Where does consumer AI stand at the end of 2025?

As 2025 comes to a close, consumer AI is entering a new phase. A small number of products now dominate everyday use, multimodal models have unlocked entirely new creative workflows, and the big labs have pushed aggressively into consumer experiences. At the same time, it is becoming clearer which ideas actually changed user behavior and which ones did not. In this episode, a16z consumer investors Anish Acharya, Olivia Moore, Justine Moore, and Bryan Kim look back on the biggest product and model shifts of 2025 and ahead to what 2026 may bring. They discuss why consumer AI appears to be trending toward a winner-take-most model, how subtle product design choices can matter more than raw model quality, and why templates, multimodality, and distribution are shaping the next wave of consumer products. Where do startups still have room to win? How will the role of the big labs continue to change? And what will it actually take for consumer AI apps to break out at scale in 2026? Timecodes: 0:00 Introduction & Market Overview 0:35 Who Won Consumer AI in 2025? 1:22 Major Model and Product Launches 2:24 Image and Video Model Innovations 4:05 Product Sensibility and User Experience 6:40 Advances in Image and Video Models 9:11 Under-hyped Products and Productivity Apps 10:21 Prosumer Tools and Power User Workflows 12:56 Gemini vs. ChatGPT: Distribution and Brand 14:04 Product Nuances: Onboarding and Engagement 16:09 Social Features and Group Chat 19:26 Sora, TikTok, and the Status Game 21:02 Challengers: Claude, Perplexity, Grok 23:37 Meta, Grok, and Rapid Model Progress 26:54 Predictions for 2026: Enterprise, Apps, and Multimodality 32:02 Startup Opportunities and App Generation 36:27 Favorite Products and Recommendations 42:19 Building Consumer Products in 2026 Resources: Follow Anish: https://twitter.com/illscience Follow Olivia: https://twitter.com/omooretweets Follow Bryan https://twitter.com/kirbyman01 Follow Justine: https://twitter.com/venturetwins Stay Updated: If you enjoyed this episode, be sure to like, subscribe, and share with your friends! Find a16z on X: https://twitter.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Listen to the a16z Podcast on Spotify: https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX Listen to the a16z Podcast on Apple Podcasts: https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711 Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details, please see a16z.com/disclosures.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Olivia Moore?

  For most of the year, less than 10% of ChatGPT users even visited another one of the big LLM providers.

• 0:06Bryan Kim?

  When you open Gemini, it has a pop-up that says, "We got Nano Banana. Would you like to do something with it?" The little pane where you have to type something.

• 0:13Olivia Moore?

  Yeah.

• 0:14Bryan Kim?

  I don't, I don't know what to do.

• 0:15Olivia Moore?

  Yeah.

• 0:15Bryan Kim?

  These are product nuances that I think makes people actually take the first.

• 0:20Olivia Moore?

  The models have gotten to the level of quality that you can build a real scalable app on top of them. And so the hope is 2026 will be a huge year for consumer builders.

• 0:31Speaker 02

  As 2025 comes to a close, consumer AI is starting to look very different than it did at the beginning of the year. A small number of products now dominate everyday usage. New multimodal models have gone viral and the big labs have pushed harder than ever into consumer experiences. To take stock of the year, the A16Z team, Anisha Charia, Olivia Moore, Justine Moore, and Brian Kim, break down what actually worked in 2025 and what didn't. They discuss which model launches and interfaces change user behavior, why small product details matter more than raw model quality, and whether the consumer AI market is trending toward win or take most. The conversation also looks ahead to 2026, where there is still room for startups, how templates and multimodality are reshaping creation,

• 1:15Speaker 02

  and why this may finally be the moment when scalable consumer AI apps break out.

• 1:22Olivia Moore?

  Today, we're talking about who won consumer AI in 2025. This was arguably the year that we saw the big model providers, OpenAI and Google, most out of everyone, make a major push of their own into consumer, both in terms of new models they release, but also in terms of new products, features, and interfaces that target the mainstream user. You might wonder, why does it matter who is in the lead here? There are some early signs that the general LLM assistant space might be trending towards winner-take-all, or at least winner-take-most. So only 9% of consumers are paying for more than one out of the group of ChatGPT, Gemini, Claude, and Cursor.

• 2:01Olivia Moore?

  And for most of the year, less than 10% of ChatGPT users even visited another one of the big LLM providers like Gemini. If we had to call it now, ChatGPT is currently in the lead by far at 800 to 900 million weekly active users. Gemini is at an estimated 35% of their scale on web and about 40% on mobile. And everyone else significantly trails this. So Claude, Grok, Perplexity are all about 8 to 10% of the usage. But especially in the last three to six months, things are changing very quickly. With the launch of new viral models like Nano Banana, Gemini is now growing desktop users 155% year over year, which is actually accelerating even as they reach more scale,

• 2:45Olivia Moore?

  which is pretty crazy to see. And ChatGPT is only growing 23% year over year. And we're starting to see players like Anthropic almost specialize within consumer, owning different verticals like the hyper-technical user. So today, we've brought together the A16Z consumer team to recap what we saw this year from the big model companies in consumer and also to predict what might be ahead of us in 2026.

• 3:08Anish Acharya?

  Cool. Well, thank you, Olivia. It's been a super fun year. If we kind of wind the timeline back to last January, maybe we should start with what we saw, launches, products, what worked, what didn't. So Justine, tell us what you saw this year. OpenAI, Google, what are you paying attention to? What have you changed your mind on?

• 3:23Justine Moore?

  Yeah, those two in particular had a ton of consumer launches, like Olivia mentioned. From a model perspective, I would argue their most viral models this year, at least among consumers, were in image and video. So for OpenAI, it was the ChatGPT 4.0 image, the Ghibli moments.

• 3:39Olivia Moore?

  Which is crazy that that was this year.

• 3:41Justine Moore?

