a16zThe State of Consumer Tech in the Age of AI
EVERY SPOKEN WORD
45 min read · 9,129 words- 0:00 – 0:28
Introduction to Consumer AI
- JMJustine Moore
The great thing about consumer is it's completely unpredictable, and the best products emerge, like out of nowhere.
- BKBryan Kim
We're living in this early era of AI where velocity is the moat.
- AAAnish Acharya
In the future, you're gonna see consumer span to be like food, rent, software.
- JMJustine Moore
In some ways, that's sort of like the peak value of AI, enabling better human connection. [on-hold music]
- 0:28 – 3:18
The Evolution of Consumer Breakouts
- ETErik Torenberg
Guys, thanks for coming on for our State of Consumer podcast. It, it seems like every few years there was a t- there was a breakout, starting from Facebook, Twitter, Instagram, Snap, WhatsApp, Tinder, TikTok. The-- E-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. W-w-why did it stop, or did it stop? Would you re-reframe how, how we should think about that and, um, where do we go from here?
- JMJustine Moore
I would argue probably ChatGPT was a, was a huge consumer-
- ETErik Torenberg
Right
- JMJustine Moore
... 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 Eleven Labs and Blackforce Labs, um, now things like Kling and Veo. Um, mo- like weirdly though, a lot of them don't have the same like social or traditional-
- ETErik Torenberg
Right
- JMJustine Moore
... consumer dynamics that you mention, 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.
- BKBryan Kim
It's interesting that you ask that question because I was thinking about the past, what? Fifteen years, twenty years, where, as you said, like Google, Facebook, Uber, all the, 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, all that had a lot of maturity baked in. Like the platform was around for like ten, fifteen years. Every little nooks and cranny has been explored to some 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 mo- uh, mo-model updates. So I think that's one different. But the other thing is, again, Justine, you touched on this, but if I think about the past historical winners, there was like information area, like Google of the world, and now I think ChatGPT's certainly doing that. And there are the utility we missed out, like Box and Dropbox of the world that are more consumer, prosumery 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. Th-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.
- 3:18 – 8:00
The Shift in Consumer Spending
- ETErik Torenberg
It's interesting because, you know, Facebook's almost twen-twenty years ago at this point. Like the companies that you mentioned, Justine, you know, as, um, aside from ChatGPT and OpenAI, like are they gonna be around for ten, twenty? 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 d-disrupted by, by these new players? Or in ten 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?
- AAAnish Acharya
I mean, you could argue that ChatGPT's got way higher business model quality than the kind of analogous consumer companies from the last-
- ETErik Torenberg
Mm
- AAAnish Acharya
... product cycles, right? Their top SKU's two hundred dollars a month. The c- the top Google consumer SKU is two hundred and fifty dollars a month. So sure, there's a question of defensibility, networks, all these other things, but that might have been a response to the poor business model quality that would've occurred if you didn't have those things. Now you can just charge people a lot of money, and perhaps we've been overthinking it previously.
- ETErik Torenberg
There was poor busine- uh, business model quality, maybe stronger sort of retention or product market fit or dur-durability.
- AAAnish Acharya
Yeah. Yeah. Like you had to have a story for how this, there 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.
- ETErik Torenberg
Yeah.
- AAAnish Acharya
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, Claude and the ChatGPT horizontal model and the Gemini model, like aren't they interchangeable, and doesn't that mean 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 zoom in a little closer, you see that there's, there are like some interesting defensibility dynamics that are already there.
- BKBryan Kim
The increasing price not decreasing in 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. A-and I, one, 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 tried to make a differentiation between unique user retention and revenue retention, 'cause they were like kinda the same. Like you don't get to change pricing that often. You don't get to upgrade. Like, it's kinda 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 seeRevenue retention being meaningfully higher than unique user retention, which again, like I haven't seen that before, so
- JMJustine Moore
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 happily paying $200 a month, uh, and even saying in some cases that they feel like they're being undercharged for that or [chuckles] they would pay more.
- ETErik Torenberg
How, how do we explain that? What, what value are they getting such that they're paying more for it?
- JMJustine Moore
I think it's doing work for them. Like consumer subscriptions in the past were on things like, I don't know, personal finance, fitness, wellness, like things that-
- ETErik Torenberg
Entertainment.
- JMJustine Moore
Yeah. Uh, 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 [chuckles] 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.
- JMJustine Moore
I mean, I think things too, like VO3, like people are paying two hundred and fifty a month, and I'm happy to pay that because it's like you have this suddenly m- like it, it feels like a magical mystery box that you can like open it and get whatever video you want, only for eight 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.
