The “second wave” of AI is coming. The game will no longer be just about cutting costs

“AI achieves its true economic potential when it creates value that consumers are willing to pay for, not just value that companies want to save” – he wrote on LinkedIn. This next phase, he says, requires a new “consumer AI stack”: real-time responses of less than 300 milliseconds, support for millions of simultaneous users, and deeply personalized experiences tailored to individual preferences.

In January, Gibbs launched an accelerator in Silicon Valley that will support up to 30 “second wave” AI startups – companies that build new consumer experiences instead of adding chatbots to old processes. Venture capital funds are involved, including Khosla Ventures and Lightspeed Venture Partners, as well as leaders from OpenAI, Google and Stripe. Demo Day will take place in early March in San Francisco.

This philosophy is reflected in a recent post by Y Combinator CEO Garry Tan: “Instead of worrying about doing the same thing cheaper, why not focus on doing things we haven't even dreamed of before?”

Several startups already embody this approach.

Particle brings news to the AI ​​era

Sara Beykpour, CEO and co-founder of Particle, says the tech industry is in a moment of transition.

— We are in the transition between the first and second waves – he specifies.

The first wave brought huge productivity gains. In Particle, a news platform built natively for AI, tasks that once took a month can now be built, tested and deployed in a matter of hours.

— During meetings, we notice when someone slips into old ways of thinking says Beykpour. — We jokingly call it “boomer thinking,” even though we're all millennials, he adds.

This change in mentality gives the startup more time to unlock new AI-based formats. Particle recently launched the Podcast Clips feature, which embeds the most relevant fragments of long podcasts directly into news articles. Instead of searching through a three-hour episode, users see selected fragments assigned to specific topics.

“It changes the hierarchy of information,” explains Beykpour. “Instead of searching for the podcast you want to listen to, we bring it to you based on the most relevant parts,” he adds.

Under the hood, the system uses AI embeddings to map relationships between transcripts and articles. A segment of a talk show about Greenland and Davos, along with comments from President Donald Trump, may be automatically linked to relevant press coverage. Generative AI then adds summaries and context.

“AI embeddings have improved significantly in key aspects,” Beykpour tells Business Insider.

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AI as a “super motivator” in fitness

If Particle is reimagining news, Luvu is transforming personal training with generative AI.

Launched in August 2025 by CEO Alexis Sursock and CTO Creston Brooks, the AI-powered fitness app has already attracted approximately 250,000 users. users. The app includes an AI “marshmallow” that acts like a personal trainer, sending highly personalized notifications and feedback in real time.

“The key is personalization, driven by AI models, which would not have been possible before the advent of this technology in recent years,” Brooks said.

Instead of general reminders – like “it's time to train” – Luvu tailors messages. If the user notes that he had an exam yesterday, the application may write: “Your exam is over. Time to train!”

The results are significant. Luvu notification click rates are four times higher than typical, non-personalized messages. In an industry where only 2-3 percent users remain active after 30 days, Luvu claims retention rates two or three times higher.

The app offers three motivation styles: supportive, neutral or “more mischievous marshmallow”. Behind the scenes, Luvu also uses AI to create detailed, individual messages generated by large language models.

The company is also experimenting with reinforcement learning with verified rewards, a relatively new technique for training and improving AI models.

Users can rest the phone and record themselves exercising; the app uses computer vision models to verify the accuracy of squats and other movements, offering real-time corrections such as “straighten your knees.” These validated signals feed back into the system, helping to train what Brooks calls the future “super motivator” model.

Status: Social simulation powered by imagination

For Fai Nur, CEO and co-founder of the AI-powered social game Status, the “second wave” is about imagination.

“Status couldn't exist before LLMs,” she said.

The app, which has surpassed 3 million downloads, allows users to role-play in AI-generated social media worlds. It's sort of like The Sims, but played as a living, breathing social feed.

Users can play any character – Hogwarts students, soccer stars or “Stranger Things” characters. Just post and the AI-generated characters respond instantly. Events unfold dynamically: you miss a penalty kick – you have to face criticism. The AI ​​system awards an “aura score”, evaluating responses and raising or lowering the player's level.

In many business applications, the non-deterministic nature of LLMs' responses is a disadvantage. Generative models can respond to the same prompt in different ways, which is not conducive to applications requiring strict accuracy.

In games, however, this can be an advantage — each new response generated by AI can be different, creating a richer and more diverse experience.

— It was impossible to role-play this way before said Nur.

Before LLMs, creating immersive fandom worlds required convincing other people to participate. Now entire social universes are created instantly.

For Gibbs and other “second wave” AI advocates, this is exactly what it's all about. The future of this technology will not be defined by incremental cost savings, but by products that are natively AI – experiences that surprise, motivate, inform and entertain at a consumer scale.

If the first wave made companies leaner, the second could make everyday life weirder, richer and more interactive — and, crucially, something people will be willing to pay for.

The above text is a translation from American edition of Business Insider