  It seems like this was a year ago. And then Sora, obviously, Sora 2. And then for Google, it's VO, VO3, and VO 3.1. And then Nano Banana and Nano Banana Pro in image models, which went insanely viral, probably comparable to, if not beyond, the Ghibli moment for OpenAI. I think in terms of the product layer, what we saw was OpenAI tended to keep more things in the ChatGPT interface. So like Pulse, group chats, shopping, research, tasks, all of these features launched inside ChatGPT as the core. The exception there is obviously Sora as a standalone video app, whereas Google tended to launch more things as standalone products.

• 4:25Justine Moore?

  So they did ship a lot through like Google AI Studio and Google Labs and Gemini and the plethora of Google surfaces there are to launch a product. But they would also ship things as standalone websites that you could go to and visit, which basically allowed for a more custom interface for each type of product, not just the kind of chat entry, chat exit or image video exit.

• 4:46Anish Acharya?

  So just, you have a question for you on that. So it felt like 18 months ago, we were talking about Mid Journey and most of the multimodal models were defined by aesthetics and realism. Is that still true? What changed this year?

• 4:58Justine Moore?

  Yeah, I think there was definitely different styles still. And I think Mid Journey, when you talk to people really deep in image and video, it still kind of stands apart for this like aesthetic sensibility that a lot of the models don't have if you don't know how to prompt for it. But I would say this year in particular, we made a lot more strides on realism and also on reasoning within both image and video. Like all of the little details that make an image or a video actually seem real. For example, if you have a person walking and talking, the people in the cars in the background, if they're on a street, should be moving in the correct direction, like they shouldn't be morphing and looking strange. In image, we were able to have multiple input images and text and sort of reason across all of those uploads

• 5:40Justine Moore?

  to create like a cohesive design or something like that, which was not something we saw happening last year for sure.

• 5:46Bryan Kim?

  Yeah, I remember when we were excited about having a letter show up correctly in images. And now we have insane infographics.

• 5:55Justine Moore?

  Yes.

• 5:55Olivia Moore?

  Yeah.

• 5:55Bryan Kim?

  We can just put up amazing YouTube video and say, give me an image that explains this.

• 5:59Justine Moore?

  Yeah.

• 5:59Bryan Kim?

  That's incredibly different.

• 6:01Justine Moore?

  Nano Banana Pro can even generate like market maps.

• 6:04Bryan Kim?

  No, you generated a market map. It's incredible.

• 6:07Justine Moore?

  And it either has or will go do the web research within the image model, which is crazy to get the correct list of companies and then pull their logos. Which is insane. I know. There's one benchmark left that the reasoning image models have not cracked. Not, I tested GPT Image 1.5 yesterday. They sometimes struggle with both reasoning and multi-step reasoning. So what I've been testing is you upload a picture of a monopoly board. And you say, remove the names of all the properties and replace them with names of AI labs and startups. And GPT Image 1.5 is actually the closest, but it's very hard for them to do all of those steps. Remove it, come up with the new names, put all of the new names in the correct places.

• 6:48Justine Moore?

  Make sure there's not overlaps or one thing you mentioned three times and another big player you never mentioned. So there's still some room to go on the image evals.

• 6:56Bryan Kim?

  It's interesting that especially from the image model from ChatGPT where you can actually see presence of like it carries a character over into multiple image generation, the same style.

• 7:07Justine Moore?

  Yep.

• 7:08Bryan Kim?

  And I thought that was like, oh, like this is actually very interesting. We're storyboarding.

• 7:11Justine Moore?

  Totally.

• 7:12Bryan Kim?

  Makes you want to generate more.

• 7:13Justine Moore?

  Yeah.

• 7:14Anish Acharya?

  You know, for me, it felt like the most underhyped aspect of Nano Banana was the integration with search. Because it feels like there's realism, which is physics and sort of other things that feel like we're on Kenny Valley. There is reasoning, which is apply modifications that are adherent to what the user asked for. But then there's also sort of accuracy. And for me, a good example of this is product photography. If you say, hey, generate a photo of this album cover or a historically accurate photo of this moment in time, you have to actually have the search integration. And that was sort of not intuitive, but is actually very useful.

• 7:47Justine Moore?

  Totally. Yeah. It's kind of like the VO3 moment when I don't think it was intuitive to people that video would be cracked necessarily by bringing audio together with video in the same place. And that ended up being the thing that made AI video go viral. Like since VO3 and now Sora maybe dominates, but like since VO3, my social feeds have been like full of really realistic.

• 8:08Bryan Kim?

  I counted about one fifth of my feeds are AI generated.

• 8:11Justine Moore?

  Amazing. Yeah.

• 8:13Anish Acharya?

  What do you guys do? There's so many launches this year and many of them went well, like VO and Nano. What do you think is underhyped or products that you think didn't get enough attention? Brian?

• 8:22Bryan Kim?

  It's a good question. I think underhyped Pulse of the world is probably still underhyped. And we're talking about OpenAI, Google, which to me falls under productivity category. So if you actually think about, if you go to App Store today, top five out of top 10 productivity apps are all Google. It's insane. And ChatGPT is number one. So we're talking about a productivity category where it helps you do things. And I feel like a lot of people are trying this from a different angle. Like, how do I actually ingest your data or your schedule, your email, to make it more helpful and give more proactive and notification to you? I think a lot of people are working on it. Given the frequency of people using ChatGPT, which I think is what, 25 times a week? Pretty good.

• 9:07Bryan Kim?

  Pretty good, three to four times a day. It feels like it's a really good position to actually give you proactive nudges and summary and help your life in general. So I feel like the everything app was always a myth in the Western world. I think OpenAI is trying to move in that direction where it's interesting enough. People are going there enough to start giving really useful proactive nudges. And I think that's a space that I'm excited about. It's interesting.

• 9:34Anish Acharya?

  But are you a DAU?

• 9:36Bryan Kim?

  I am not a DAU.

• 9:37Anish Acharya?

  A Pulse?

• 9:37Bryan Kim?

  Not a Pulse.

• 9:39Olivia Moore?

  Similarly, I tried Pulse for a while and have kind of largely turned off of it. But I would agree with you that I feel like Pulse and a couple other examples that OpenAI launched this year are kind of new primitives or ideas that feel underhyped. But because the execution is a little off.

