Three years into the generative AI surge, the majority of AI startups continue to generate revenue primarily by serving businesses rather than individual consumers. While general-purpose large language models such as ChatGPT saw rapid consumer adoption, most specialized consumer-facing GenAI applications have struggled to find widespread appeal. "But then Sora and Nano Banana were released, and Chinese developers open-sourced their video models. Consequently, many of those early opportunities vanished," one observer noted.

This dynamic is compared to the simple flashlight app, a popular third-party download after the iPhone's 2008 launch that was soon built directly into iOS. The argument is that, much like the smartphone platform required a few years to solidify before transformative consumer apps like Uber and Airbnb emerged around 2009-2010, AI platforms need a similar period of "stabilization" for enduring consumer products to develop. "I think we're right on the cusp of the equivalent to mobile's 2009-2010 era," said Chien. Signs of this stabilization may be appearing, with Google's Gemini reaching technological parity with ChatGPT.

Elizabeth Weil, founder and partner at Scribble Ventures, shares this perspective on GenAI's early phase, describing the current landscape of consumer AI applications as an "awkward teenage middle ground." The question remains: what will propel consumer AI startups to maturity? One answer may lie in a new type of device. "It's unlikely that a device you pick up 500 times a day but that only sees 3% to 5% of your world will be the one to unlock the full potential of AI's capabilities," Chien suggested. Weil agreed, noting the smartphone's limitations largely stem from its lack of ambient presence. "I don't think we're going to be building for this in five years," she said, gesturing to her iPhone.

This has sparked a race among startups and established tech firms to create a new personal device that could eventually replace the smartphone. Rumors suggest OpenAI and Apple's former design chief Jonny Ive are collaborating on a potential "screenless," pocket-sized device. Meta's Ray-Ban smart glasses are operated via a wristband that detects subtle gestures. Meanwhile, several startups are attempting, often with mixed success, to launch AI-powered pins, pendants, or rings that operate differently from smartphones.

Not every future AI consumer product will require new hardware, however. Chien pointed to the potential for a personalized AI financial advisor tailored to an individual's specific needs. Similarly, Weil anticipates the rise of a ubiquitous, personalized "always-on" tutor, delivering specialized instruction directly through a smartphone.

Despite their enthusiasm for AI's possibilities, both Weil and Chien expressed doubt about several stealth-mode AI-powered social network startups. These companies are constructing networks where thousands of AI bots interact with user content. "It turns social into a single-player game. I'm not sure that it works," Chien remarked. "The reason people enjoy social networking is the understanding that there are real humans on the other side."