Despite a surge in generative AI over the past three years, most startups in the sector continue to generate revenue primarily by serving businesses rather than individual consumers. While large language models like ChatGPT have achieved rapid consumer adoption, specialized consumer-facing applications in video, audio, and photo generation have struggled to replicate that success.

Chi-Hua Chien, co-founder and managing partner at Goodwater Capital, speaking at TechCrunch’s StrictlyVC event, noted that many early “super cool” AI apps quickly became obsolete. Advanced models such as Sora and Nano Banana, along with open-source video models from China, diminished initial market opportunities. Chien compared this to the post-iPhone 2008 boom of third-party flashlight apps, which were eventually integrated into iOS, rendering standalone versions unnecessary.

Chien argued that, much like smartphones took years to stabilize before transformative apps like Uber and Airbnb emerged, consumer AI platforms require a similar period of maturation. He believes we are “on the cusp of the equivalent to mobile of the 2009–2010 era,” with the technological parity of Google’s Gemini and ChatGPT potentially marking the first signs of stabilization.

Elizabeth Weil, founder and partner at Scribble Ventures, described the current consumer AI landscape as an “awkward teenage middle ground.” Both experts suggest that the sector’s growth may hinge on the development of new devices that go beyond smartphone limitations.

Chien emphasized that a device used 500 times daily but only capturing 3–5% of a user’s attention is unlikely to unlock AI’s full potential. Weil agreed, calling smartphones “not ambient” and restrictive for reimagining consumer AI products. This challenge is fueling competition among startups and tech giants to design personal devices capable of complementing—or even replacing—smartphones.

Notable experiments include the rumored “screenless,” pocket-sized device developed by OpenAI and former Apple designer Jony Ive, as well as Meta’s Ray-Ban smart glasses with gesture controls. Other startups are exploring AI-powered pins, pendants, and rings, seeking unique interactions beyond the smartphone experience.

However, hardware innovation is not the only path. Chien highlighted possibilities for personal AI assistants, such as a financial adviser tailored to individual users. Weil envisions “always-on” personalized tutors capable of delivering specialized instruction directly via smartphones, demonstrating AI’s versatility beyond novel gadgets.

Despite their optimism, both experts expressed skepticism toward emerging AI-powered social network startups. Chien warned that networks dominated by AI bots risk turning social interaction into a “single-player game,” questioning the appeal if real humans are no longer engaged on the other side. This underscores a central challenge for integrating AI into human-centered platforms.