• 9:55Bryan Kim?

  I think it's the execution.

• 9:56Olivia Moore?

  The usage is off. Another example that I would give, which is similarly like personal contacts, would be their connectors. So now you can, and you can do this on Claude as well. You can connect your calendar, your email, your documents. And so hypothetically, you could say to ChatGPT, you know, read all of my memos over the past six months and like summarize what's most interesting, least interesting. I think when that works, it's really exciting. I have found it to be a little bit unreliable so far, but I think as the models get better, they have a real chance to kind of own the prosumer workspace if they get that right.

• 10:27Bryan Kim?

  Prosumer is perfect category because we talk about this sometimes, but 99% of people don't run their lives on calendar.

• 10:33Olivia Moore?

  Yeah.

• 10:33Bryan Kim?

  We do.

• 10:34Anish Acharya?

  Right.

• 10:34Bryan Kim?

  So that's what I'm thinking about, the actual average frequency of using ChatGPT. And look, if it's 24 times a week, that's a pretty good place to start.

• 10:44Anish Acharya?

  Yeah. Olivia, I feel like you're the ultimate power user. What are you still using? What's your stack?

• 10:50Olivia Moore?

  It's a great question. From all of the larger model companies, actually, I would have to say the thing that I'm still using the most and was maybe the most impressed by this year was the Perplexity Comet browser. And I don't and was not using Perplexity as my core general LLM assistant. I use ChatGPT and Claude much more. But I think they really executed on it in a first-class way in terms of both the agentic model within the browser, but also perhaps more importantly, all of the workflows that you can set up that allow you to basically run the same task over and over, either at a preset time or when you trigger it on a certain webpage. So that, to me, was a really exciting launch. And if you look at the data, like the spike at launch and the sustained traffic for Comet

• 11:32Olivia Moore?

  was actually much higher than for ChatGPT's own browser launch, Atlas, which is kind of crazy, given how much more distribution ChatGPT has than Perplexity. But I think they also launched an email assistant this year, Perplexity did, and they made a couple acquisitions of really strong agentic startups. And so what I would love to see from them next year is like more of these dedicated prosumer interfaces. I feel like that would be an awesome direction for them to kind of double down in.

• 11:58Anish Acharya?

  They do feel like the startup that has the biggest breadth of ambition, you know, alongside the labs and sort of big tech. Like, it's very, very impressive, just the number of things they've shipped this year.

• 12:07Olivia Moore?

  Yes, definitely.

• 12:09Anish Acharya?

  What, um, you know, one thing I wanted to ask you just now was sort of Gemini feels like it's having a real moment because of all the image and video models. Do you think it can overtake ChatGPT? Is there truly that much demand for these types of models?

• 12:22Olivia Moore?

  I think, yeah. So what we, what I've seen basically is there is always nearly infinite demand for like the best-in-class image or video model. Because then you have a mix of tons of different people seeing it and wanting to use it. You have, like, if you're using it professionally, if you're marketing or in entertainment or storyboarding or whatever, you always want to be using what's at the forefront of the field. And so you're totally fine to go somewhere other than ChatGPT and Sora to get access to VO. Even if you're an everyday consumer, so many new viral trends.

• 12:55Justine Moore?

  Friends are created around new capabilities of the best in class image and video models. And so that ends up driving users into different products that they may have never tried before. Like you might be downloading the Gemini app or accidentally ending up on Google AI Studio, which I know they're trying to make be more for developers to use Nano Banana Pro, which a lot of users, I think, experienced in the past couple of months.

• 13:19Olivia Moore?

  Yeah. The interesting thing about Gemini to me is like hypothetically, they benefit from the massive Google distribution advantage. Like if you look at Android, Gemini is at like 50% of ChatGPT's scale on mobile, whereas on iOS it's like 17%. So like clearly something is working there. They launched a little Gemini widget within Chrome recently that encourages you to use it. They're launching it within Google Docs and Gmail and other things.

• 13:43Justine Moore?

  Yeah.

• 13:44Olivia Moore?

  But I think that most, the average person is still just using one AI product. And ChatGPT is like the Kleenex of AI.

• 13:52Justine Moore?

  Like it is the brand that has become.

• 13:54Anish Acharya?

  The verb, the noun.

• 13:54Justine Moore?

  Exactly.

• 13:55Anish Acharya?

  Yes, yes.

• 13:55Olivia Moore?

  And so I think that Gemini still has a pretty big hurdle to overcome.

• 13:59Justine Moore?

  Yep.

• 14:00Olivia Moore?

  Just in terms of that.

• 14:01Justine Moore?

  Yeah.

• 14:02Olivia Moore?

  But if they keep doing what they're doing on these amazing viral consumer creative tool launches and model launches, like they could get there next year.

• 14:11Bryan Kim?

  I'm thinking about this. It's really interesting when you look at Gemini, which is everywhere.

• 14:18Olivia Moore?

  Yeah.

• 14:18Justine Moore?

  Yeah.

• 14:18Bryan Kim?

  But yet nowhere to some extent, right? You don't like, you know, when you look at the actual usage, people still think of the Kleenex.

• 14:25Olivia Moore?

  Yep.

• 14:25Bryan Kim?

  And they go to ChatGPT. But the interesting thing also is on the product sensibility. So this morning I had like two panes open, OpenAI's image model and Google's Gemini and basically use an image functionality. When you open Gemini, it's a blank screen. It has a pop up that says, we got Nano Banana. Would you like to do something with it? And a little pane where you have to type something.

• 14:51Olivia Moore?

  Yeah.

• 14:52Bryan Kim?

  I don't, I don't know what to do.

• 14:53Olivia Moore?

  Yeah.

• 14:54Bryan Kim?

  ChatGPT, you go in and it has a very TikTok like style of like, here's a trending theme that you might want to generate. And you click on, I want a sketch pen or whatever. And then just like use one other picture and it creates something amazing. And then it says, would you like a holiday card? Would you like a blah, blah, blah, blah? These are product nuances that I think makes people actually take the first step.

