a16z's Justine Moore: AI creative app market keeps expanding with more specialized tools, not fewer

Uh, up next we have Justine Moore from A16Z. This is her second time on the show. Third time in the chat. I felt that gong hit in my soul. That gong hit was wild. Uh, Justine Moore, can you hear us? We're back on the podium. Hopefully, we have audio. Fantastic. Here we go. Loud and clear. It's great to be back, guys.

Fantastic. Uh, what is uh what is new from you? Wait, wait, wait. Open open screen time. I want to know how much Sora This is a good question. Let's see it. Let's see it. We know she loves Guys, this is not going to be super impressive because I mostly use Sora on desktop. Oh, okay. Okay. Desktop user.

I would I would guess it's if I had to guess, it's probably like 15 minutes a day. 15 minutes a day. Okay. In the feed? In the feed or making? Making stuff, right? Um I think I like the phone. I Okay. When I do it on the phone, I like to scroll through the feed and see what other people are making.

On desktop, there's a lot more controllability with like the storyboard and stuff like that. And you can do landscape as well. Oh, yeah.

Do you feel like you've you've given Sora, the app, enough data that you're actually getting fine-tuned recommendations or are you just seeing the cream of the crop because there isn't enough to give you specific things that you like? How what's the temp? What take the temperature on the feed?

You know what I'm talking about, right? I think it is not yet enough content to be able to have a very personalized feed for everyone, but I'm not sure because I haven't seen anyone else's feed. So, they might be super different.

Yeah, cuz like if I go on TikTok and I say I like car videos and you go on Tik Tok and you say you like boat videos, like pretty quickly we're both going to just get unlimited cars and no boats and vice versa. Um, interesting.

Uh how are you thinking about the we were just talking to Craya about this like winning in the application layer for creativity like Sora is a creative tool you can create on desktop with the storyboard. Uh there's there's this world where we wind up with one app that instantiates UI on the fly lets you do everything.

There's another one where we see even more bifurcation just like we have Lightroom and Photoshop and Premiere and After Effects. we could wind up with 20 apps for individual little fine tune a face upres over here. How do you think it's going to play out? Yeah, it's a great question.

I think um honestly at the beginning of the wave we thought maybe there'd be a little bit more concentration than there has been. The market just keeps getting bigger and bigger and bigger and we keep seeing more specialized apps.

I think because these creative AI tools are enabling all of these people who couldn't create content before to make content for the first time and so that unlocks a bunch of different verticals who weren't using creative tools much before.

Um, so my guess is like there'll be some kind of horizontal tooling layers whether they're for developers like what the folks at fall are doing which is awesome or for consumers proumers and then I think we're also going to start seeing more vertical specific applications just like we've seen with LLMs honestly like we've seen a lot of for accounting for law for finance sure sure different industries um and different personas have different use cases and workflows yeah it's interesting I haven't thought about it that way because when I think of uh like an AI law firm, I don't think them I don't think about them as like fine-tuning tokens or like running a specific but it is it is it is very much the same.

Um how are you thinking about the mobile versus desktop divide?

you're you're obviously experiencing it on Sora, but are you seeing a uh a bifurcation where you might actually back a company that's saying we're going after mobile gen AI in this particular niche or we're going desktop and is that a meaningful designation or are companies with vibe coding able to kind of uh go multiplatform on day one?

Obviously, OpenAI was but they have a lot of resources. I think sort of the mobile versus desktop speaks a lot to sort of the user persona and use case.

What we've seen so far is that stuff that blows up on mobile tends to be consumer products where you don't have to put a ton of work into editing the output into having super long prompts.

Things like Sora 2 or like Lensa if you guys remember which blew up a couple years ago now to make these like AI profile pictures of you. It was huge. I think like true um true creative workflows and really detailed editing tend to require bigger screens.

We've actually seen more companies start looking at iPad apps, too, which is crazy to say. It's not just like four-year-olds on iPads. It's like real real creative professionals because people love to kind of draw on them. Um and it and it's a larger screen that enables kind of more knobs and dials. Yeah.

uh what are you seeing on uh on the monetization side for pure AI content creators? I know you track a lot of these accounts.

I'm interested uh to see if if some of these again like not not just a content creator that might use AI here or there, but like a new content creator that only makes AI content, will they monetize via, you know, influencer style marketing?

Will they go straight to doing deals with, you know, the Netflixes or other streaming platforms? But curious what you think there. Yeah, it's so early it's hard to say.

