consumer software startups peaked in 2013 with companies like LinkedIn and Facebook and Uber and snap and then in 2014 crickets nothing there's been almost nothing build and consumer for 11 years let's talk through why that is and let's talk through how AI changes the game because things have really changed in the last year so consumer was over for about 11 years building anything in consumer software was almost impossible the window had closed 90% the tech window had closed so in 1993 consumers didn't use software but 1994 we got the browser and that's when we kicked
off the consumer era that we all have lived through and have really enjoyed whether it be eBay and Amazon and Facebook and Google and Uber and all these great companies that now help us run our lives that was all between 94 and 200 13 but then by 2013 we got almost nothing for the next 11 years consumer was over so what had happened so Facebook and Linkedin were dominating their channels you had to spend to get distribution the needs of consumers were largely met the interface of the laptop or the desktop with a mouse hadn't
changed in 30 years the mobile phone stopped changing after about 2008 I mean the iPhone 3 looks pretty much like the iPhone 18 nothing has really changed and so there was no opportunity no technology window disruption that would allow for a breakout new consumer company during 2014 to 2023 so as an investor meeting startup Founders trying to start a consumer company I'd look at it do will it actually work and time again I said this isn't going to work so consumer software went through the same technology window cycle that every technology goes through at the
beginning you get the hobbyists who are just playing around with the browser or within eBay and the but then there's a status moment like when Mark andreon suddenly becomes a billionaire at age 24 and everybody wants to know how did he get that so they start looking into it and that means that the knowledge diffuses so knowledge diffusion takes place and then once people learn about what this internet thing is and what consumer internet is and how people are using it on their laptops and on their desktops everyone jumps in you get competition and once
you get this competition then the next phase is that the in arrive either because they have Network effects or because their management teams are better or because they get a bigger brand they get defens abilities in place and they become the incumbents for this technology window in this case consumer software and then they shut the door it just becomes nearly impossible 90% the window is closed do some things get through sure between 2014 we got Discord and we got Tik Tok and we got starlink and we got chat GPT and then we got a few
mobile games companies a few consumer fintech companies but literally it's somewhere between 10 and 15 unicorns were birthed during an 11-year period where in the prior 20 years each year had birthed perhaps 15 or 20 [Music] unicorns so in 2025 the consumer window has finally reopen because of AI plain and simple this new consumer wave is not just a Revival of what was old it's actually a revolution because whole new ways of thinking about how to interact with consumers and how they interact with each other and how they interact with agents is now upon us
it's a whole new way of thinking so we're not not just going to dredge up what we did 20 years ago when it was working we actually have to have new mental models new mindsets based on the new technology that's why these are called technology Windows right new examples for Behavior are the fact that AI can go and gather a lot of information summarize it and present it to them so the consumer doesn't have to do that work another behavior is that consumers can interact with voice another behavior is that consumers can interact with agents
or with Bots that didn't exist before and we're just beginning to see how that's going to look what those interfaces are what those experiences are that's why it's so exciting it's late in the game the incumbents are already in place everyone's got access to the same AI you do so you're going to have to be excellent in order to make waves and consum Internet it's a little bit like Los Angeles if you were there in the 50s and the 60s you could be okay and you'd still do really well but by the time the '90s
and the 2000s rolled around you had to be better than Tom Cruz which just doesn't happen the environment had already closed off and the same thing is true today it's just that AI gives you a lever but you still have to be excellent at everything you do in in consumer in order to make any waves so be prepared so here are some of the things number one you've got to be good at AI you've got to know what's going on with AI and be on the very Cutting Edge and be evolving constantly moving constantly checking
out new AI models constantly checking out new interfaces using AI as we move into that space you have to be flexible you don't have the answer you have the process for finding the answer for this month it's a different mindset second thing is you've got to be world class uh in design in marketing in positioning in growth okay you've got to be world class third thing you've got to study history a lot of things have been tried before and there's psychological and distribution reasons why they haven't happened and you need to know what those are
so you can angle around them fourth thing speed okay it's always important in software startups it's critical in consumer as soon as you get any traction you'll have six venture-backed competitors and the incumbents will want to come take it speed is essential design your product to start quickly and Accelerate from there the fifth thing is you've got to master growth you've got to be good at AB testing you've got good at iterating you have to be excellent growth it needs to be in your DNA changing how you grow every week every month every quarter it's
not something you fix and then you grow it's something you do all the time number six you've got to focus on network effects if you don't have a network effect that incumbent will come and take your Market once they see what you're doing or another startup that might be better funded or have some other another Advantage will come in and take your Market you've got to build Network effects from the very beginning or you're going to get displaced and then seven you've got to be in person in the same office so that you move quickly
you're going to make four critical decisions between breakfast and lunch and if you're not in person looking at each other whiteboarding agreeing with each other doing it together AB testing together going through all of your different failures and getting back on your feet you will not be fast enough you will not be precise enough you will not be good enough and I know you don't want to hear that and you believe oh I get better Talent remote you got all these excuses for why everyone can just stay at home and relax you can't you've got
to be in the War Room moving at speed together in the same room and that's how we see consumer businesses get big and how they win we've got plenty of Founders who have come to us and said James you kept telling me this for years and now I finally moved everyone together it's night and day I can't believe it I I hope all my competitors stay remote and they're absolutely right you don't want to be roadkill because you weren't willing to play the real game which is move your ass together work in the same [Music]
room and look winning today in consumer software is like winning in Hollywood only the point 1% make it and in fact it's a little bit similar because when you have an app that is consumer oriented and you have tens of millions hundreds of millions of users everyone's going to end up knowing your name so you actually become part of the framework of how people move their lives and you become important and it's only the top 1% of people who can manage that and that's where it is today in ' 94 it was much easier but
it ain't '94 it's 30 years ago guys that Social Network movie that you watched that was published in 2010 and it was a story from 2004 that was 20 years ago the world doesn't work that way anymore but consumer takes a particular type of magic a particular type of attention to detail iterating on the AB testing iterating on the growth channels iterating on the messaging and the product features that magic that skill that art if you will is very rare among people and that's what's required to succeed here my partners and I have built 10
companies that got to be worth over10 billion cumulatively almost all in consumer and we know what excellence requires to make these consumer things work there are some formulas but in a brand new world of AI they've got to be adapted for what's going on now but bringing yourself up to that level and giving yourself a chance to Consumer uh is a real work and you need to be sure that you're up for [Music]