• 15:15Justine Moore?

  Yeah.

• 15:16Bryan Kim?

  To generate it. And then once you have it, you have character consistency.

• 15:19Justine Moore?

  Yeah.

• 15:19Bryan Kim?

  So you keep going.

• 15:21Justine Moore?

  Right.

• 15:21Bryan Kim?

  So that's interesting in that I think OpenAI and ChatGPT team has proven that there is deeper product sensibility.

• 15:28Justine Moore?

  Yep.

• 15:29Bryan Kim?

  But then I, this is a funny thing, maybe, maybe a little non-cultural thing to say, but, you know, I, I worked at Snap. So when you look at Meta versus Snap, famously Evan Spiegel was chief product officer of Meta.

• 15:41Justine Moore?

  Yeah.

• 15:41Olivia Moore?

  Yeah.

• 15:42Bryan Kim?

  I wonder.

• 15:43Justine Moore?

  Yeah.

• 15:43Bryan Kim?

  If there is a world where the ChatGPT team.

• 15:46Justine Moore?

  Yeah.

• 15:47Bryan Kim?

  Innovates on the product front again and again, Google with distribution looks at him like, that's cool. Let's just, let's just integrate it and keep going and actually play that game.

• 15:56Justine Moore?

  The interesting thing there is that images pane just launched yesterday when we're filming this.

• 16:01Olivia Moore?

  In ChatGPT.

• 16:02Justine Moore?

  In ChatGPT. Brand new.

• 16:04Bryan Kim?

  Yeah.

• 16:04Justine Moore?

  And it took them, like, they had image models for years and it took them that long.

• 16:08Bryan Kim?

  Yeah.

• 16:08Justine Moore?

  To come up with a separate, relatively basic interface for generating images. I would almost argue the application layer companies like the, the Creas, the Hidras, the Higgs fields of the world, popularized that template format and did it first and did it better.

• 16:23Bryan Kim?

  I agree.

• 16:24Justine Moore?

  And then our ChatGPT's product people and then maybe the ChatGPT's.

• 16:28Bryan Kim?

  So it's a supply chain of product ideas.

• 16:30Justine Moore?

  Exactly.

• 16:31Bryan Kim?

  Always.

• 16:31Justine Moore?

  Yeah.

• 16:31Bryan Kim?

  Always.

• 16:32Anish Acharya?

  Well, maybe going in a slightly different direction, BK, I'm very curious for your take on OpenAI's social features. Cause it does feel like that's something that you really have to get product execution right on, but also network design. You know, there's some efforts around Sora 2, we should talk about that. There's also group chats within ChatGPT. You're our sort of social guy or habit historically bullish bearish, where's your head at?

• 16:52Bryan Kim?

  Bearish for now.

• 16:54Anish Acharya?

  Okay.

• 16:54Bryan Kim?

  And the reason to me is twofold. Historically, we, we look at sort of, it's funny, I, I look at products. Based on what I call inception theory, you go like three to four layers down to figure out what the one liner is, which is like, I want my dad to love me. And so, you know, when they think about products. Is that for you or for the world? That's for me, as well as for a lot of people. Okay, yes, yes. And so I look at some of the, you know, products like, like ChatGPT. Ultimately, when you peel the onion five times, I think essentially is help me be better. Like, help me get that information, help me be more productive, help me be more efficient. And then when I think about social features, Meta, Instagram, what have you, or even TikTok,

• 17:36Bryan Kim?

  the two layers of information or the, you know, emotion that it's trying to address to me is for TikTok, entertain me. I want my clown to entertain me. Yeah. And then the other layer is, I'm lonely, I want to be seen, I want to connect with people. And to me, these are pretty two different parallels in the product direction. And OpenAI's product is incredible, it's magic, it's amazing, but it's ultimately a see me or help me category, which essentially is why it's the number one in productivity category. Yeah. Now we're trying to take this and shove it in people's life and say, guys, connect, connect better and like actually. Yeah. Feel like you're being seen. And even the group chat function, which I love, it'll be so good to plan a trip and

• 18:21Bryan Kim?

  like actually have that common pain. But I think it still stops at probably end count of two to three people planning something in a help me way. Yeah. Versus, oh, I feel like I understand a niche so much better because I've sort of done that. So largely over time, I think that's the reason of that division. But that is not to say you can build a separate product that completely sort of addresses that.

• 18:49Justine Moore?

  I think Sora, so we talked about group chat, Sora 2 was the other big, I think, social push this year from all the consumer AI giants.

• 18:56Olivia Moore?

  Which was basically like a TikTok feed, but all AI-generated video and you can make cameos of your friends.

• 19:01Bryan Kim?

  The cameos was a very good bet. Yeah. It was a strong bet. Yeah.

• 19:05Justine Moore?

  And I but I think what we've seen is like in the retention data and how we're seeing it used is it was massively successful as a creator tool. Like now my feed is probably two thirds AI slop, if not more. And I over 50% of it is now Sora, whereas before it was like all VO and some cling. But it has not been as successful as like a social app.

• 19:26Bryan Kim?

  Consumption.

• 19:27Justine Moore?

  Yeah, people like a small number of creators are creating a ton of content and then bringing it out to like TikTok, Instagram, X, Reddit, where it's going massively viral. But it doesn't seem like there's a as much consumption happening in the app.

• 19:42Olivia Moore?

  Yeah.

• 19:43Justine Moore?

  As much remixing, as much commenting, especially as there was initially.

• 19:46Bryan Kim?

  You know, in a funny way, the way I think about it is like Sora's competition or analogy isn't actually TikTok.

• 19:53Justine Moore?

  Mm hmm.

• 19:53Bryan Kim?

  It's actually Capcom.

• 19:54Justine Moore?

  Hmm.

• 19:55Bryan Kim?

  It's like a funny way, is it almost like a creative tool.

• 19:58Justine Moore?

  Yes.

• 19:58Anish Acharya?

  Interesting.

• 19:59Justine Moore?

  Yes.

