what's gonna make these things stick around for a long time, and it is gonna be things like network effects and marketplaces, and all the businesses you can interact with those agents.
- OMOlivia Moore
Yeah.
- JEJosh Elman
That's gonna be really transformative too.
- 9:14 – 14:39
The privacy wall for personal agents
- OMOlivia Moore
Exactly, yes.
- JEJosh Elman
Yeah.
- OMOlivia Moore
Um, I d- I still don't feel like any of the assistant products have unlocked person-to-person network effects.
- EBElena Burger
Mm-hmm. Yeah.
- OMOlivia Moore
And part of this for me is, like, this software knows us more intimately than any other product in the past, based on email, but also, like, I find myself telling extremely personal things to my AI. And so there's kind of this natural, um, tension between the more useful the product is to you as the consumer, the more it knows about you, and, like, then do you really wanna introduce that into other contexts with other people? It's the same thing as, like, many people have a separate ChatGPT work account and personal account, and no one has quite cracked that yet.
- EBElena Burger
Mm-hmm.
- JEJosh Elman
No, and I think, you know, as we talk about consumers and AI privacy, safety, security are becoming more and more important. I mean, there's obviously the overall trends of, you know, trust in AI and, and this kind of belief that AI is good for the world, that is in some ways, you know, affecting adoption and affecting some of the excitement around these products. But on a very personal level, if you don't trust the thing that you're giving it your most intimate access to your email or your life or your credit card, and it might do rogue things that you wouldn't expect or share things with other people you wouldn't expect, you know, that's gonna be the biggest impingement on these things really growing as, as massive consumer apps. So it's a... We're in a fascinating time where we're all learning these new norms, and these are norms that, like, as people, we're actually very good at it. We're very good at knowing what information we're comfortable sharing, what information if somebody gives it to us, what information that we're trusted to be able to pass on to somebody or should be protecting and keeping ourselves, and we're just, like, all of a sudden expecting software to do this too? It's a, it's a very, you know, interesting new set of things we're learning.
- EBElena Burger
Yeah. Well, you, th- you both just brought up, like, two interesting sort of facets of this. One is, like, there's this endogenous force, which is all of the platforms and how they allow agents to interact with them, and then there's more, like, this exogenous force of, like, how, how comfortable am I using this and, and how... And maybe I mixed up endogenous and exogenous. [chuckles]
- OMOlivia Moore
[chuckles]
- EBElena Burger
One is on the outside and one is on the inside.
- OMOlivia Moore
We knew what you meant. Yeah.
- EBElena Burger
One is, one is what the platforms are doing, and one is how you feel about it.
- OMOlivia Moore
Yeah. Yeah.
- EBElena Burger
Or how you feel about the agent.
- OMOlivia Moore
Yeah.
- EBElena Burger
And I, I'm curious, which, which do you think, um, is going to get resolved sooner and, and Whose, like, uh, whose onus is that? Like, whose, whose responsibility-
- OMOlivia Moore
Yeah
- EBElena Burger
... is resolving those kinds of questions?
- OMOlivia Moore
I think what the platforms are capable of is improving faster than true consumer willingness to use them, um, which we've seen kind of throughout AI so far. It's interesting 'cause a lot of people are, like, seeing these numbers that founders of these assistant products are posting that it costs, like, hundreds or thousands of dollars a month to serve a user, and like, how is that possible? Um, and I was stumped as well, but I, uh, have been working with David Paulown, who runs Assistant Benchmark-
- EBElena Burger
Mm-hmm
- OMOlivia Moore
... who's fantastic. So he-
- JEJosh Elman
We did a recent podcast with him.
- OMOlivia Moore
Yes.
- EBElena Burger
Yeah.
- OMOlivia Moore
He's great.
- EBElena Burger
Great podcast.
- OMOlivia Moore
So basically what he's done is he's created a website where they track, I think, over 170 agents. I checked it last night, it's probably, like, 200-something this morning. Um, and they, he has users kind of use them and then rank them on success on different tasks. But the other really interesting thing that he does is he hosts kind of group chats and communities of early adopters of these agents, so he has a group of, I think it's 1,500-plus users. And he pulled some cool data for us, which is like, what are they doing with agents? What are they talking about doing with agents? And the vast majority, still the number one use case, was coding and technical automation, even for these consumer assistant products like-
- EBElena Burger
Interesting
- OMOlivia Moore
... like Muse and Instinct.
