Even three years after the generative AI boom started, most AI startups are still making money by selling to businesses, not individual consumers.
Although consumers quickly adopted general-purpose LLMs like ChatGPT, most specialized consumer GenAI applications have yet to resonate.
“A lot of early AI applications around video, audio, and photo were super cool,” said Chi-Hua Chien, co-founder and managing partner at Goodwater Capital, on stage at a TechCrunch’s StrictlyVC event in early December. “But then Sora and Nano Banana came out, and the Chinese open-sourced their video models. And so, a lot of those opportunities disappeared.”
Chien compares some of those applications to the simple flashlight, which was initially a popular third-party download after the iPhone launched in 2008 but was quickly integrated into iOS itself.
He argued that, just as it took a few years for the smartphone platform to solidify before game-changing consumer apps emerged, AI platforms need a similar period of “stabilization” for lasting AI consumer products to flourish.
“I think we’re right on the cusp of the equivalent to mobile of the 2009 -2010 era,” Chien said. That period was the birth of massive mobile-first consumer businesses like Uber and Airbnb.
We could be seeing inklings of that stabilization with Google’s Gemini reaching technological parity with ChatGPT, Chien said.
Techcrunch event Join the Disrupt 2026 Waitlist Add yourself to the Disrupt 2026 waitlist to be first in line when Early Bird tickets drop. Past Disrupts have brought Google Cloud, Netflix, Microsoft, Box, Phia, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, and Vinod Khosla to the stages — part of 250+ industry leaders driving 200+ sessions built to fuel your growth and sharpen your edge. Plus, meet the hundreds of startups innovating across every sector. Join the Disrupt 2026 Waitlist Add yourself to the Disrupt 2026 waitlist to be first in line when Early Bird tickets drop. Past Disrupts have brought Google Cloud, Netflix, Microsoft, Box, Phia, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, and Vinod Khosla to the stages — part of 250+ industry leaders driving 200+ sessions built to fuel your growth and sharpen your edge. Plus, meet the hundreds of startups innovating across every sector. San Francisco | WAITLIST NOW
Elizabeth Weil, founder and partner at Scribble Ventures, echoed Chien’s sentiment about the early days of GenAI, describing the current state of consumer AI applications as being in an “awkward teenage middle ground.”
What will it take for consumer AI startups to grow up? Possibly a new device beyond the smartphone.
... continue reading