• 19:59Anish Acharya?

  Olivia, what's your thing?

• 20:00Olivia Moore?

  Well, I was gonna say like, I think it goes back to your earlier point, which is like the kind of motion that drives social apps is both these like positive and negative feelings of like, oh, I'm publishing this thing of myself that's kind of sensitive or that I want people to think it's this or that or this other thing. And so that's kind of what drives participation on the app.

• 20:21Justine Moore?

  Yeah.

• 20:22Bryan Kim?

  The status game.

• 20:23Olivia Moore?

  Yeah.

• 20:23Bryan Kim?

  A little bit of the status game.

• 20:24Olivia Moore?

  Exactly the status game. And when it's AI generated content and people know it's not real, like a real representation of you as a human being, the status game is lost a little bit.

• 20:34Bryan Kim?

  Absolutely.

• 20:35Olivia Moore?

  Yeah, I think the status game comes then with can you prompt something very cool?

• 20:40Justine Moore?

  Yeah.

• 20:40Olivia Moore?

  But that's a different type of product. And that's why I think it goes viral on like Twitter and all these other existing platforms.

• 20:46Anish Acharya?

  I mean, my sort of counterpoint or bull case for Sora two is actually think the status game was about humor more than anything else. And humor is the intersection of knowing how to prompt and sort of being culturally aware.

• 20:57Olivia Moore?

  Yeah.

• 20:58Anish Acharya?

  So I think that if they iterated on that, that's like a direction that nobody has captured before.

• 21:02Olivia Moore?

  Yeah. Yes, but if you can export those videos.

• 21:05Anish Acharya?

  Yes.

• 21:06Olivia Moore?

  Isn't it true that like TikTok?

• 21:08Anish Acharya?

  Yeah.

• 21:08Olivia Moore?

  With Sora videos on it is strictly better than Sora.

• 21:11Bryan Kim?

  We talked about it so much where like the ultimate social product is where consumption and creation both live together and that the output of it is not native to other platforms like TikTok, like YouTube Shorts.

• 21:25Anish Acharya?

  So what do folks think of the challengers? You know, we're talking about sort of to, I mean, Meta, it's crazy to talk about Meta as a challenger. I guess in this context they are, but I think Claude, Perplexity, Grok are the more obvious names for challengers. Olivia, what's your take?

• 21:40Olivia Moore?

  I love Claude. I talk to Claude all the time. Claude has somewhat replaced ChatGPT for me as my general LLM. I think Claude is opinionated in an interesting way. I also love Claude because I'm willing to invest time into building out AI workflows. I think Claude actually launched a lot of really powerful things this year around like artifacts and skills, where you can essentially set up tasks or workflows to run over time. I do think the reason it hasn't hit the mainstream yet is even the way they built those things is geared towards a technical user or an engineer. It's, I think they tried to make skills as easy as they could to create, and it still was not anywhere near easy enough for the mainstream consumer.

• 22:23Olivia Moore?

  Another example would be, they were actually the first of the big players to kind of launch file creation, slide deck creation, editing. And they branded it as like file generation and analysis or something. And it was like a toggle feature within a setting bar of a setting bar or something. So like very few people used it. And yet to me, it's still the best product across all of them at doing that kind of complex work. So I love Claude, but I think if they want to be a true mainstream consumer product, they need to dumb it down even more in terms of accessibility. There was that survey you found recently of US teens.

• 23:02Justine Moore?

  Yes, yeah, there's, I think it was three times more US teens have ever used Character AI than have used Claude.

• 23:08Olivia Moore?

  Yeah, so I think that shows that like.

• 23:10Justine Moore?

  Claude is a pretty broad thing, yeah.

• 23:12Olivia Moore?

  Claude is beloved amongst tech people, but outside of tech people, I think they are maybe struggling to pick up relevance.

• 23:19Anish Acharya?

  It is interesting though, like if you look at the sort of aesthetics, the product design, the craft, like three things that Anthropic did were MCP, skills, and command line interface, Claude code.

• 23:31Olivia Moore?

  Yeah.

• 23:31Anish Acharya?

  Like those are three surprising bets, especially Claude code. I would have said, command line interface, really? Like, is this the way that people want to?

• 23:38Bryan Kim?

  I thought you were gonna talk about taking over airmail and the thinking cap.

• 23:42Justine Moore?

  Yeah, that too.

• 23:43Olivia Moore?

  They're a consumer.

• 23:46Anish Acharya?

  So three, you think of like, where is the thinking cap?

• 23:49Anish Acharya?

  But it's sort of very high-minded design. It's sort of like versus mass market. Or maybe that's apologetic on their behalf. But I think it is, it is that it's opinionated and it's great.

• 23:58Justine Moore?

  Yeah, yeah. I do need to hear Justine's take on both Meta and Grok, as I feel like they both had fascinating years in different ways.

• 24:05Anish Acharya?

  Yes.

• 24:06Justine Moore?

  So Meta hired all those researchers. I think their strongest models are actually not consumer-facing models. It's their SAM3 series. So like the segment, anything for video, for image and for audio. And basically like for video, for example, you can upload a video and you can describe in natural language, like find the kid in the red T-shirt. And it will find and track that person across every, the entire video, even if they're coming in and out of the frame. It will let you apply effects like blurring them out or removing them or whatever. And you can imagine a similar thing with audio with different stems and then with image with different objects in an image. I think we're going to see next year, hopefully,

• 24:48Justine Moore?

  some incredible consumer products built on top of those models. But today, they're more of a playground for developers than they are a consumer-facing product.

• 24:57Olivia Moore?

  Which is surprising, given just like the DNA of the company.

• 25:00Justine Moore?

  Yeah, so the one good consumer feature I think they've launched this year with AI is the Instagram AI translations, where when you're uploading a reel now, you can opt in to enable translations and it will clone your voice, translate it into five different languages, apply the translation with your voice, so, you know, and then re-dub with the lip sync.

• 25:22Olivia Moore?

  Wow.

• 25:23Justine Moore?