- EBElena Burger
Yeah.
- 14:39 – 20:20
4.5% pay, $903/month at the top
- OMOlivia Moore
Yeah. If you look at broad usage data now, about half of Americans report using AI, and about 25% of Americans think they're interacting with AI probably on close to a daily basis. Uh, but the spending data is much more concentrated.
- EBElena Burger
Mm-hmm.
- OMOlivia Moore
So it depends on the source. Um, our Yippit panel shows probably sub 5%, around 4.5% of US consumers are s- paying a subscription to an AI product. Some other sources say as low as 2 or 2.5 or maybe a little bit higher. It is expanding, so that's, like, doubled from a year ago. Um, but it, that spend is still extremely concentrated. [chuckles] So even within that top 4.5% of people who do spend, the top 10% of those are, like, more than half of the revenue, and the top 1% are 20% of the revenue, whereas the bottom 50% are, like, 16%, right?
- JEJosh Elman
Yeah.
- OMOlivia Moore
So, like, the top 10% of users are driving this market. This was the other interesting thing about revenue data is we were able to look at it kind of, like, on a almost person-by-person basis, what it looks like, who are these people who are spending on AI.
- EBElena Burger
Mm-hmm.
- OMOlivia Moore
The top 1% user is spending $903 per month personally on their personal credit cards on AI.
- JEJosh Elman
Wow.
- EBElena Burger
Wow.
- OMOlivia Moore
And the median is spending $25. And again, all of this is within the, only the 4.5% that are spending at all. Yippit also was helpful for us because we could see what products are they actually spending on-
- EBElena Burger
Mm-hmm
- OMOlivia Moore
... like on a, on, on a personal basis. And probably unsurprisingly, it was mostly developer tools, um, productivity tools, creative tools, things used to, like, build, make, sell.
- EBElena Burger
Mm-hmm.
- OMOlivia Moore
Um, things like n8n, Granola, Higgs Field, Manus, those all were way overrepresented amongst the top spenders.
- JEJosh Elman
I mean, in a way, this is actually really cool. I mean, even though these numbers aren't everybody yet, like, we're enabling this whole new generation of makers, of people who are, you know, not just using this for work, but actually using their personal credit cards to code things they, they never coded before-
- OMOlivia Moore
Yes
- JEJosh Elman
... to make art, make videos, make content, and, you know, really have this power of making. And so it's actually, in some ways, you know, while it's all still so early, it's actually really cool how much making is going on-
- OMOlivia Moore
Yes
- JEJosh Elman
... that people are actually so excited they're willing to spend. I mean, if you're spending $900 a month-
- OMOlivia Moore
Yeah
- JEJosh Elman
... on a set of AI tools, you're really using that to, like, hopefully make things faster, better, have more ideas in your head coming to life than ever before.
- OMOlivia Moore
Yeah.
- EBElena Burger
Yeah.
- JEJosh Elman
So that's kind of like when I, when I was looking at these categories between creativity and coding, like, you know, that's actually hopefully really, really powerful.
- OMOlivia Moore
Yeah.
- EBElena Burger
Yeah. Well, I th- I, I think this is a point that's really important, which is I think developers and coders are people who are naturally attuned to sort of ask, "How do I get leverage over this thing?"
- OMOlivia Moore
Yeah.
- EBElena Burger
"How do I build a product that allows me to get leverage over my time?" And AI obviously supercharges that. But it's, it is a specific kind of mindset, I think, and it's a specific kind of worldview, and I think, uh, th- part of, part of-
- OMOlivia Moore
My understanding of these numbers is it's still a worldview that gets reflected only among a small, smaller group of people, and the question might be just like how do you expand that worldview?
- JEJosh Elman
Yeah.
- 20:20 – 23:51
Why subscription is the wrong model
- JEJosh Elman
this list.
- OMOlivia Moore
Um, I actually don't necessarily wanna see that 4.5% of people paying for AI products directly expand.
- JEJosh Elman
Mm-hmm.
- OMOlivia Moore
Which is maybe controversial because I'm like invest in consumer AI products-
- JEJosh Elman
[chuckles] Okay
- OMOlivia Moore
... and I'm a consumer AI maximalist. But the reason I say that is because substantially all of the consumer AI revenue thus far has come from direct subscriptions.
