a16z: Generative AI, the next consumer platform

Original title: "Generative AI: The Next Consumer Platform"

Original author: Connie Chan & Justine Moore, a16z

Original compilation: Kate, Marsbit

We have entered the era of generative artificial intelligence. Use cases are everywhere — from writing papers to creating comics to editing movies — and adoption is outpacing every consumer technology trend of the past decade. Text generator ChatGPT surpassed 1 million users in just five days, and tens of millions of consumers created AI avatars.

Whenever a new technology captures consumers' attention so quickly, it begs the question: Is there real value here? We think the answer is undoubtedly yes. Generative AI will be the next major platform on which founders will build category-defining products.

Just as the iPhone revolutionized our daily interactions with technology — spawning products like Uber, DoorDash, and Airbnb — generative AI will transform everyday Life.

In addition to creating new product categories, AI will enhance existing products, improve the consumer experience and make it easier to expand.

One of the most powerful features of AI is that it enables products to personalize the user experience. Early applications of this approach were in educational technology and search—if you were to explain why it rained, you would use a different language to explain it to an eight-year-old than to a high school student. We expect this customization to become a core value pillar of many AI-enabled products.

Here we explore the key consumer categories where we see opportunity. In subsequent posts, we'll delve into each of these areas and share the questions we ask when evaluating consumer AI companies.

Language models have the potential to revolutionize one of the core functions of the Internet: search.

We've all struggled with typing a question into Google and being inundated with links, some of which had conflicting or inaccurate information. It's literally an endless scroll. What if you could get a concise answer written in natural language, with links to more content if you're interested? The LLM  powered search engine makes this possible.

Companies like  You  and  Neeva  are offering this service for general search queries. Others are taking a more vertical approach: Consensus searches among research papers to provide evidence-backed answers, while  Perplexity 's Bird SQL product targets Twitter graphs (e.g., "The latest news about Golden Globe fashion Popular Tweet").

This type of search is especially valuable for product recommendations. Today, making an informed purchase often requires sorting through dozens of links and hundreds of reviews. What if you could get a curated list of options based on your specific needs? Potential hints like: "Best dog food for a six-month-old Labrador with a sensitive stomach" or " A camel coat for New York winters for under 250 $.

Additionally, we see great potential for internal search applications for the enterprise. Most companies now use many communication apps and databases such as Gmail, Slack, Drive, Asana, etc. Finding a single document, message or metric across all these tools can be a challenge. Products such as Glean  allow teams to search across applications, while  Vowel  allows users to query their video meeting recordings.

Edtech has long struggled to strike a balance between effectiveness and scale. Build something for the masses and you lose the individuality that appeals to the individual. It's too expensive to scale to build something that does exactly what one needs.

With artificial intelligence, this is no longer the case. We can now deploy personalized learning programs at scale, providing each user with a "teacher in their pocket" who understands their unique needs and can answer questions or test their skills.

Imagine an AI language teacher who can talk in real time and provide feedback on pronunciation or diction. Come on, Quazel  and  Lingostar  are already doing it! We’re seeing products that teach new concepts or help learners “get out of the way” in nearly every subject. Apps like Photomath  and  Mathly  guide students through math problems, while  PeopleAI  and  Historical Figures  teach history by simulating chats with famous figures.

In addition to studying specific subjects, students also utilize AI assistants in their assignments. Tools like Grammarly, Orchard , and  Lex  help students overcome writing blocks and "pick up" their writing. Products that handle other forms of content are also gaining popularity in high schools and colleges across the country -- Tome  and Beautiful.ai. For example, artificial intelligence can help create presentations.

We do not believe that technology will completely replace human connection. But it can make us feel less alone. Talking to someone who listens to you and responds is very powerful, and AI chatbots can fill this role.

For early evidence of this, check out the  reddit  subreddits for AI chatbot products such as  Replika, Anima  and  CharacterAI. Many users find real meaning in their relationships with these bots, spending hours chatting each week. The durability of use is already comparable to the  Z Gen Snap .

AI can also enhance and even inspire human relationships. Tools like  Millie  and  YourMove  optimize profiles and information for dating apps, while apps like  Mumkin  help users navigate difficult conversations. Eventually, we could all have an AI chatbot that reminds us when it's time to reach out to friends and family and prompts us to send the perfect message.

Finally, artificial intelligence can help us connect with people who are not around or reachable. Have you ever wished you could hear one more story from a deceased family member, or that you could get some advice from someone you haven't seen in years? Some people have experimented with this. It’s not hard to imagine a world in which we all have an AI-powered “digital twin” trained specifically to write and, eventually, speak. For some, this quest has already begun.

We also hope to see more professional and even clinical applications of artificial intelligence chatbots. AI therapists, nutritionists, coaches and mentors will make personal and professional development less costly and more accessible for millions of consumers around the world. It's a 24/7 digital support system where users can ask questions or start a conversation simply by opening an app.

Early research has found that chatbots can be effective in treating mental health. Products such as Woebot  and  Wysa  have demonstrated clinically validated results and received  FDA  designations for the treatment of postpartum depression, chronic pain and anxiety, among other conditions. With over  25%  of adults currently living with a diagnosable mental health condition, and we're experiencing a nationwide shortage of therapists, chatbots could be a viable solution for non-acute cases.

