What Makes a Consumer AI Product Stick? | Josh Elman · The a16z Show summary

Key takeaways

Getting consumer attention is easy; creating habitual, trustworthy products is hard.
Successful consumer AI products start by excelling at a single function, build trust, and then expand gradually.
Trust, privacy, and responsible AI deployment are crucial for mainstream adoption.
AI has rapidly advanced, enabling new applications in work, entertainment, and social connection that will continue to evolve.
Products should focus on providing clear value and incremental improvements to foster long-term retention and network effects.
Despite technological breakthroughs, new social networks have not emerged strongly because current platforms cover most needs or are too similar; future social innovations may come from new content forms and AI-enhanced interactions.
Content creation will become more democratized and prolific thanks to AI, enabling anyone to produce high-quality stories and media.
Effective monetization of AI-driven consumer products will involve balancing user value, trust, and the cost of AI inference, with models like subscriptions and ads playing key roles.
Earning trust through reliable, well-defined functions and developing a strong creator or user relationships are fundamental to building durable products in the AI age.

Summary

The Challenge of Consumer Engagement in the AI Era

This section focuses on the main challenge of consumer technology today: attracting attention is easier than getting consumers to develop lasting habits. Josh Elman emphasizes that successful products need to excel at one thing, become habits, and then expand gradually. Trust becomes increasingly important as AI agents integrate more deeply into personal lives, managing everything from shopping to health and social interactions. Building products that are compelling enough to replace existing behaviors while earning and maintaining trust is key to longevity in this fast-evolving landscape.

The State and Trajectory of AI Technology

Elman discusses the rapid progress of AI models, particularly noting the explosion of user engagement with tools like ChatGPT, which now has hundreds of millions of weekly users. He highlights the dramatic improvements in AI capabilities over recent months, such as longer task management and better memory. The conversation covers the need for a cautious, step-by-step approach to AI adoption by consumers, emphasizing the importance of trust, privacy, and gradual integration. The epochal change in how AI impacts work, life, and entertainment is also explored, with a focus on the importance of responsible and trust-based deployment.

Building Consumer AI Products and Trust

This section examines the importance of creating AI products that consumers can trust. Utility currently drives adoption more than trust, but for mainstream, long-term success, products must prioritize user trust—particularly regarding data privacy and ethical use. Elman advocates for products that do a few things exceptionally well to build reliability and trust, earning the right to expand over time. Examples include voice assistants and personalized agents, which need to develop personality, relationship, and a distinct identity, making interactions more natural and human-like.

The Future of Social Networks and AI-Enhanced Connectivity

Elman addresses why new social networks have struggled to emerge despite technological innovations. Established platforms dominate, but new forms of digital interaction are likely to focus on content creation, creator marketplaces, and group collaboration, especially enhanced by AI. He foresees AI facilitating more human-like interactions in small groups, virtual meetups, and shared experiences—potentially transforming the social fabric of online and offline life. The idea is that AI can serve as a connector, bringing people together more effectively than traditional social networks.

Innovations in Media, Entertainment, and Content Creation through AI

This section highlights how AI is revolutionizing media and entertainment. Micro dramas, personalized stories, and new media formats are being created quickly and affordably thanks to AI's generative capabilities. Elman mentions the potential of AI to empower creators, facilitate storytelling, and create new marketplaces for original content. He discusses his own experiment with AI-generated micro dramas, emphasizing that these tools will democratize content creation, enabling anyone with talent to produce high-quality stories at scale—thus broadening access and diversifying media experiences.

The Economics and Monetization of Consumer AI Products

Elman explores the economic considerations for AI products, noting the high variable costs of inference and how consumer willingness to pay is evolving. The trend towards subscriptions, in-app purchases, advertising, and open-source open avenues for monetization. He emphasizes that successful AI products must offer clear value—saving time, money, or enhancing social connections—while balancing affordability with the costs of AI inference. Creating sustainable revenue models is essential for widespread adoption.

Key Criteria for Successful Consumer AI Products and Network Effects

The final section summarizes Elman's criteria for evaluating consumer products: clear, compelling value propositions; ease of adoption; ability to replace existing behaviors; and strong network effects. He explains the importance of products that earn trust gradually by mastering a few core functions first. The role of personality and relationship-building in AI, as well as the importance of differentiation and sidestepping copied ideas, is stressed. The discussion underscores that building a durable platform involves evolving and deepening the user relationship over time.

Show notes

a16z Partner Josh Elman joins Ollie Forsyth on New Economies to discuss the next wave of consumer AI and what separates a product people try once from one that becomes part of their everyday lives.

Josh argues that getting attention has actually become easier, but getting consumers to stick is harder than ever. He explains what he looks for in consumer products, why the best ones start with a narrow wedge and earn the right to do more, and why trust becomes increasingly important as AI agents gain access to more of our personal lives.

They also explore personal AI agents, the future of shopping and entertainment, why we haven’t seen another major social network emerge, and how AI could make technology more social rather than less, including agents that help people spend more time together in the real world.

This conversation originally appeared on the New Economies podcast.

Resources:

Follow Josh Elman on X: https://x.com/jelman

Follow New Economies: https://www.youtube.com/@NEWECONOMIESPOD

New Economies Substack: https://www.neweconomies.co/

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What Makes a Consumer AI Product Stick? | Josh Elman