- JEJosh Elman
Yeah.
- OMOlivia Moore
Um, like on this list, we looked and it was like, you know, 85% or something of our web list monetized via subscriptions. Another 62% monetized via kind of credits or token extra usage payments. Only like 13% had ads or other options where like you are the product instead of paying for the product. And that's like a... If you look back at the history of the consumer internet, that's like a pretty unnatural inversion. Like almost-
- JEJosh Elman
Yeah
- OMOlivia Moore
... all of the really big consumer technology companies that we have now make the vast majority of their revenue from ads-
- JEJosh Elman
Mm-hmm
- OMOlivia Moore
... or from transaction fees, not from subscriptions. Because I think the truth of it is most similar to the fact that not everyone is looking for a coding tool to help them-
- JEJosh Elman
Mm-hmm
- OMOlivia Moore
... you know, start a business or, or create and sell a product. Most people don't have the funds or don't want to spend their funds on software. If you look at the top 20 consumer, uh, subscription products globally, ChatGPT is already on there.
- JEJosh Elman
Mm-hmm.
- OMOlivia Moore
Which is crazy in like three and a half years of growth.
- JEJosh Elman
Yeah.
- OMOlivia Moore
Almost all the other ones are media companies-
- JEJosh Elman
Mm
- OMOlivia Moore
... or big platforms like Amazon or even Uber, things like that, uh, where you have a very frequent purchase behavior. So I actually am a big believer that we need to move... We have transcended the need for everyone to buy a subscription to AI, and we need to see these other business models come back.
- JEJosh Elman
You know, I think we're, we're still at the early days of inference costs coming down. We're still at the early days of people finding ways to run lower cost models to build great products. And as they do that, you know, a lot of the other business models that have always been on the internet from, you know, transaction fees and ads will finally start working. But we, we need that to happen, and that's, I think, where we're still... You know, there's so much learning and, and so, so much that like, "Well, if it's gonna cost me a lot to serve, at least let me just charge money so that people pay for it," became sort of an early default.
- OMOlivia Moore
Yes.
- JEJosh Elman
Yeah.
- OMOlivia Moore
I mean, you can probably speak to this from seeing many prior eras of the consumer internet, but like it used to be, at least for me as a consumer investor, if a company was making money in the first five years, it was like, "Whoa."
- JEJosh Elman
[chuckles]
- OMOlivia Moore
"What's happening?"
- JEJosh Elman
Yeah.
- OMOlivia Moore
The, the rule was like, let's build density of users, and because they cost near zero to serve, we can then wait and make money via ads or start charging for transactions once we have liquidity and density, and that just isn't the case given how high cogs are.
- JEJosh Elman
No, I think, I think this cost thing is a, is a really interesting challenge, and companies get afraid of growing too fast.
- OMOlivia Moore
Yeah.
- 23:51 – 29:21
OpenAI's $1B ad run rate
- JEJosh Elman
too.
- EBElena Burger
I think this is a, a great transition to talk about ads.
- OMOlivia Moore
Yeah.
- EBElena Burger
Your, uh, consumer, uh, top 100 report had a really, really interesting fact in there, which was the run rate that OpenAI has reached through advertising.
- OMOlivia Moore
Yeah.
- EBElena Burger
They're at a billion dollars now-
- OMOlivia Moore
Yeah
- EBElena Burger
... in, in annual run rate on-
- OMOlivia Moore
Yeah
- EBElena Burger
... on advertising, and what does that tell us, you know?
- OMOlivia Moore
Again, the number was from August, and so there's probably a chance that it's reasonably higher-
- EBElena Burger
Yeah
- OMOlivia Moore
... even a month or so later.
- EBElena Burger
Yeah.
- OMOlivia Moore
But they have been very slowly, I would say, rolling out ads, um, with kind of a network of partners. And they're already at, you know, a billion. [chuckles]
- EBElena Burger
Yeah.