  And so it basically makes it seem like you're a native speaker in whatever language. So I would love to see more of that stuff come to the Meta products. Grok, I think, has had, so Grok had a crazy year with like the companions, with all of the LLM progress and the coding progress. I think their image and video progress is probably the steepest slope I've seen of any of the companies, like. It was probably like six months ago, they didn't even like have image and video models. And they're shipping so fast to launch new features. Like it was initially just image to video. They added text to video, they added audio, then they added lip sync with speech, then they added 15 second videos. Like they're just not slowing down the speed of progress.

• 26:08Justine Moore?

  And Elon has made a bunch of statements about like wanting more interactive video game type content out of Grok and wanting movies out of Grok by the end of next year. So let's hope it continues to go at that pace.

• 26:20Bryan Kim?

  Do you feel like it's a pincher movement where like on one hand, there's like a very infrastructural model layer of like, let's get to the, let's top the L M arena charts. And then the other one is like, let's go Annie.

• 26:35Bryan Kim?

  It's like a little bit of like a bifurcated move.

• 26:37Justine Moore?

  Right, like the entertainment and the like.

• 26:39Bryan Kim?

  Absolutely, but entertainment in a way that like we're talking about, you know, anthropic and chat GPT's general population. But you just said, character AI is way more popular.

• 26:49Justine Moore?

  Yes.

• 26:50Bryan Kim?

  So then like, how do we think about that? And I think, you know, it's a very interesting strategy in my mind.

• 26:55Justine Moore?

  And Grok, like in the image and video app, since pretty early on, they've had templates of popular things. Like you're standing somewhere and suddenly like a thing drops, a rope drops from the ceiling and you grab onto it and it like swings you out of the scene, like some really good ones that go viral regularly on TikTok and other places.

• 27:13Anish Acharya?

  Yeah, really, really interesting. Well, so maybe switching gears from 25 to 26. What are some of all your predictions for next year? What do you think we'll see? Hardware, models, commerce we haven't spoken about yet? So what do we think will play out?

• 27:29Justine Moore?

  I think, I know this is, we're talking about consumer, but one of the things that's been really maybe underrated for me about chat GPT that we might see more of next year is they've really made a push into the enterprise, both with the traditional enterprise licenses and then working with specific companies to even like train models for them. And I think when we think about the fact that most consumers only use one general L L M product, chat GPT enterprise usage, they publish a big study, but it's up somewhat like eight or nine X year over year.

• 27:58Olivia Moore?

  Yeah. And so if we're entering a world now where people have to use ChatGPT for their company or as part of their work, that could really translate into consumer usage. Yeah. Or maybe they become the workspace with the connectors and some of the other things that they're investing in and someone else owns the consumer consumer use cases. Yeah. I think to that end, we have to talk about their push into apps. And I think whether or not that works is going to be kind of the defining question for them next year.

• 28:28Anish Acharya?

  Yeah. And I think that the, we've all discussed the importance of the Apps SDK and the Apps Directory, as they're calling it, and it's going to be a huge new channel for consumer. I think what's less discussed is it's hyper relevant to enterprise. So I think where ChatGPT shines is where it's able to operate across a number of tools for one workflow. And if you think about the number of things you do in your sort of business day to day that operates across many tools, it's most of those things.

• 28:51Olivia Moore?

  Yeah.

• 28:52Anish Acharya?

  So I think that will have very interesting implications for the SaaS ecosystem. And it's a part of the App Store. We're not talking about as much.

• 28:58Olivia Moore?

  Yeah.

• 28:59Bryan Kim?

  Yeah, maybe less of a prediction, but I'm thinking through 2025. And we talked about all the big moves from big labs. And from the startup point, I think one of the biggest trend we've seen is app generation. And I think there is a real world where we see the big labs with the distribution and the frequency of usage of people coming in to start saying, look, like, maybe there is a common type of product and apps that we could actually help you generate within the confines of the big lab products.

• 29:32Olivia Moore?

  Yeah. Yeah.

• 29:33Bryan Kim?

  I think that's like one of the interesting thing, which, you know, again, going back to the supply chain of ideas and research, maybe that's one thing. And again, nothing groundbreaking, but as we know, the Ghibli broke the internet. My cousin, who knows nothing about tech, sent me a Ghibli photo.

• 29:52Anish Acharya?

  Well, let's now send this to your cousin then.

• 29:56Bryan Kim?

  And I think that goes to show that templates matter.

• 30:00Justine Moore?

  Yeah.

• 30:00Bryan Kim?

  That style matters.

• 30:01Justine Moore?

  Yeah.

• 30:02Bryan Kim?

  And I think about video and like, it's pretty freaking good.

• 30:06Justine Moore?

  Yeah.

• 30:07Bryan Kim?

  And it's possible that we're already at a point that it's not necessarily just about the capability of models of the big labs, but the stylistic things, a template, think of TikTok. The large capability is largely still the same, music, trend, dance, go. Except the trend and format keeps on changing, keeps it extremely fresh. So I feel like there's a real world where the repurposer team or what have you can start thinking about ways to actually really build in video-first products into these lab models. And I think the cost will go down enough for people to try it out. And I'm excited to see that.

• 30:44Justine Moore?

  Yeah, I think what I'm most excited about is sort of along those lines, basically everything becoming multimodal, like I call it like anything in to anything out, which is basically initially, especially with these image and video models. It was you put in a text prompt and you get an image out or a video out. You couldn't really do much with it. And now we've started to see this with the image edit models with like Nano Banana and with Flux and with the new OpenAI model where you can put an image in now and get another image out. You can put an image in with a text pair in a direction or put an image with a template, another reference image and get another image out.

• 31:27Justine Moore?

  What happens when you can put a video in and get images out that are related to or the next iteration of the video? Or you can put a video in and a text prompt about what you want to edit and get the edited video out. From my conversations with the labs, a lot of them are trying to basically combine all these largely separate efforts they've had across like text reasoning and intelligence, the LLM space and image and video into like, what if we can put, merge those all into like a mega model that can take a lot different forms of content and produce much more? I think it's also going to have huge implications for like design.

