Where Does Consumer AI Stand at the End of 2025?
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
This episode brings together four a16z consumer investors—Anish Acharya, Olivia Moore, Justine Moore, and Bryan Kim—to analyze the major shifts in consumer AI throughout 2025 and predict what 2026 might bring. (00:31) The conversation reveals that consumer AI has entered a new phase where a small number of products dominate usage, with ChatGPT leading at 800-900 million weekly active users compared to Gemini's 35% scale on web. (01:54) However, the landscape is rapidly changing, with Gemini growing desktop users 155% year-over-year following viral model launches like Nano Banana, while ChatGPT only grows 23% annually.
- Main themes: The evolution from model quality to product execution, the rise of multimodal creation tools, and the ongoing battle between big labs and startups for consumer mindshare in an increasingly winner-take-most market
Speakers
Anish Acharya
Consumer investor at Andreessen Horowitz (a16z) who focuses on AI-powered consumer products and productivity tools. He brings insights from his experience analyzing consumer behavior patterns and investment trends in the AI space.
Olivia Moore
Consumer investor at a16z who specializes in evaluating consumer AI products and workflows. She is known for being a power user of multiple AI tools and provides practical insights on product execution and user adoption.
Justine Moore
Consumer investor at a16z with expertise in multimodal AI models and creative tools. She closely tracks the evolution of image and video generation models and their impact on consumer behavior and viral adoption.
Bryan Kim
Consumer investor at a16z who focuses on productivity and enterprise consumer crossover products. He brings perspectives on social features, product design, and the intersection of consumer and business use cases in AI applications.
Key Takeaways
Product Execution Trumps Raw Model Quality
The conversation reveals that subtle product design choices often matter more than having the most powerful underlying model. (14:42) When comparing OpenAI's ChatGPT to Google's Gemini, the speakers noted that ChatGPT provides a TikTok-style interface with trending themes and templates that guide users to take action, while Gemini presents a blank screen with minimal guidance. This demonstrates that user experience and onboarding design can be more critical than technical superiority in driving adoption and engagement.
Templates and Multimodality Drive Viral Adoption
The most successful AI products this year leveraged templates and became truly multimodal, allowing "anything in to anything out" workflows. (30:47) Google's Nano Banana and OpenAI's image models gained massive traction because they provided pre-made templates and style options that users could easily customize. The future lies in combining text reasoning with image and video capabilities in seamless workflows, enabling users to input various content types and receive sophisticated outputs across different media formats.
Consumer AI Is Trending Toward Winner-Take-Most
Early data suggests the consumer AI market may be consolidating around a few dominant players. (01:54) Only 9% of consumers pay for more than one major LLM service (ChatGPT, Gemini, Claude, Cursor), and less than 10% of ChatGPT users visit competing platforms. This indicates strong user loyalty and suggests that establishing early market leadership in specific categories becomes increasingly important as switching costs and user habits solidify.
Enterprise Usage Drives Consumer Adoption
OpenAI's enterprise strategy is creating a powerful flywheel effect for consumer adoption. (27:40) With enterprise usage growing 8-9x year-over-year, employees who use ChatGPT at work naturally extend that usage to personal tasks. This enterprise-to-consumer conversion represents a significant competitive advantage and suggests that B2B success can be a pathway to consumer dominance in the AI space.
Big Labs Struggle with Standalone Consumer Products
Despite having superior models and distribution advantages, major AI labs consistently fail at creating successful standalone consumer applications beyond their core chat interfaces. (32:46) Products like OpenAI's Pulse, group chats, and Atlas, or Google's numerous experimental apps, haven't achieved meaningful adoption. This creates opportunities for startups to build opinionated, focused products that leverage these powerful models through APIs while providing superior user experiences for specific use cases.
Statistics & Facts
- ChatGPT leads with 800-900 million weekly active users, while Gemini has reached about 35% of ChatGPT's scale on web and 40% on mobile. (01:54) This demonstrates the significant gap between the market leader and closest competitor in the general LLM space.
- Only 9% of consumers pay for more than one major AI service (ChatGPT, Gemini, Claude, Cursor), and less than 10% of ChatGPT users visit other major LLM providers throughout the year. (01:54) This indicates strong user loyalty and potential winner-take-most dynamics in the consumer AI market.
- Gemini is experiencing 155% year-over-year growth in desktop users, which is actually accelerating as they reach larger scale, while ChatGPT is only growing 23% year-over-year. (02:35) This suggests that viral model launches like Nano Banana can significantly impact growth trajectories even for established products.