- AAAnish Acharya
It seems like every part of consumer discretionary spend is gonna be overtaken by software, and I think, you know, in the future, you're gonna see consumer spend be like food, rent, software, and that's kinda where we're going, what Justine's speaking to.
- ETErik Torenberg
And can you give us some examples of that?
- AAAnish Acharya
Well, uh, y- a lot of it is what Olivia said, right? So I think all the entertainment is being subsumed by it. A lot of the sort of creative expression work that you would do-
- ETErik Torenberg
Yeah
- AAAnish Acharya
... outside of software is now being subsumed by it. A lot of the sort of relationship intermediation, which might've 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 gonna pay for
- 8:00 – 13:00
The Future of Social Networks with AI
- AAAnish Acharya
that.
- ETErik Torenberg
Bryan, you're saying w-we're, we're still missing this connection fro-fro-from this new paradigm, and, and people are still relying on sort of Instagram, Twitter, other... some of the other sort of s-social networks of the, uh, of the past. What, what's going to get us to, to something new here?
- BKBryan Kim
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 in different modality. It 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 to others through reels and, and what 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 think about 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 is... It's funny, um, I don't know about you guys, but I pour my heart and soul into ChatGPT. It knows more about me than probably Google, potentially-
- JMJustine Moore
Yeah
- BKBryan Kim
... which is an insane things to say. Like Google, I've been using, using Google for a decade plus, and ChatGPT 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 when that essence of me is shareable with 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, you know, younger generation, et cetera, that are kind of tired of just looking at the surface level stuff.
- JMJustine Moore
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 ChatGPT 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, uh, 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 ChatGPT, is still happening on the existing social platforms-
- ETErik Torenberg
Yeah
- JMJustine Moore
... and not in the new AI platforms. Like Facebook now is, like, a lot of AI content. [chuckles]
- BKBryan Kim
Potentially unbeknownst to some of the audience.
- JMJustine Moore
Facebook is like the boomer AI slop, and then, like, Reddit and Reels are like-
- BKBryan Kim
[laughs]
- JMJustine Moore
... the younger people AI content.
- JMJustine Moore
Yeah. No, I, I agree. I think it's been a puzzle to me what the first AI social network is gonna look like 'cause 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 ground-up AI social network would be.
- BKBryan Kim
Well, you use the word skeuomorphic. A lot of the AI social products that mimics Instagram feed or Twitter feed was bots and AI. Is that... That feels skeuomorphic. Like, that feels like, "This is what it used to look like. We're gonna 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, a true consumer product probably needs to live in mobile.And for AI products to work really, really well, I think there's still a little bit of work where, uh, 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.
- ETErik Torenberg
It seem-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.
- AAAnish Acharya
I mean, I think a-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-
- ETErik Torenberg
Right
- AAAnish Acharya
... and get all of your wisdom. Perhaps that's what future social looks like as well. That's what, what you're talking about, 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.
- ETErik Torenberg
Yeah.
- 13:00 – 20:42
Enterprise Adoption of AI
- ETErik Torenberg
One, one thing I heard you guys say is that y-one 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. W-what can we say there?
- JMJustine Moore
Yeah, that has been fascinating, and BK and I saw that a lot with ElevenLabs, which, um, we, uh, were 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. Um, but then I would argue it hasn't even gone, in many cases, to the true mainstream consumer. Like it's not yet like every single person in America or most have ElevenLabs 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 Eleven. 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."
- BKBryan Kim
I've also heard of like similar to that on, 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 sells, and you basically put it in an AI tool to go try to find where they work.
- JMJustine Moore
Mm.
- BKBryan Kim
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 p-people, 40-plus people are using our product. What's up?"
- ETErik Torenberg
Justine, 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 Friendster? Are, 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, tw-20 years later? Like where are we right now?
- JMJustine Moore
I mean, I think our hope always-
- ETErik Torenberg
[laughs]
- JMJustine Moore
... is that every big consumer-
- ETErik Torenberg
Yeah. [laughs]
- JMJustine Moore
... AI company now-
- ETErik Torenberg
Yeah
- JMJustine Moore
... 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 gonna 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've 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 v03 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 could argue about this with the text people, the LLMs are more mature, but have the opportunity to just keep improving capabilities as they scale.
- ETErik Torenberg
Mm.
- JMJustine Moore
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 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 Friendster 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 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.