• 32:08Justine Moore?

  Cause if you think about it, a lot of design is combining images with text, with video, with different elements in kind of interesting ways.

• 32:16Olivia Moore?

  Yeah. I guess if I think about like a macro level prediction. I think it's actually going to be more of the same in that when we talk about what all of the labs have launched in consumer, they've done a great job with models and they've done a great job with incremental things that improve the core experience of using like a ChatGPT or Gemini. Yeah. In my opinion, we've gone through dozens of things that they've launched or tried as new consumer products or new consumer interfaces like group chat, like Pulse, like Atlas, like Sora. Google has had a long tail, like Stitch, Gems, Opal, Doppel, tons. Yeah. None of those are really working. And I think it's because it's not the core competency of these companies anymore to

• 32:59Olivia Moore?

  build opinionated standalone consumer UI. Out of all of those, I think the product that's working the most is like Notebook LM. And that's one of like maybe 20 things that Google has tried or experimented with. So I think it's actually very positive for startups in that, consumer startups, in that the models will keep getting better, which the startups can use. And they'll keep, you know, they'll make ChatGPT better and better, but I don't necessarily think that ChatGPT like verticalizes into all of these other amazing use cases or products. And there's still room for startups to be building there.

• 33:30Bryan Kim?

  I have a yes and to that.

• 33:31Olivia Moore?

  Okay.

• 33:32Bryan Kim?

  Where absolutely. But however, when the input and the output is text.

• 33:37Olivia Moore?

  Yep.

• 33:38Bryan Kim?

  Where ChatGPT and Gemini of the world shine the most, no matter how deeper you go, no matter how specific you think your text output is going to be, essentially given the frequency of users of the main big lab products.

• 33:51Olivia Moore?

  Yeah.

• 33:52Bryan Kim?

  I think it's going to be really hard to stitch that and get that away from that usage if your product is mainly text and text out.

• 34:00Olivia Moore?

  Yep.

• 34:01Bryan Kim?

  So I do think you have to be creative around what is the angle that you can like go steal people away from.

• 34:07Anish Acharya?

  You know, I love that you use the word opinionated because I think that for labs, certainly for big tech and perhaps increasingly for labs, their priorities get set in their promo committee always. And if you're a PM, and it's always the sort of mid-career PMs, and I've been one of these, and you like the incentives are always to get promoted. And the way to get promoted is to build something safe that extends a core metric and a core feature. So building opinionated products is a very risky way to manage your career, you know, because they're probably not going to work. They're probably going to have a bunch of implications for legal and compliance, and the CEO might yell at you. So I just think that they are so structured to do incremental things. The more founders do opinionated things, the more advantaged they are.

• 34:46Justine Moore?

  I think honestly, the big thing we haven't discussed here too is compute, which is the labs have this inherent tension between there's a limited amount of compute and they either spend it on like training models or they spend it on inference. And even with inference, there's this split between like the entertainment Ghibli use cases and the like coding intelligence use cases. I think XAI is probably the only model company that is not bottlenecked on compute, from my understanding, whereas the others have to make really like serious and significant calls of like if we let, if we release Nano Banana and go super viral, like it may slow down the next like big LLM we're trying to push forward. Whereas startups who focus on the app layer don't have that problem because there's, there's no tension there.

• 35:28Anish Acharya?

  Yeah, absolutely. Yeah. I'll, we've talked about this before. I also think that there are categories in which being multi-model is just allows you to deliver a better proposition to the customer.

• 35:37Justine Moore?

  Yeah.

• 35:38Anish Acharya?

  And the labs in big tech are always going to be sort of definitionally first-party model only.

• 35:42Justine Moore?

  Yeah.

• 35:42Anish Acharya?

  So I think as all the models get better, perhaps 80% of what you need can be received from a single model, but for the power users, and so much of AI is a power user story.

• 35:51Justine Moore?

  Yeah.

• 35:51Anish Acharya?

  You know, you always said that like, well, power users are just power users. And I think that's true in a pre-AI world.

• 35:56Justine Moore?

  Yeah.

• 35:57Anish Acharya?

  But now the kind of depth of value and the depth of monetization is so much higher that maybe all of AI is actually a power user story.

• 36:03Justine Moore?

  Mm-hmm.

• 36:04Anish Acharya?

  You know, and everyone else is just traffic.

• 36:05Justine Moore?

  Yes. Yeah. Which is why we're also seeing like consumer products for the first time ever have more than 100% revenue retention.

• 36:12Anish Acharya?

  Yes.

• 36:12Justine Moore?

  Yes. And that's separating the good from the great, from the exceptional in consumer AI world. And to be clear, how that happens is they charge for usage often in addition to a subscription. So you can use beyond whatever your quota is for the month, given your subscription and pay more.

• 36:27Bryan Kim?

  It's either upgrade of the tier.

• 36:28Justine Moore?

  Yeah.

• 36:28Bryan Kim?

  Or actually buying tokens or more, more usage.

• 36:32Justine Moore?

  Yeah.

• 36:32Bryan Kim?

  It's, that's what differentiates it. Like, you know, if you told me pre-AI, we see a consumer company with 100 plus retention and money, like that, that doesn't make any sense. Does that compute?

• 36:43Justine Moore?

  Yeah.

• 36:43Anish Acharya?

  Yeah. No pun intended.

• 36:46Bryan Kim?

  Exactly.

• 36:48Anish Acharya?

  Well, guys, okay, maybe let's talk about start with specific recommendations. Like after this pod, what are the products people should download or the features of the models? What should folks be using today?

• 36:58Justine Moore?

