Where Crypto Meets AI with Chris Dixon & David George

Chris Dixon: How will the money flow? How will copyright work? There's all sorts of interesting questions that you can kind of think of downstream. I think those are all questions that in some ways crypto can address. They have the leading state-of-the-art models of Gemini across a bunch of different domains. So what should they do? They should throw out the search. What is it, a hundred-something billion in revenue? Yeah, it's the best business out there, and I do not envy them. There's all these people talking about P-Doom and Terminator stuff, and then they're talking about models. That sort of either really tactical or really like cosmological scale or something. My sense is a lot of the actual interesting questions are sort of in the middle.

[The episode was recorded live at A16Z's 2025 LP Summit.]

David George: Today's episode was recorded live at A16Z's 2025 LP Summit. General partners Chris Dixon and David George, two leaders at the forefront of crypto, AI, and growth stage investing, discuss the real state of crypto, the rise of AI native apps, and how platform shifts are reshaping where value is created. We also explore what defines a winning company and founder in this era of exponential acceleration. Let's get into it.

[Music fades out.]

David George: As a reminder, the content here is for informational purposes only. Should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com forward slash disclosures.

Chris Dixon: Chris, obviously you spend the vast majority of your time in crypto. Talk about what the state of crypto is today. Where are we at? What's most important?

David George: People probably know the last four years have been a tricky time on the regulatory policy side. And so that's really kind of set us back a little bit. But on the positive side, the infrastructure has gotten much better. So, one of the big goals was to be able to send money for under one penny and under one second. And that is now achievable if you download the Coinbase wallet, for example, you can do that. And a couple of years ago, that was like $10 or something like this. So, that's great. So, core blockchain infrastructure has gotten much better.

Chris Dixon: For those tracking it, stablecoins have grown dramatically in usage. It's now in the trillions of dollars higher than Visa per month. So, that's been really good. And that's, by the way, not correlated to trading volume and things. So, it's not speculative use cases. It seems like real use cases.

David George: Yeah, talk about some of the use cases, like maybe stable coins, double click for a second. I think you called it, you know, WhatsApp moment for money. Like, what do you mean by that? What are some of the big use cases?

Chris Dixon: So sort of like when we go to DC, for example, explaining blockchains and stable coins is it's essentially digital services where you remove the intermediaries. So instead of having to send money through having an issuing bank and a merchant bank and Visa and a payment processor, you have a blockchain, but it's essentially acting like a service provider with very lightweight intermediaries. And so in the same sense that like WhatsApp came along when you had to use like SMS and you'd pay for international payments. And there were like all of these little like really wasn't really one network. It was a whole bunch of like sub networks. And you had WhatsApp and other kind of over the top networks, which created a single unified network. And so you can think of stable coins as you're creating a single global unified network without intermediaries to allow you to make payments. Right.

David George: And that turns out once you get the infrastructure down to one penny, one second, it turns out to be quite popular and useful. So that's really exciting. And hopefully for those following it, we're trying to get legislation. And that will, I think, further accelerate it because you've got essentially, think of it as a network effect. And you've got 90, probably 5% or some percentage of the nodes on the network that right now don't feel like they can participate in the network. So like banks and other kinds of more conservative financial institutions. And once we have legislation, that will unlock that. They'll join in. That will accelerate the network effect.

Chris Dixon: And then the exciting thing about the stablecoin thing, right, is the next thing, once you have money flowing through it, well, why not loans? Why not stocks? Why not treasury bills? And so it's sort of a stepping stone to a whole bunch of other things. So that's been very positive.

David George: The negative side, as I mentioned on the regulatory side, we had this all-out assault by the last administration on the space, and that just had all of these negative effects. Essentially, we lost four years or something, I would say, in a lot of ways. And not only did it mean that the projects that we're invested in had to really limit their product development, but it also, I think, scared off a lot of entrepreneurs from even entering the space. And so we're sort of recovering from that now. I think all things considered, given that, like we're in a really good spot, given all the drama of the last four years.