- OMOlivia Moore
A billion in, in annualized run rate. Like, that would previously take a company years and years and years to get to, even after launching an ads product. I think there's two interesting things there. One, they have real density now. So I think the last reported number a few days ago was 1.2 billion weekly active users-
- JEJosh Elman
That's right
- OMOlivia Moore
... which is, like, a real density. And then the second thing, and what I'm fascinated to see in terms of the evolution of the ads product, is hypothetically, they should be able to charge more and have higher conversion rates because they just know so much more about you as the user. And ChatGPT has launched things like login with ChatGPT, I think a wallet is coming, things like that. And so you could imagine that, um, it becomes a, a much more compelling value prop for the advertisers, and then that just, like, juices the ad business even more. Uh, but we'll see. It's very early days there.
- JEJosh Elman
It's early days, and I think, you know, there have been some really funny conversations about ads and AI. If you are talking to this incredibly personal thing-
- OMOlivia Moore
Yeah
- JEJosh Elman
... and then it's like, "Let me tell you about health, and let me introduce you to this, like, crazy product that can help you-"
- OMOlivia Moore
[chuckles] Yeah.
- JEJosh Elman
"... you know, lose weight fast." Like, that's not building trust with AI.
- OMOlivia Moore
Yeah.
- JEJosh Elman
And so I think the other really interesting thing is, like, how do we as a ecosystem, these products are so different. They're so much more personal than ever before. They're giving you answers that are custom-tailored to what you're doing and what you're asking about and what it knows about you, that actually introducing ads has been done very deftly. I've actually been really impressed-
- OMOlivia Moore
Yeah
- JEJosh Elman
... with the OpenAI rollout of ads.
- OMOlivia Moore
Yeah.
- JEJosh Elman
When I've actually ever seen an ad, it's, it's very clearly labeled, and it actually feels like pa- uh, a natural add to the conversation that I'm having.
- 29:21 – 32:30
ChatGPT vs Claude vs Gemini
- EBElena Burger
Yeah. Is it, is it worth talking and taking a step back and talking about, uh, OpenAI Anthropic-
- OMOlivia Moore
Yeah
- EBElena Burger
... and Gemini and, and sort of these of, these are companies, these are labs that have been on the list pretty much since the beginning. Um, are we seeing any kind of evolution in, in the way people are paying for these products? Um, what can we surmise about the different kinds of users of all three? Uh, super, super curious what you're, what you're seeing.
- OMOlivia Moore
Yeah, absolutely. Um, from the very first time we did this report, the main conclusion was, like, ChatGPT is the dominant global user by both usage and revenue on the consumer side. That continues to be true. Everything below ChatGPT has seen, I think, more movements and more shakeups. So ChatGPT is now ahead of Claude, um, around 6X on the web, around 2X, uh, ahead of Gemini on the web. Probably going forward, given a lot of the usage is concentrated in these power users who are paying, um, the revenue numbers could be even more useful here. Um, and probably that's one of the biggest surprises to me in this report was we got a panel of US spenders, and Claude has actually passed Gemini in terms of number of paid subscribers, which is kind of crazy given Gemini has a much bigger install base and user base overall, and it also has, like, the natural distribution mechanism of something like a Google. I think that's a big, you know, accomplishment, of course, for Anthropic. I think it's come on the wave of a bunch of very successful products that they've launched over the last few months, like Claude Design. Uh, it's also come from a lot more press that they've had, starting with the Department of War stuff all the way back in, I think it was February. Um, the other main difference, I would say, in how these products are monetizing, and again, ChatGPT still far in the lead by monetization. They have around three times more paid consumer subscribers in the US than both Gemini and Claude. Um, but Anthropic has said very famously, "No ads."
- EBElena Burger
Mm. Mm-hmm.
- OMOlivia Moore
So they're much more aggressive about subscription. They have around 7.5% of subscribers on the $100-plus per month, like the-
- EBElena Burger
Oh, right
- OMOlivia Moore
... Max plan.
- EBElena Burger
The premium plan, yeah.
- OMOlivia Moore
And that's, like, 1% for both ChatGPT and Gemini, and so those users naturally look different and are doing different things on the product, even in that paid user base.
- EBElena Burger
Should we talk about creative tools? And-
- OMOlivia Moore
Yeah
- EBElena Burger
... um, I think one thing that's interesting is actually all of the big labs have gotten really good-
- OMOlivia Moore
Yes
- EBElena Burger
... at creative tools. And one thing that, that actually, like, Anthropic kind of famously abstained from but then somehow achieved anyway was, like, creating an image model or video model. But now people are making images and videos because coding is so good at creating-
- OMOlivia Moore
Yes
- EBElena Burger
... like, images and videos. Um, so it's interesting that, you know, they didn't build a diffusion model, yet they're still capable of doing, uh, image gen. But, but about the, the pure creative tools-
- OMOlivia Moore
Yeah
- EBElena Burger
... the, the companies that have kind of, like, verticalized in that category, what are we, what are we seeing?