  I guess on the multimodal point, I think one really underhyped product that people should check out, not because they'll use it every day, but because it shows sort of what is possible when you combine like an agent with image with text is Pimelli. So this is like the Google Labs product where you put in the URL of your business and it has an agent, go to the website, pull all of the product and brand photos, summarize what it thinks your brand's aesthetic is, what it stands for, what kind of customers it's targeting, and then it will generate three different ad campaigns for you. And it will generate not only the text, but it will generate like the Instagram posts, it will generate the flyer, it will generate like the photo of your product in this, you know, whatever,

• 37:42Justine Moore?

  wherever it thinks it should be based on your customer. And very cool product, would be hard to become a giant standalone product within Google, I think, but show sort of the future of what happens if we combine agents with generation models that have sort of really deep understanding of context that an image model or a video model normally wouldn't have. Startup products, though. Do you have a favorite startup? Oh, startup and creative tool. Yes. In creative tool? Yes. I mean, we're investors in Crea, so this is biased, but I think they've really done an exceptional job of being the best place to use every model or every quality model across every modality, and also building more of the interface on top of these models.

• 38:26Justine Moore?

  Like, I now prefer to use Nano Banana Pro on Crea because Crea allows you to save elements, which are essentially characters or styles or objects, that you can like at-tag to re-prompt versus having to drag the same image reference into Nano Banana over and over again. It's a good one.

• 38:46Bryan Kim?

  I suppose it falls under startup category, again, shilling companies, but you know, the one that I use the most is actually Eleven Labs Reader. And the reason is, we've seen an explosion in podcasts, and there is, I think, a reason for that, right? People are a lot more on to go. The reading capability of us reading, I think, is going down over time. And so, you know, let's not fight the reality. Let's embrace it. And, okay, so then like, let's actually find a written material, translate into listening and do that. And I used to be a power user of tools like Pocket. You know, I didn't have time to read everything that I wanted to read. And it's a saving behavior, right? You're going around and saving all the things you eventually want to consume.

• 39:29Bryan Kim?

  But I think what I do now is similar where I go get all the things I want to read and I just put it, I either PDF it or put it in 11 Reader. And just like, once in a while, when I'm gonna walk and have like, three, four minute, you know, 1.5x speed or 2x speed and just listen to one of these and get the gist of it. So I think that's been a good way to use a little bit of time as a sort of semi-normal person.

• 39:52Olivia Moore?

  Yeah. Well, first of all, I love this question because I am strongly opinionated that by far the best way to get up to speed on AI is just to try a ton of products. And you get opinionated really quickly. Yeah. Justine and I actually, for the whole month of December, are on Twitter publishing one new consumer product a day for people to check out. So that's one way. I'll name three others that I think are super, maybe relevant or interesting that people can plug into their workflows. So one would be Gamma for slide deck generations. You can go text prompt to slide deck. You can go document to slide deck. I use it for everything. Also, the slides are flexible sizes. So you're no longer like editing every little pixel in your Google Slides to get it to fit into one, which is great.

• 40:36Olivia Moore?

  Granola for no-taking. You might not have any meetings over the holidays, but in the new year. And it just gets better and better the more meetings you have on it because it has the context of what you talked about before. And then lastly, I'm still gonna plug, try the Comet browser. If you want to try kind of an AI-native workspace, I think that's one of the most accessible ones to start with.

• 40:56Anish Acharya?

  I mean, for me, I've spent my whole year obsessed with coding and AI code. It's just been so tremendously fun. I, by the way, Brian, would take the other side of your argument that the big labs or big tech will win in app generation. I think they just lack the focus. Products like Opal have been, you know, released with a whimper and they're one model only, so.

• 41:16Bryan Kim?

  I didn't. They will win it. I think that we will see them doing it.

• 41:19Anish Acharya?

  Yes, yes, I think that's true, but I think for the pure consumer side, of course, Wabi is really fun and really capable. And I think they are, they're creating the right sort of constraints on app generation so that you can get a really satisfying functional result. And I think so far, there's been a lot of overpromising in app generation, which has discouraged the early users. I also think if you haven't tried, you know, GPT-52 in Codex or in Cursor, it's worth trying. Even for non-technical people, it's just amazing. I think almost being technical is sort of a constraint because you have a pre-existing idea for what these models can do and they can do a lot more. And I'm hearing increasingly about people doing knowledge work and writing essays in Cursor instead of just writing code.

• 42:00Justine Moore?

  Wow.

• 42:01Bryan Kim?

  Just one thing I'm going to do at the end, year end, it's just to plug in like a popular trend I'm seeing on TikTok where there are people who said, what is the most unhinged thing I said this year?

• 42:12Anish Acharya?

  Okay.

• 42:13Bryan Kim?

  And it actually does a review of all the things that you said. But I think similarly, it'll be a good thing. I'm going to do this at the year end. Tell me how to live a better life next year.

• 42:24Justine Moore?

  Yeah.

• 42:24Bryan Kim?

  Give me, give me actual unvarnished opinions and some direction, then I think it'll be helpful.

• 42:32Justine Moore?

  I love that idea.

• 42:33Anish Acharya?

  I'm going for a worse life next year.

• 42:36Bryan Kim?

  Fantastic.

• 42:37Anish Acharya?

  Let's go full DGEN, guys. Any closing thoughts?

• 42:41Bryan Kim?

  That wasn't.

• 42:42Justine Moore?

  I mean, the obvious one is we are very actively investing in consumer companies. And I genuinely, I think a lot of people say this, I genuinely believe that the models have gotten to the level of quality that you can build a real scalable app on top of them. Wabi is a great example of this. And so the hope is 2026 will be a huge year for consumer builders, not just like consumers as

• 43:08Justine Moore?

  like consumers being consumers of a product.

• 43:11Anish Acharya?

  Yes. Well, thank you all for a super fun year in consumer and AI. We'll be back with more next year and Merry Christmas, guys.

• 43:17Bryan Kim?

  This is a wrap.

• 43:18Anish Acharya?

  Yeah.

• 43:18Justine Moore?

  Happy holidays.

• 43:19Bryan Kim?

  Happy holidays.

• 43:23Speaker 02

  Thanks for listening to this episode of the A16Z Podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X at A16Z and subscribe to our Substack at A16Z.substack.com. Thanks again for listening, and I'll see you in the next episode. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast.

• 44:07Speaker 02

  For more details, including a link to our investments, please see A16Z.com/disclosures.