In the rapidly evolving world of artificial intelligence, keeping up with the latest consumer applications can be like chasing a moving target. For venture capitalists and investors, understanding which AI apps are really garnering attention is essential to making informed investment decisions. Fortunately, Andreessen Horowitz (a16z), one of Silicon Valley's most prominent venture capital firms, recently released the third edition of its comprehensive “Top 100 Gen AI Consumer Apps” report, providing valuable insights into emerging trends, user behavior, and potential investment opportunities.
Published in August 2024, this latest edition (the third edition) provides data-driven rankings of the 100 most popular AI products, the top 50 web-first web products (based on monthly unique visits) and the top 50 AI-first mobile apps (by monthly active users). As a semi-annual report from a16z, it serves as a key barometer of the rapidly changing AI consumer landscape, offering investors a unique window into which apps and platforms are not just generating buzz, but actually acquiring and retaining users.
What's particularly striking about this third edition is the pace of change: compared to our last report in March 2024, nearly 30% of the companies featured are new entrants. This high turnover rate highlights the dynamic nature of the AI āāstartup ecosystem and highlights the potential for rapid growth and market disruption. For investors looking to stay ahead of the curve in the AI āāspace, a16z's report offers a wealth of actionable information.
Key trends for investors to watch: 1. The enduring appeal of creative tools
Content generation and editing tools continue to dominate the AI āāconsumer app space, especially on the web. According to a16z analysis, 52% of web-based applications are focused on content creation in various formats, including images, video, music, and audio. This trend shows no signs of slowing, with 58% of new entrants falling into the creative tools category.
Standout performers in this area include:
- Luma (#14): Video generation tool
- Viggle (#21): Another video-focused AI application
- SeaArt (#29): Image generation platform
- Udio (#33): Music generation tool
Perhaps most notable is music generator Suno, which has risen from 36th to 5th place in just six months, highlighting growing consumer demand for AI-powered music creation tools.
For investors, the diversification in the content generation space is particularly noteworthy. Image generation tools, previously dominant, now account for just 41% of the top content generation sites. Video and music generation tools have gained significant ground due to recent improvements in output quality.
2. Mobile: An editorial powerhouse
On mobile platforms, content editing, especially image and video editing, is dominant. It is the second largest product category, accounting for 22% of the top mobile apps. This trend coincides with mobile users' natural desire to edit content captured on their devices.
An interesting development for investors to watch is the success of traditional creative tools that have pivoted to be AI-first. Examples include:
This trend suggests that established brands with a strong user base can successfully integrate AI capabilities to maintain and even expand their market position.
3. The battle for AI assistants heats up
While OpenAI's ChatGPT maintains its dominant position as the number one product on both web and mobile platforms, competition in the AI āāassistant space is heating up, creating a great opportunity for investors looking for companies that could challenge ChatGPT's throne.
Key players to watch include:
- Perplexity: Currently ranked #3 on the web, this AI-powered search engine focuses on providing concise, real-time, accurate answers with source credits. With an average visit duration of over 7 minutes, Perplexity demonstrates strong user engagement.
- Claude AI: Anthropic's product has risen from #10 to #4 in the web rankings, and with the recently released “Artifacts” feature, it now competes directly with ChatGPT's GPT.
- Luzia: Debuting at #25 on mobile, this AI assistant has 45 million users worldwide, primarily focused on Spanish-speaking markets. Its evolution from a WhatsApp-based chatbot to a standalone app indicates the growth potential for language-specific AI assistants.
4. ByteDance's AI ambitions
TikTok's parent company, Bytedance, is making big inroads in the AI āāconsumer app market, with the company claiming six spots in the web and mobile rankings thanks to its various AI-powered tools.
- Gauth (#44 on the web): Edtech platform
- Coze (#45 on the web): Bot builder
- Doubao (Web: 47th, Mobile: 26th): General assistant
- Hypic (#19 on mobile): Photo and video editing software
- Cici (#34 on mobile): English version of Doubao
ByteDance's aggressive push into AI applications, including the launch of its “Flow” research and development division in the second half of 2023, signals the company's intention to become a major player in the consumer AI space. For investors, the multi-pronged approach by this established tech giant presents both potential opportunities and competitive challenges for AI startups.
5. The rise of AI in aesthetics and dating
AI-powered beauty and dating apps are hot new categories on mobile, with three new apps making it into the Top 50 list.
- Luxmax AI (#43)
- UMAX (#44)
- Ritz (#49)
LooksMax and Umax focus on analyzing and āimprovingā usersā appearance, while RIZZ aims to enhance conversations on dating apps. These apps have quickly gained millions of users and make money through weekly subscriptions that cost between $3.99 and $4.99.
The rapid adoption of these apps signals growing consumer appetite for leveraging AI for personal improvement and social interaction. For investors, this trend could signal untapped potential in AI applications for personal development and relationship building.
6. Discord as a launch pad and growth metric
The report highlights an interesting correlation between Discord's traffic and future success on web and mobile platforms, especially in content generation tools. Many AI startups use Discord as a testing ground and community building tool before releasing standalone products.
As of July 2024, 10 AI companies rank in the top 100 Discord servers by invite traffic, half of which are new entrants since January. Some notable examples include:
- Mid Journey (maintained #1)
- Character AI
- Novel AI
- Stable diffusion
- Playground AI
For investors, monitoring Discord's traffic and engagement can be an early indicator of promising AI startups and products that are likely to succeed in the broader market.
1) Investment impact and opportunity content creation momentum:
The continued dominance of creative tools, especially in new modalities like video and music, suggests continued investment opportunities in this space. Look for startups that are pushing the boundaries of AI-generated content quality and user experience.
2) Mobile-First Strategy:
Mobile users have a strong preference for AI-powered editing tools, so consider investing in startups that prioritize mobile experiences or successfully pivot existing apps to incorporate AI capabilities.
3) Differentiation of AI Assistants:
As the market for AI assistants gets more crowded, look for companies that offer a unique value proposition, such as specialized knowledge areas, high accuracy, and novel ways to interact.
4) Linguistic and cultural specificities:
The success of language-specific AI assistants like Luzia highlights the potential for AI products that are customized for specific linguistic or cultural markets.
5) Corporate AI Initiatives:
Keep an eye on large tech companies like Bytedance that are aggressively moving into the AI āāspace. These efforts could lead to acquisition opportunities or create new competitive dynamics for existing AI startups.
6) Emerging AI Use Cases:
The rapid adoption of AI in personal aesthetics and dating shows that consumers are open to applying AI in unexpected areas. Look for startups that are applying AI to new personal or societal challenges.
7) Community-Driven Development:
Consider the potential of platforms like Discord as a launch pad for AI products and an indicator of future success: startups that effectively leverage community feedback and engagement could be well-positioned for growth.
Conclusion
The AI āāconsumer app landscape is evolving at breakneck speed, with new entrants constantly reshaping the market. a16z's third annual “Top 100 Gen AI Consumer Apps” report provides valuable insights into this dynamic ecosystem. For investors, this volatility presents both challenges and opportunities. By closely monitoring trends in user engagement, new categories, and strategies of both startups and incumbents, smart investors will be positioned to capitalize on the next wave of AI-powered consumer applications.
It's clear that AI will continue to be a driving force in consumer technology in the second half of 2024 and beyond. Companies that can effectively leverage AI to solve real user problems, enhance creativity, and improve personal experiences will likely be those that define the next generation of category-leading businesses. For investors willing to navigate this complex and rapidly changing environment, the potential rewards are enormous. As the a16z report shows, staying informed about the rapidly changing AI consumer app market is more important than ever for those looking to make strategic investments in this transformative technology.