- 32:30 – 45:12
Where creative tools still win
- OMOlivia Moore
Creative tools is very interestingly distributed in terms of who is succeeding where. So there's a few categories of creator tools, or maybe modalities is the better term, where the labs have not focused energy and attention for many reasons we could discuss. Uh, a lot of those around audio, so, like, text-to-speech, music. ElevenLabs and Suno are now very reliably near the top of our traffic lists and are also ranked very highly in our spend list. The labs have so many things to do. They're building coding agents. They're building AGI. Does it make sense at this point for them to deal with all of the IP headaches that Suno has had to go through and launch a competing music model? I don't know. And in the meantime, Suno has been able to kind of run away with a really strong lead.
- EBElena Burger
And, you know, I'm a big believer that, you know, the labs are gonna do what they're gonna do, and they're gonna keep growing, and they obviously are great baselines for everything. But in so many of these markets, you're seeing really specialized products that are really focused, knowing who their audience is and what they're doing, that's able to build really custom things. You know, if you wanna make music just for fun or for something that you're really producing, Suno is an incredible tool, and it speaks to you from the moment you start using it through the end. You know, ElevenLabs, if you need voice and audio within the product that you're making, it just has a way of working and, and interacting with it that feels completely different. When you look at a bunch of the video tools, um, you know, when you look at design tools, even like Figma, like, they're so designed to, to use deeply for the thing you're trying to express yourself, and it speaks to designers, not to people who, you know, wanna just skip that step. And I think we're gonna see so much more value from these really bespoke interfaces where the software layer of all the things you can do and the things you save and the way you interact with it become really where the value sits, not just the models.
- OMOlivia Moore
Yes. So this is the second category, I think, of creative tools, which is, um, images and video-
- EBElena Burger
Yeah
- OMOlivia Moore
... that looks different from audio. On images, I think to your point, like, OpenAI has really leaned into images quite successfully. Like, Images 2.0 is very, very good both for image creation and editing. And then, of course, Google with the various iterations of Nano, Banana, and Veo. I think they have candidly taken away a lot of the high-level consumer traffic that was previously going to these standalone image generators. Um, so, like, Midjourney was fairly high on our first-ever rankings.
- EBElena Burger
Mm.
- OMOlivia Moore
It has fallen off the traffic rankings completely. But to your point on power users, if you look at the revenue rankings, Midjourney is back. So people... The power users still want the model that they feel has taste, has an aesthetic sense, and that they're able to tune in a really specific way. Um, and then that brings us to video, which to me is kind of like a wild frontier right now because, uh, Chinese companies that can train on any data and do, uh, have a real advantage. Video is just so complex to generate with, like, the visual, the sound, the visual and the sound synced, and looking a specific way, uh, that I think, like, the more data you have to train, the better. They've been successful there thus far. Um- I think more broadly in creative tools, I'd be curious if either of you have experienced this, but I have recently been asking Astra and other really powerful models to generate or create, uh, generate or edit creative for me.
- EBElena Burger
Mm-hmm.
- OMOlivia Moore
And it does a very, very good job, and it will go tool call to elsewhere on the internet.
- EBElena Burger
Yep.
- OMOlivia Moore
And so I think that creative tools that are agent-friendly, uh, and agent-accessible are gonna increasingly see really compelling tailwinds.
- EBElena Burger
Yeah. Yeah. It's actually crazy what you can do if you just, like, empower an agent and just say-
- OMOlivia Moore
Yeah
- EBElena Burger
... like, yeah, install whatever you want to install.
- OMOlivia Moore
Yes.
- EBElena Burger
Um, I had it... I actually had, uh, Astra and 5.5 go, like, head-to-head in animating some stuff for me.
- OMOlivia Moore
Yeah.
