By Alistair Barr
Publication Date: 2026-02-16 23:00:00
Over the last three years, AI has been primarily a cost-cutting tool. A growing number of founders and investors are trying to move beyond this era.
They argue that the next chapter of AI will be defined by new types of products – apps, games, companions and services that simply couldn’t exist before large language models. They call it the “second wave” of AI.
“The first wave of AI made existing things cheaper. Automation. Efficiency,” said Kylan Gibbs, a former Google DeepMind product manager who runs AI startup Inworld. “The next wave is creating things that didn’t exist before. New products. New experiences. New revenue. That’s the difference between optimizing spend and creating it.”
For Gibbs, this distinction is existential. If AI simply reduces costs, it transforms value within existing companies. If it enables entirely new consumer goods – that people pay for – it expands the economic pie.
“AI reaches its true economic potential when it…