I think like how it started was people started growing these sort of AI only accounts and monetizing in the traditional ways um which was like ad revenue or kind of some share of the views you got on your video, things like that on platforms like X and and Tik Tok and Instagram.

Um, I've also seen honestly a ton of the ways that AI creators monetize is by selling like prompts or courses or teaching other people how to make the same things just because there's so much demand and most people are not experts at these tools.

Um, I think it's going to be really interesting to see like when we start to see more AI native IP or characters that can like appear in a Netflix show or have a song that they release on Spotify and they kind of get a cut of the streaming revenue. We've already started to see some of that like that AI actress.

Um, and we've seen some in music too, especially in Asia, but I think we're just at the very early stages of that. Yeah. Um, are you are are you losing the ability to actually define a particular AI virality moment? Like the Lensza era was definitely a thing. Everyone had the Magic Avatars.

The Studio Gibli moment was a moment. Uh, then maybe it was like the Sam Alman stealing GPUs era with Sora, but I feel like we're just now in like the Sora moment. And maybe it just becomes an era. But uh and the Italian brain rot like are are are we accelerating?

Are you feeling acceleration where you can't start you can't even track all the memes because they just happen so fast? Yes.

I used to keep um basically the spreadsheet where I tracked like the number of impressions as far as I could guess from like certain trends or launches or announcements or things that would happen. And I gave up on it probably like six or so months ago because there was so many things happening at once.

It was like Nano Banana and V3 and Sora and like two new Chinese models that were amazing and like the World Labs launch like there were just 20 things happening like every day. Um and and I think the interesting thing about that too is like different people are excited by different things.

Like sometimes I talk to people who are really deep in AI creativity but they're really into one part of it and so they don't even know about the other the other launches because it's so hard to keep up with everything right now. What was the Nano Banana using the Meta Vibes app too much? I can't. I'm sorry.

I don't have time for anything else. What was the What was the Nano Banana like viral like moment or driver? Like what was the the canonical like thing that you would prompt that Nano Banana did so well that made it really popular?

I mean, the the interesting thing about Nano Banana was I think it wasn't just one prompt. It was a series of them. There was like the Polaroids, putting yourself in a different era, and then there was making yourself an action figure.

And then one I've been following this week on Tik Tok is um like college kids are making videos of them like hugging their younger selves from an image that they create. Yeah. Like with them and their younger self on Nano Banana. I'm not a fan. I think it's not. I mean, don't we all want to hug our younger self?

No, not at all. I say toughen up. Toughen up. Pull up the bootstrap. Pick yourself up by your bootstrap. I would I would make an AI would make an AI video of my younger me picking myself up by my bootstrap. There you go. Okay. So, you know, we're close there.

We're we we we will be participating in like the next slight iteration of the of the viral sensation. But no, I won't be hugging myself. That feels very odd to me. You can do a new one of you yelling at your younger self if you want. This is a free idea or boxing.

Um but yeah, I mean a lot of these are a lot of these are odd. Stephen Hawking at the X Games is odd. A cat uh steamrolling its way through a house is odd, but uh I love I love most of those. But it's important. It is important. Humanity needs these videos. I think we do. I think we do. I think we do. Laugh.

Laughing is important. Yeah, creativity. It is. It is creativity. Whoever prompted it was creative. I would not have thought to put Stephen Hawking at the X Games and someone did. Me neither. Uh what else is are people talking about? What are the key uh like stress points?

Are people worried about like AI bubble generally? Is it all just about like let me find the the most efficient inference arbitrage or inference provider, the the best AI factory? Like what what are the current uh discussions? I imagine it's not Doom anymore. That one's kind of moved on.

What what are people talking about at this particular conference? Yeah, we we actually had an investor panel earlier with a bunch of great folks kind of talking about those sorts of things. Um, I think like the the bubble question is an interesting one. Um, I personally don't think we're in a bubble.

I think like just the true demand for the products is massive and we're seeing companies grow faster than ever before and also retain users higher than ever before. A lot of a lot of folks like I'm sure you guys do have questions about kind of gross margin.

I think like we find that margins tend to improve over time as you've seen in many eras of consumer software like Amazon and Uber and Door Dash.

Like a lot of these companies were gross margin negative or neutral at the beginning and then kind of become more efficient over time as they scale and and unlock various network effects.

where I would be worried we were in a bubble if the margins were all negative and the retention sucked and you're a lot of money for it or if there was only like 100,000 real users or something like that. Totally. Exactly. Which we've seen before in different tech trends. Yeah. Yes. Yeah. No, totally. Totally.