- EBElena Burger
And, like, it, it was just like it knew exactly what to do. It's like, yeah. So-
- JEJosh Elman
And, and what I love about this is, you know, this is the tinkerers, the people at the edge are figuring out these capabilities, and we're gonna build products over the next-
- OMOlivia Moore
Yeah
- JEJosh Elman
... year that are gonna show up on these lists because they're gonna take all of this complexity of what you can do and package it up in a way that makes it really easy to use. And like, that's this-
- OMOlivia Moore
Yeah
- JEJosh Elman
... you know, when I think of this gap of, like, all AI versus consumer AI, it's exactly this, this movement of packaging these up and building great product experiences-
- EBElena Burger
Yeah
- JEJosh Elman
... that really turns it into, into these things that sustain.
- OMOlivia Moore
Yeah.
- EBElena Burger
Yeah. Yeah. And I guess it, it has to start with the tinkerers, and then they post on X.
- JEJosh Elman
[laughs]
- EBElena Burger
And then, you know, six months later, we get a real, like, product and startup out of it. Or like-
- JEJosh Elman
Yeah
- 45:12 – 49:33
The white space: dating, shopping, entertainment
- JEJosh Elman
piece.
- OMOlivia Moore
Yeah.
- EBElena Burger
Yeah. Um, Olivia, I think you referenced this, this chart that you made, but maybe we can bring it up, is all of the white space that still exists-
- OMOlivia Moore
Mm-hmm
- EBElena Burger
... for, you know, just all the product categories that exist in Web2 and the pre-AI age, and maybe you can just-
- OMOlivia Moore
Yeah
- EBElena Burger
... talk through some of these categories and, um, where are the big opportunities?
- OMOlivia Moore
Yeah. The vast majority of pure consumers are basically using AI still as a replacement for search products, things like Google. Um, maybe especially as you get into education use cases, kids are using it to write essays.
- JEJosh Elman
[chuckles]
- OMOlivia Moore
Little bit more of an expansive use case.
- EBElena Burger
Homework help, not-
- OMOlivia Moore
Homework help, exactly
- EBElena Burger
... not homework replacement.
- OMOlivia Moore
Yes. Or people in the workplace to write emails. But if you look at this, this chart, which will show almost all of the kind of areas where we've seen startups succeed thus far have been in and around that theme of getting things done, uh, so like productivity, photo and video design and editing, search and answers. Um, so many categories are wide open, uh, and many of those categories are, I would say, I would call them network categories, where you need a multiplayer product. Um, you know, dating is one. We haven't seen... We, there are certainly startups there that I hope and believe will make future editions of the list, but there's no one on the list doing dating now. Recruiting is another one. I think of dating and recruiting as somewhat similar-
- EBElena Burger
Mm-hmm. [chuckles]
- OMOlivia Moore
... networks actually, in terms of trying to make matches. Um, social AI, we really haven't seen anything take off. Most of-
- EBElena Burger
No.
- OMOlivia Moore
Most of social AI is people posting AI-generated content on existing social platforms. Um, and then I think there's all of these other categories that are, look maybe more like marketplaces did, like shopping, uh, home buying, um, you know, retail. We'll have to see if those end up living in agents like Instinct or Muse or living as standalone products-
- JEJosh Elman
The next ones.
- OMOlivia Moore
Or the next ones-
- JEJosh Elman
No, no, no
- OMOlivia Moore
... which there will be many, uh, or living as standalone products or perhaps a mix of both.
- JEJosh Elman
Yeah.
- OMOlivia Moore
Perhaps your agent is calling the AI-native marketplace. Um, so I'm, I'm very excited about those things. I think also categories like gaming and entertainment, the models just have not been good enough to produce content that the average person likes to watch, which may be the exception of AI micro-dramas, which are blowing up.
- EBElena Burger
[chuckles]
- OMOlivia Moore
Um, but I think that is coming soon too.
- JEJosh Elman
No, I think that's exactly right. And I just think we're in this world where, you know, uh, we're kind of like so excited by what ChatGPT did with turning things into conversation, and now these agents we can get in our messaging apps that turn them into more conversation. Like, it's this incredible paradigm. But when you're shopping, you wanna visually see options and explore and have things customized for you and be able to say, "I really like that, but I wish it had some piping on the collar"-
- OMOlivia Moore
Yeah
- JEJosh Elman
... or something, and actually have AI help you both realize that and maybe even get it made for you. Uh, like shopping can have so much invention there. Entertainment, I think we've barely started scratching the surface-
- OMOlivia Moore
Yeah
Episode duration: 49:47
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