AI's Second Wave Aims to Build Novel Consumer Experiences

Startups are leveraging large language models to create new products and services that couldn't exist before

Published on Feb. 17, 2026

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A growing number of founders and investors are trying to move beyond AI's first wave, which was mostly about cost-cutting and efficiency. The next chapter of AI, they argue, will be defined by new kinds of products - apps, games, companions, and services that simply couldn't exist before large language models. This "Second Wave" of AI is about creating value for consumers, not just businesses.

Why it matters

If AI merely trims costs, it reshuffles value within existing businesses. But if it enables entirely new consumer products that people will pay for, it expands the economic pie. The tech industry is in a liminal moment, transitioning from the first wave of AI to the second, which requires a new "consumer-scale AI stack" with real-time responses, support for millions of users, and deeply personalized experiences.

The details

Startups like Particle, Luvu, and Status are already embodying this "Second Wave" ethos. Particle uses AI embeddings and generative models to curate the most relevant podcast clips for news stories. Luvu's AI-powered fitness app offers highly personalized notifications and real-time feedback, resulting in much higher user retention rates. Status lets users role-play in AI-generated social media worlds, creating immersive fandom experiences that couldn't exist before large language models.

  • In January 2026, Kylan Gibbs launched a Silicon Valley accelerator to back up to 30 'Second Wave' AI startups.
  • Particle recently launched its Podcast Clips feature.
  • Luvu was launched in August 2025 by CEO Alexis Sursock and CTO Creston Brooks.
  • Status has surpassed 3 million downloads.

The players

Kylan Gibbs

A former Google DeepMind product manager who runs AI startup Inworld and launched a Silicon Valley accelerator for "Second Wave" AI startups.

Sara Beykpour

CEO and cofounder of Particle, an AI-native news platform.

Alexis Sursock

CEO and cofounder of Luvu, an AI-powered fitness app.

Creston Brooks

CTO and cofounder of Luvu, an AI-powered fitness app.

Fai Nur

CEO and cofounder of Status, an AI-powered social simulation game.

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What they’re saying

“We're in a transition between the first wave and the second wave. The first wave delivered massive productivity gains. The next wave makes things that couldn't exist before. New products. New experiences. New revenue.”

— Sara Beykpour, CEO and cofounder of Particle (Business Insider)

“Instead of worrying about doing the same thing we've been doing for cheaper, why not focus on doing the thing we never even dreamed of doing?”

— Garry Tan, CEO of Y Combinator (LinkedIn)

“The key is the personalization, which is powered by AI models and wouldn't have been possible before this technology appeared in recent years.”

— Creston Brooks, CTO and cofounder of Luvu (Business Insider)

“Status could not have existed before LLMs. You haven't been able to role-play like this until now.”

— Fai Nur, CEO and cofounder of Status (Business Insider)

What’s next

Kylan Gibbs' Silicon Valley accelerator will hold a demo day in early March 2026 in San Francisco to showcase the "Second Wave" AI startups it has backed.

The takeaway

The future of AI will be defined by new consumer products and experiences that leverage large language models to surprise, motivate, inform, and entertain people at scale - not just by optimizing costs for businesses. This "Second Wave" of AI represents a shift from incremental efficiency gains to creating entirely novel offerings that people are willing to pay for.