I mean, yeah, we just talked uh to Korea like 30 million users is like very significant like and chatbt at close to a billion users.

Like it's just it's just accelerating much faster and the distribution is there and it's a lot because like Stripe exists like you can just actually get 20 bucks a month out of someone pretty easily and you couldn't do that in 1999. It was just no way.

And so you had to say, "Well, we'll monetize the eyeballs later and we'll do ads and people will pay. " And it became this kind of weird circular economy, but now you can just be like, "How much value am I delivering to your business? Put down your card and we'll pay for it or churn. " Uh, which is great.

Uh, well, thank you so much for taking the time to stop by during a busy conference. Second podium guest time chatting with you. I'm honored. Thanks, guys. Have fun at the event and and give our best to everybody there. Yes. And and and just so you know, we're we're coming for your lunch.

We dropped our first market map. I don't know if you saw that, but we dropped a media we dropped a media market map. So now we're in direct. It's not skitso at all. It's not skitso at all. You know, the the competition fuels me, so I'm excited for Yeah. Fire back. Fire back with your own market map.

This is like This is like a rap battle for people that uh a rap battle that like five people are interested in. Yes. a rap battle for people who know how to read a term sheet or something. Uh anyway, thank you so much for stopping by. We will talk to you soon. Have a great rest of your day. Thanks, guys. Goodbye.

We got to take go over to this post from Marvin Vonhagen, which is one of the most uh royal names ever. Uh this this man is is destined for uh greatness.

He quoted uh the essay that I published yesterday and and just with two excerpts from my my piece, he said, "The interaction company of California has managed to really break through the noise and deliver a truly novel consumer AI product experience. " Dot dot dot nothing important. Don't worry about it. Pokey.

com itself is a fantastic domain and a name for their business and audience. So, you just skipped over of course the criticism in there or something. No.

Yeah, I was like I was criticizing the general sort of like naming convention, but this was an absolutely perfect response and I I really want to have Marvin on the show. So Marvin, let's get you on the on the schedule next week. Yeah. Yeah. This is the nature of this was like chef's kiss. Perfect response.

Um uh what's going on here? Uh Austin says you should never use an M dash in your writing anymore. You will be 100% be accused of using AI, especially if it's on social. That is true.

I actually recently like today in the in the newsletter I used just a minus sign instead of an M dash and Brandon was like certainly we can use the mdash here like you intended to use an M dash and I was like no we're using the minus sign we're using the wrong thing because I don't want to deal with it's an M dash you used AI or whatever.

So I have completely sacrificed it. But what does Alyssa pumpkin queen say? says, "That's what the Clank uh uh dropping the M Dash. That's what the Clankers want you to do.

Surrender the M dash, but by the grace of God, we will outmaneuver the Clankers, sink our hands into their motherboards, and remind them what mankind can do. Let the Clanker hold their position. We won't journalistic force. " Oh, so good.

Uh, by the way, the chat uh chat wants us to do a conference, and Ben Sans says, "I'd go to the conference, but we needed a TVPN cruise. " We uh I'm not joking. We've talked about getting a yacht to park in the San Francisco uh bay and do a conference there.

So, uh I would like to pull that off at some point and the chat will be the first to know. Uh Ohio has a new bill uh that goes far beyond banner marriage. Far beyond banning human AI marriage.

The measure would define AI systems as non-scentient entities, strip them of any claim to legal personhood, forbid them from owning property, holding financial accounts, controlling IP, or acting as company directors. So, it's basically game on if we get a humanoid. Like, we can it has no rights in Ohio.

So, if we take it to Ohio, it like the unit is going to be sitting there being like, "Hey guys, why why are we going to Ohio? " Uh, you know, I I'd love to stay in in in a different state because I would hate for you to like destroy me and then face no legal consequences because I have no rights in Ohio.

Yeah, this this this Ohio clearly hasn't read uh less wrong. It's not is not familiar with Roco's basilisk. Um, Ohio might be the first place that the Clankers descend on and and Skynet goes on like really they really put themselves in the crosshair the clanker crosshair on the aggress on the aggressive.

Daniel Tenerero has Before we read this, let me tell you about wander. com. Find your happy place, book a wonder with inspiring dues, hotel, great amenities, dreamy beds, top cleaning 24/7 concier service. It's a vacation home but better. What did Daniel say?

He says, "Finally, some good news, which is that hedge fund assets hit 5 trillion with most inflows since before the financial crisis. Great hit, John. Uh, assets in the global hedge fund industry have surged to a record 5 trillion as investors poured money into alternatives and funds posted solid gains.