Outside of healthcare, we are already starting to see the emergence of other artificial intelligence tools and coaches designed to assist with specific tasks. InterAlia can help you match your clothes, Prodigy AI can give you career advice, and Poised can improve your communication skills, just to name a few.

It is not surprising to believe that one day we will all have a personalized chatbot that understands the unique context of our lives. When faced with life changes—such as divorce, going to college, or having a baby—we'll be able to get advice in whatever way resonates. We can also seek support or guidance on what we're trying to achieve, whether it's strengthening our workouts or improving our financial health.

Generative AI allows us to bring our imaginations to life—and when done right, it can feel like magic. As we saw with  Lensa , content creation has been the first mainstream use case for generative AI. Remember when your social media was filled with pictures of your friends portrayed as superheroes, astronauts and anime characters?

Portraits are just the beginning. Generative AI products will serve a variety of use cases, from consumers producing content “just for fun” to creators or individual entrepreneurs monetizing content. We’ve seen generative AI tools promoted in almost every medium:

Art – products like Midjourney  and  Stable Diffusion  allow users to Enter hints and styles and get unique art.

Writing - ChatGPT  is ahead of products like  Sudowrite  and  Verb . AI is here for more specialized types of writing, such as fiction.

Video - Descript  and  RunwayML  are expanding from generative video editing to creation, while products like  Linum, QuickVid  and  Synthesia  Generate new video content.

Design - Canva integrates AI, and Microsoft is testing its own AI design platform. They will compete with startups like  PhotoRoom  and  Magician .

Audio – Products like Boomy  and  Riffusion  create music from scratch, while  Murf.ai  and  Resemble  deliver studio quality voiceover.

Over time, we will likely see more professional-grade generative AI products emerge.

Many AI tools today are buggy (a third arm pops up in the photo!) or take a long time to process requests. That's fine for most consumers, but it's even more frustrating if you're trying to monetize your content. To serve these power users, we expect many companies to add a "Pro" tier that offers higher quality service - as ChatGPT  has already done.

AI  is likely to play an important role in the game, our partners have written a lot about this. Generative AI will make it easier, faster, and cheaper to make high-quality games, while enabling players to truly customize their gameplay.

The most popular games cost millions, sometimes hundreds of millions of dollars to make. In addition to the game's storyline, developers also need to generate thousands of media assets, from the graphics themselves to 3D models to soundtracks.

The lifeblood of these high-quality, AAA games is the work and vision of the human artists. AI is unlikely to completely replace them. However, we think AI will facilitate the development of these artists and their teams, allowing them to use their time more efficiently and launch games faster and at a lower cost.

We've seen AI tools for creating game assets, such as Scenario  and Iliad, and platforms that can build entire virtual worlds, such as  Promethean. You can even generate non-player characters (NPCs) using products like  Inworld, Charisma , and  Convai .

AI will not only drive the creation of more games, but a new kind of game that will be more dynamic and personalized to suit the needs of each gamer preferences. We've seen some early examples of this in text-based games like  AI Dungeon  and  Hidden Door . Imagine you go into a game and design a complex custom character with just a few words. Eventually, this could extend to entire virtual worlds you could create from scratch.

Tools for small businesses will be the killer use case for generative AI. There are 32 million small businesses in the United States, and they account for more than half of the net new jobs created since 2000. They play a vital role in our economy, yet they are often understaffed and overwhelmed, especially with the recent labor shortages.

AI tools could have an immediate impact on many of these businesses. Extra hands - blurry as they may be! — is priceless. AI tools and corresponding use cases are multiplying: Sameday can answer calls and make appointments; Truelark can handle texts, emails, and chats;

Many common content creation tools, such as  Jasper, Copy  and  Writer, have gained meaningful traction among SMEs. But we're also starting to see verticalized tools tailored to the workflows of specific types of businesses. For example, products like  Harvey  and  Spellbook  help legal teams automate tasks such as receiving, researching, and document drafting. In real estate, Interior AI enables agents to show their properties virtually, while Zuma helps property managers convert leads into booked tours.

One of the most productive verticals in this space is e-commerce. Most of these businesses operate entirely online, which allows them to easily integrate AI tools into many parts of their workflow. In a world of rising customer acquisition costs, brands are eager to try products that might help them reduce costs, attract more shoppers, and improve retention.

Tools like Flair, Booth , and  Bloom  help brands create compelling product photos, which are great when selling to online shoppers important. A still photo of a dress hanging on a hanger can become an image of a woman walking through a garden in that dress. We expect these uses to eventually become highly personal: a landing page for a sofa will feature a photo of the sofa in your apartment.

In addition to product photos, brands create many types of content that can now be enhanced with AI. Products like AdCreative  and  Pencil  can create marketing materials for email or social media, while  Frase  or  Writesonic  can write SEO-optimized product descriptions. Ultimately, we want users to be able to create an entire e-commerce store — and the materials to market it — by simply describing their desired aesthetic and clicking a button.

We're still in the early stages of the generative AI revolution, but we're excited to share how this technology will impact the way we work, learn, create, and play. Over the next few days, we’ll dive deeper into AI’s impact on these consumer categories.

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