A16z’s Olivia Moore on the state of consumer AI

Olivia Moore, a partner at Andreessen Horowitz, discusses the state of consumer AI in a recent report. ChatGPT remains the dominant player, but smaller companies like Suno and ElevenLabs are gaining traction. Moore highlights six consumer categories that have not yet been impacted by AI. She believes there is significant opportunity in consumer AI, particularly if the industry can unlock new revenue streams beyond subscriptions and API charges.

The report comes at an interesting time, as OpenAI has shifted back to focusing on enterprise applications, which has led to some pessimism about the overall revenue potential for consumer AI. However, Moore is more optimistic and argues that consumer AI could change the revenue landscape by monetizing users in a way that doesn't require direct payments.

She questions whether we need a higher percentage of households paying for AI and instead focuses on finding ways to monetize consumers without charging them upfront. Moore also notes that the marginal cost of AI services is currently higher than traditional internet services, but there is potential for more affordable models, including open-source solutions.

She sees a shift towards consumer companies building on top of open-source models and believes this could lead to lower-cost models. Moore emphasizes that the current user base driving revenue often requires advanced intelligence for technical automation, but as more consumer-focused services emerge, cheaper models may become more prevalent.

The report suggests that consumer AI is still in its early stages, and there is an opportunity to explore new categories, such as social apps, dating apps, marketplaces, retail, travel, finance, and health, which currently lack consumer entrants.