Today's dominant AI tools like ChatGPT are perceived as productivity aids, akin to "homework helpers." The next multi-billion dollar opportunity is in creating the go-to AI for fun, creativity, and entertainment—the app people use when they're not working. This untapped market focuses on user expression and play.

Don't view generative AI video as just a way to make traditional films more efficiently. Ben Horowitz sees it as a fundamentally new creative medium, much like movies were to theater. It enables entirely new forms of storytelling by making visuals that once required massive budgets accessible to anyone.

Creators will deploy AI avatars, or 'U-Bots,' trained on their personalities to engage in individual, long-term conversations with their entire audience. These bots will remember shared experiences, fostering a deep, personal connection with millions of fans simultaneously—a scale previously unattainable.

While today's focus is on text-based LLMs, the true, defensible AI battleground will be in complex modalities like video. Generating video requires multiple interacting models and unique architectures, creating far greater potential for differentiation and a wider competitive moat than text-based interfaces, which will become commoditized.

The future of media is not just recommended content, but content rendered on-the-fly for each user. AI will analyze micro-behaviors like eye movement and swipe speed to generate the most engaging possible video in that exact moment. The algorithm will become the content itself.

While many pursue human-indistinguishable AI, ElevenLabs' CEO argues this misses the point for use cases like customer support. Users prioritize fast, accurate resolutions over a perfectly "human" interaction, making the uncanny valley a secondary concern to core functionality.

The debate over using AI avatars, like Databox CEO Peter Caputa's, isn't just about authenticity. It's forcing creators and brands to decide where human connection adds tangible value. As AI-generated content becomes commoditized, authentic human delivery will be positioned as a premium, high-value feature, creating a new market segmentation.

For venture capitalists investing in AI, the primary success indicator is massive Total Addressable Market (TAM) expansion. Traditional concerns like entry price become secondary when a company is fundamentally redefining its market size. Without this expansion, the investment is not worthwhile in the current AI landscape.

Business owners and experts uncomfortable with content creation can now scale their presence. By cloning their voice (e.g., with 11labs) and pairing it with an AI video avatar (e.g., with HeyGen), they can produce high volumes of expert content without stepping in front of a camera, removing a major adoption barrier.