Even three years after the generative AI increase began, most AI startups are nonetheless being profitable by promoting to companies, not particular person customers.
Though customers shortly adopted general-purpose LLMs like ChatGPT, most specialised shopper GenAI functions have but to resonate.
“A variety of early AI functions round video, audio, and photograph have been tremendous cool,” stated Chi-Hua Chien, co-founder and managing companion at Goodwater Capital, onstage at TechCrunch’s StrictlyVC occasion in early December. “However then Sora and Nano Banana got here out, and the Chinese language open sourced their video fashions. And so, a variety of these alternatives disappeared.”
Chien compares a few of these functions to the easy flashlight, which was initially a well-liked third-party obtain after the iPhone launched in 2008 however was shortly built-in into iOS itself.
He argued that, simply because it took a couple of years for the smartphone platform to solidify earlier than game-changing shopper apps emerged, AI platforms want an analogous interval of “stabilization” for lasting AI shopper merchandise to flourish.
“I feel we’re proper on the cusp of the equal to cellular of the 2009-2010 period,” Chien stated. That interval was the start of large mobile-first shopper companies like Uber and Airbnb.
We might be seeing inklings of that stabilization with Google’s Gemini reaching technological parity with ChatGPT, Chien stated.
Techcrunch occasion
San Francisco
|
October 13-15, 2026
Elizabeth Weil, founder and companion at Scribble Ventures, echoed Chien’s sentiment in regards to the early days of GenAI, describing the present state of shopper AI functions as being in an “awkward teenage center floor.”
What’s going to it take for shopper AI startups to develop up? Probably a brand new system past the smartphone.
“It’s unlikely {that a} system that you just choose up 500 occasions a day however solely sees 3% to five% of what you see goes to be what finally introduces the use instances that take full benefit of AI’s capabilities,” Chien stated.
Weil agreed {that a} smartphone could also be too limiting for reimagining shopper AI merchandise largely as a result of it’s not ambient. “I don’t assume we’re going to be constructing for this in 5 years,” she stated, indicating her iPhone as she confirmed it to the viewers.
Startups and incumbent tech firms have been racing to construct a brand new private system that may supplant smartphones.
OpenAI and Apple’s former design chief, Jony Ive, are engaged on what’s rumored to be a “screenless,” pocket-sized system. Meta’s Ray-Ban sensible glasses are managed by a wristband that detects refined gestures. In the meantime, plenty of startups try, with usually disappointing outcomes, to introduce a pin, pendant, or ring that makes use of AI in a method totally different from how smartphones do.
Nonetheless, not each AI shopper product will probably be depending on a brand new system. Chien recommended that one such providing might be a private AI monetary adviser custom-made to the consumer’s particular wants. Equally, Weil anticipates {that a} personalised, “always-on” tutor will turn out to be ubiquitous, with its specialised tutelage delivered immediately from a smartphone.
Although excited by AI’s potential, Weil and Chien expressed skepticism in regards to the emergence of a number of, still-stealthy AI-powered social community startups. Chien stated these firms are constructing networks the place 1000’s of AI bots are interacting with the consumer’s content material.
“It turns social right into a single-player sport. I’m undecided that it really works,” he stated. “The explanation that individuals get pleasure from social networking is the understanding that there are actual people on the opposite aspect.”