Our gong is gifted today. You hear this, right? It's still going. Still going. Still going. Funds saw net inflows of nearly 34 billion in the first three months through September with total returns across all strategies averaging 5. 4% over the quarter.

So underperforming the average terminally online Zoomer that is just massively levered into the MAG 7. Yeah. Uh but uh still still uh uh not not so bad as a whole.

Uh cryptocurrency hedge funds posted solid double-digit gains in the third quarter, recovering from sharp losses in early 2025 to bring year-to- date performance to 6. 7%. So can we play this clip of H. It's probably too long to react to.

Buco Capital, the legend, says, "I'm always so confused when Tesla goes down on earnings as the business performance is completely irrelevant to the price of the stock. They put up uh over 1. 4 billion, I think, of uh free cash flow as a trillion dollar company. " So, that's good. They beat earnings. Yes.

Uh the stock went down. Is that what No, no, no, no. I think they they missed earnings and the stock went up. I don't know. I I agree with No, he's saying they they missed, but he's and the stock traded down and he's like, "Why is it trading? It shouldn't even matter. It shouldn't even matter.

Um, let's skip the the Dorsy reaction. We got to get out of here. It's Friday. Uh, we we got to start our weekend. " Um, apparently the the the sale of Tik Tok was upon sacrifice to open up the diplomatic chess board.

And Run says it's pretty bad that Cunping models Tik Tok as spiritual opium and feels okay selling it to the West in a revenge opium war setup. Uh for Trump facing the sale of the high-profile app was a populist victory framed around national security. For Cinping, however, the app was a lowcost bargaining chip.

He had privately dismissed it as spiritual opium according to the people close to Beijing and viewed it as easy sacrifice to secure the continued dialogue on China that that China needed. Um, that makes a ton of sense. In more important geopolitical news, Justin Bieber is on Twitch.

Michael Seel says, "Almost 19 years after we got started, we finally got Bieber. So, never give up. " Um, and this was, I think, my favorite post of the week. It's now been uh deleted. I won't read the user's name, but I I I I think it's funny. Uh it was a post that said, "I honestly don't care if I get fired.

I was part of the illegal gambling ring with Chanty Bilips and Terry Rose here. My name is Andy Jasse and I work at Amazon. " So these these like fake framing someone who did something is so shareholders.

shareholders or I I didn't realize that like the there was a retail army for for Andy Jasse that cared about Andy Jasse and and and Amazon. Yeah, it's tough when your stock goes up 20% year to date and people are still like calling for uh you to to to be fired. Um but uh I think that's a good place to call it.

Uh we've had a fantastic You know where we're going to call it show. Where are we going to call it? Uh we're going to call it with with Gabe over at Sora. Sora was dethroned in the app store by Dave's Hot Chicken.

Play the W and uh Sora and a Eagle sound effect for Dave because uh something their team I think is just really cracked because I don't think this is the first time they've like charted number one.

I think most people think that the Dave's Hot Chicken team is like one notch above the OpenAI team in terms of just you know product design growth. Yeah. just IQ and uh and strategy research. Yeah, these types of things. I think most people think uh it's sort of like, you know, a hot bed of the best talent in the world.

Absolutely. So, I'm unsurprised. No, seriously, the the Dave's Hot Chicken Team must be cooking because something crazy happened in their marketing because to go to the top of the charts, even if it's momentum based, that means that they had some campaign that just hit. And it's not like it's the Super Bowl right now.

Like they must have had some crazy call to action to get that app to the top of the store. But congratulations to over everyone at Dave's Hot Chicken. I'm a huge fan. I order Dave's Hot Chicken all the time. Maybe I should the app. I usually use Dorchester. Never ordered it to the Ultra Dome. No, I haven't.

But uh more of a weekend thing. More of a weekend thing. More of a weekend thing. But Dave's Hot Chicken is awesome. Highly recommend. It is almost a weekend for our our East Coast audience. If you're on the West Coast, we're going to we're continue your lock in. Please stay locked in at least until 5.

Hopefully you're not leaving the office at 5 because it just looks bad. It's like you just were hanging out. Yeah. Um trying to trying to get the optics in. But uh we had a really fun week. Uh uh next week is going to be wild as well. I think it's going to be a magnificent week. I think so, too.

It's going to be absolutely magnificent. I think it will be magnificent. And uh I can't wait to be back. So have a wonderful Friday. Have a wonderful Saturday. Have a wonderful Sunday. We will be counting down the hours until we are going live again on Monday. And thank you for tuning in. Goodbye. Cheers.