- BKBryan Kim
I absolutely agree. I mean, even in video, it's like-
- JMJustine Moore
Yeah
- BKBryan Kim
... different video, but ad video, and then even in ad video-
- JMJustine Moore
Yes
- BKBryan Kim
... I saw a post yesterday, I'm like, this is best for, uh, you know, product shots, and this is w-best for pe-with people, and it, it goes on and on and on, and each of those I think is a very large market.
- JMJustine Moore
Yeah.
- ETErik Torenberg
Say more about how... I know we talk a lot about defensibility and, and moats and how that is changing this era, how, how it's, how we've changed how we consider that, that, that topic.
- BKBryan Kim
I've, I've gone through a little bit of a come to Jesus moment on that, uh, especially recently. I think moats 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 moats. 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, andI've sort of come around that in that in we're living in this early era of AI where velocity is the moat. 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 share and users and traffic, that actually converts to real revenue that gives you more ability to continue that journey.
- ETErik Torenberg
Yeah. It's interesting. Ben Thompson, I, 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."
- BKBryan Kim
That's true.
- ETErik Torenberg
But Snap is just gonna 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.
- BKBryan Kim
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.
- ETErik Torenberg
How do we think about network effects for these new products?
- BKBryan Kim
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 close linked, closed loop with creation, consumption, network effect, social 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 s- we, we see a different type of m- uh, moat form in the likes of ElevenLab, like I said. Like, because it moves so fast, because the product is very good, it gets to go into enterprise and gets to get locked in into the workflow. So I think that version of moat we're starting to see. I think the true network effect we're still, you know, looking out for.
- JMJustine Moore
I think Eleven is an interesting example. I was making a, an AI-generated video the other day that I needed a voiceover for.
- 20:42 – 23:06
The Rise of Voice Technology
- JMJustine Moore
new.
- ETErik Torenberg
I, I wanna go deeper in on, on voice a-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 firm that I, that I saw sort of, you know, have, uh, sort of, you know, uh, sort of, uh, a thesis around it. A-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, where do you think it's going?
- AAAnish Acharya
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 know, not a, not a substrate on which technology's been applied 'cause it just, the tech never worked. You know, and there's all these previous efforts, VoiceXML 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 NaturallySpeaking 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 perfect area where you'll see a lot of AI-native efforts.
- JMJustine Moore
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. 'Cause 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 ChatGPT advanced voice mode into 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 consumer is it's completely unpredictable, and the best products emerge like out of nowhere, otherwise they've already been built yet, uh, they would've been built already. So I'm excited to see what happens in consumer voice in the next year.
- AAAnish Acharya
For sure.
- 23:06 – 25:25
AI's Role in Enterprise Conversations
- AAAnish Acharya
I mean, it feels like voice is the AI insertion point for the enterprise, 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-
- ETErik Torenberg
Right
- AAAnish Acharya
... et cetera. 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 'cause AI will just do a better job with the negotiation or the sales pitch or the persuasion or the friendship.
- ETErik Torenberg
Wh-what's gonna be sort of the first use case where people are gonna be talking to synthetic versions of, of ourselves, like in a, in a sort of consistent, relevant way? Like why are they gonna be talking to sort of AI Justine or, or AI Anish or AI me?
- JMJustine Moore
I mean, we've seen a little bit of that with the... There's companies like Delphi 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 Bry- and Bryan 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 [smacks lips] 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, w- 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 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.
- JMJustine Moore
Yeah.
- 25:25 – 26:34
AI in Education and Personal Development
- JMJustine Moore
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 [chuckles] 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-hour Masterclass. 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 example of where we'll see kind of real people turn into AI clones, uh, in ways that are useful.
- ETErik Torenberg
[laughs]
- JMJustine Moore
It, it's also though like do you wanna 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-
- ETErik Torenberg
Right
- JMJustine Moore
... person look like? 'Cause 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.
- 26:34 – 31:52
AI Companions: The New Norm
- ETErik Torenberg
Yeah, it's interesting to think about is what are the, what are the set of use cases for which we're gonna want to have a human or someone we, we think is a human, uh, you know, sort of doing the ac- activity versus where are we gonna be more open to that?
- JMJustine Moore
Like I think Olivia's point is, you know, with the Masterclass thing, there's already this parasocial relationship-
- ETErik Torenberg
Right
- JMJustine Moore
... 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-
- ETErik Torenberg
Yeah
- JMJustine Moore
... where you don't need to have that pre-wired.
- ETErik Torenberg
Which may be ChatGPT. Wasn't there like a viral tweet that someone recorded in a New York subway? Like this person was fully talking to ChatGPT as if they were talking to a girlfriend.
- JMJustine Moore
Oh, yeah. Yeah.
- JMJustine Moore
Yeah.
- ETErik Torenberg
It was-
- JMJustine Moore
And there was another one where, the other day, where, um, this parent posted they'd lived through 45 minutes of their son asking questions about Thomas the Tank Engine, and they couldn't do it anymore.
- ETErik Torenberg
[laughs]
- JMJustine Moore
So they gave him 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 ChatGPT about Thomas the Tank Engine.
- ETErik Torenberg
That's awesome.
- JMJustine Moore
Uh, and it's like, in that case, like the kid has no idea who the character on the other end is.
- ETErik Torenberg
Totally. Yeah.
- JMJustine Moore
They just know it's a person who wants to go super deep on their interests.
- ETErik Torenberg
Right.
- JMJustine Moore
Yeah, I can see... I mean, if we go to ChatGPT or Claude right now for therapy or coaching, I could see another re- I'd prefer to go to my sort of AI clone, you know, therapist or coach, and maybe in the future we record our sessions so that they have the data, or, or the therapist or coach has like so much content online that we could just re, re, recreate them. But, um, but yeah, and to your question, to your point of like in, in 5, 10 years from now, will the top artists be sort of new versions of Lil Miquela, i.e., sort of AI-generated people, or will they be sort of Taylor Swift and her just army of AI, uh, you know- Or a duet.
- ETErik Torenberg
Yeah.
- JMJustine Moore
Yeah. Um-
- ETErik Torenberg
A little bit of both.
- JMJustine Moore
And similarly on Twitter, the, the, the so- the social characters that we, that we follow, the next Kim Kardashian, is that, uh, you know, a real person or is that AI-generated? Do you, do you have a hypo- hypothesis on that?
- JMJustine Moore
I have been thinking about this a lot for a couple years, 'cause I think we all followed Lil Miquela closely.
- ETErik Torenberg
Yeah.
- JMJustine Moore
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 closely into photorealistic image and video because we're now seeing-
- ETErik Torenberg
Yeah
- JMJustine Moore
... 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 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 st- her stories and her live performances, and like all of those things that AI cannot 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 ChatGPT 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.
- JMJustine Moore
Yeah.
- JMJustine Moore
Um, and so if I had to guess, it, we'll still have both.
- 31:52 – 38:50
The Future of AI Companions
- ETErik Torenberg
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, uh, upon hearing that statement, would've been like, "What? W- um, I-I bet that 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 are we just at the beginning of, of, of, of that trend? Is there gonna be all these different vertical companion app-- Like what, what is sort of the, the future of, of this? How do we think about that?
- JMJustine Moore
Yeah. We've spent an, an enormous amount of time in, in like every facet of companionship from the like therapy, coaching-
- ETErik Torenberg
Mm
- JMJustine Moore
... friends, all the way to the like not safe for work AI girlfriends. Like we've, we've looked at basically everything. And interestingly, I think like it was probably the first mainstream use case of LLMs. Um, w-we like to joke that like literally any chatbot, whether it's like your car dealer's customer support or, or whatever, people tr-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 the beginning, especially because the products today o-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 ChatGPT for all of these things it wasn't designed for. We've already seen a bunch of cases where like, you know, a, an, 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, and companies like Tolan that are doing this for, for teenagers and 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 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. 'Cause 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 real- 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 en-entertainment or counsel you could have gotten from a human before. Um, and we're gonna see even more vertical companions moving forward.
- ETErik Torenberg
O-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 generation is something above 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 about the companion use case, and as Justine 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, a white space, but maybe this is filling that in, right? Like I, as we, well, 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 gonna have less friends. People aren't gonna date, y-y-you know, a-a-anymore, and people are-- depression's gonna go up, uh, suicide's gonna go up, fertility, you know, gonna g-continue to go, go down."
- JMJustine Moore
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. [laughing] Which is, 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 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-
- SPSpeaker
[laughs]
- JMJustine Moore
... 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-
- SPSpeaker
[laughs]
- JMJustine Moore
... is, is like enabling better human connection.
- ETErik Torenberg
And we're-
- SPSpeaker
Just less weird.
- JMJustine Moore
Yeah. [laughs]
- ETErik Torenberg
Were people happy for him or did they call him a traitor?
- JMJustine Moore
People were extremely happy.
- ETErik Torenberg
[laughs]
- JMJustine Moore
I mean, there were a few, I think, jealous souls in there-
- ETErik Torenberg
Yeah. [laughs]
- JMJustine Moore
... who had not found their 3D GF yet-
- ETErik Torenberg
Yeah
- JMJustine Moore
... but I have hope for them.
- SPSpeaker
I think that's real though because I, we've even seen studies like, um, I think of the Replica product-
- JMJustine Moore
Yeah
- SPSpeaker
... where like, uh, actual studies were showing depression and anxiety and kind of suicidal ideation were going down in users.
- JMJustine Moore
Yeah.
- SPSpeaker
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. [laughs]
- ETErik Torenberg
You're talking to techno-optimists here.
- SPSpeaker
Yeah.
- ETErik Torenberg
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 Replika, it was amazing, um, after they turned off-- or she turned off the NFW stuff, and the subreddit for Replika and the comments in our video were basic- a lot of people being like, "Hey, this is like my wife when we stopped having sex." You know-
- JMJustine Moore
Yeah
- 38:50 – 42:07
Speculating on New AI Platforms
- ETErik Torenberg
So, so maybe let's speculate on new platforms or form factors that could be game-changing. OpenAI just acquired Jony, Jony Ive's company. Um, you know, Bryan, I've heard you talk a bit about glasses and why you're, you're still excited about that, that form factor. Maybe we could start there, but I wanna hear from the group on w-what they could imagine as, uh, something that's additive or even disrupting some of the mo-mobile use cases.
- BKBryan Kim
There are seven billion of, of mobile phones out there.
- JMJustine Moore
Mm.
- BKBryan Kim
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 wanna 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 think about always-onness, 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?
- ETErik Torenberg
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 these-
- JMJustine Moore
Yeah
- ETErik Torenberg
... use cases?
- JMJustine Moore
I think AI has scaled for consumers tremendously well, given it's mostly been text box 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 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.
- OMOlivia Moore
I think, yeah, the human insight layer of that is big too. Like, o-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 conversations and see everything you're doing online and say, "Hey, look, like, if you spent 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 person," like that sort of thing.
- JMJustine Moore
Yeah.
- OMOlivia Moore
That to me is the ultimate-
- JMJustine Moore
Yes
- OMOlivia Moore
... like sci-fi vision-
- JMJustine Moore
Yes
- OMOlivia Moore
... of like what-
- JMJustine Moore
Which comes from AI being with you all the time-
- OMOlivia Moore
Right
- JMJustine Moore
... and something that's not just like a ChatGPT text box.
- OMOlivia Moore
Totally. I mean, the, the device that has been most widely adopted post-phone is 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-
- ETErik Torenberg
Yeah
- OMOlivia Moore
... 'cause it's weird to have your AirPods in at dinner. No one does that.
- ETErik Torenberg
Right.
- OMOlivia Moore
But there may be a way that you can integrate AI and also fit the current social protocols around AirPods that would be interesting.
- ETErik Torenberg
Yeah.
- 42:07 – 43:14
The Social Norms of AI Integration
- ETErik Torenberg
You, you said something that we glossed over, but young people at parties are recording their conversat-
- JMJustine Moore
Yes
- ETErik Torenberg
... like, in the future, is everything get, uh, uh, uh, is everything gonna be recorded? Like, you, you think that generation is already growing up with that norm to some degree, or?
- JMJustine Moore
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's started and is not gonna stop in my opinion.
- OMOlivia Moore
And I think the context matters too. Like I think-
- JMJustine Moore
Yeah
- OMOlivia Moore
... a lot of what you're talking about is like the SF networking parties-
- JMJustine Moore
Yeah
- OMOlivia Moore
... where like work and personal stuff like really blurs.
- ETErik Torenberg
Yeah. We, we talked about this.
- BKBryan Kim
And you can do that in SF, but you do that, did that party on-
- JMJustine Moore
Yeah
- BKBryan Kim
... Broadway in New York, canceled. [laughs]
- JMJustine Moore
Yeah. But I think that's why-
- BKBryan Kim
We're like early too
- JMJustine Moore
... there'll be like a new set of cultural norms. Like when the-
- OMOlivia Moore
Yeah
- JMJustine Moore
... cell phone was introduced, like there's places where it's rude to take a loud call.
- BKBryan Kim
Yeah.
- JMJustine Moore
Like the, this-
- BKBryan Kim
Sure.
- JMJustine Moore
... the same set of things-
- OMOlivia Moore
Right
- JMJustine Moore
... will emerge around these recording devices.
- ETErik Torenberg
Yeah. Well, let's, let's end on the, on this idea that we're, that we're very early. Uh, guys, it's been a great, great conversation. Thanks so much for coming on. [upbeat music]
Episode duration: 43:22
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