Chris Dixon: Yeah, yeah, absolutely. Yeah, I mean, the stablecoin thing to me is one of the items that has become mainstream in the crypto world now or is starting to become mainstream. For those of you who followed last week, Stripe had their big product conference. And one of the big things they talked about, they did their biggest acquisition ever. They bought a stablecoin company and it was one of the biggest parts of what they spoke about in terms of product advancements and their focus areas. So quite optimistic with you on that.

David George: Yeah, they spent quite a bit of their time. And for those who don't know, like Stripe has a mixed history with crypto. They got into it a long time ago. They co-created a project called Stellar and then they got really down on it for a long time. It wasn't working. And now if you watch them on various podcasts and in their demo day, they're very, very excited. A lot of their use cases are cross-border. They're like treasury management. So that's, I think, like SpaceX, like Starlink, like uses it to move money from one country to another, things like this.

Chris Dixon: Yeah, like just scale AI has people they have to contract or they have to pay in different countries. This is the simplest way to actually pay them. But there's all these sort of secondary benefits, right? It's not just the lower pricing. They were talking about this on a podcast recently. It's also the fact that it's fully programmable. So, for example, a big problem is invoice fraud. People send bank wire information and a PDF and it's wrong. But if it's all fully programmable, you can build essentially like a reputation system and fully automate the full thing and have a whitelist system and all the kind of modern bells and whistles you want to have. So that's exciting. And I'm hoping that's, as I mentioned, a stepping stone to many others.

David George: We have obviously a lot of speculative use cases on crypto, but what we really want are non-speculative use cases, right? Things that are like real products that aren't around trading and things. And so that's been a bright spot. Yeah. That stat of stablecoin volume from the previous year, I couldn't believe it when I read it. But to be at the same level of Visa is extraordinary. So quite optimistic.

Chris Dixon: Let's shift gears. So let's talk about Gen.AI. Maybe to start, just what are your initial impressions as a student of technology?

David George: Yeah, I mean, for those of us who've been in technology for a long time, as I have, it's amazing to see. I mean, it's obviously incredible. And it's particularly AI because AI has been 80 years or so of development and has gone through waves and really became roll your eyes. At some point, people would often roll their eyes in the 2000s and 2010s of AI just because it had been around so long and hadn't really lived up to its promises. I mean, people in the 50s and 60s were saying, you know, there's going to be, there's a 1960s, there was an expert system, actual stock market kind of bubble. So to finally see it work is amazing.

Chris Dixon: It's interesting with technology, right? Because in some ways it's predictable, in some ways it's unpredictable. The predictable part, if you go back and look at like Ray Kurzweil's books from like 20 years ago, and there were a bunch of other examples, they would have these charts where they would plot out the kind of Moore's law type improvement in GPUs and then compare it to like a human, you know, how many nodes would you have? How many parameters in your model? And how does that compare? I remember there's one in like the deep learning textbook and it's like, how's that compared to a bird and a human? And someone was just talking about the Ray Kurzweil one. Apparently he predicted like AGI in like 2027. Like a lot of these predictions were fairly accurate because you could predict the improvement in GPUs and things.

David George: On the one hand, on the other hand, I don't think many people predicted that generative AI would be the kind of leading, the leading use case over more like, I don't know what you call analytical AI or whatever, you know, just sort of like an analyzing language and financial statements, right? The fact that it would actually be a creative thing. I think you'd always hear, you know, oh, it's going to come for the truck drivers or something, right? In fact, it's coming for like the laptop. Came for the laptop. The laptop class. Came for all of us first.

Chris Dixon: I mean, like product managers. The email jobs, yeah. Like the greatest risk. I don't think many people predicted that. Coming for creatives before like robotic tasks is surprising back that long. I mean, I think like Martine and Sarah and Eric were just talking about it. There's all sorts of interesting AI-specific questions of what are the applications? Where is the value going to accrue? I'm sure you've thought a lot about this. People talk about applications, foundation models, chips, cloud service providers, lots of interesting questions. Probably my colleagues, you and colleagues in the other verticals are more qualified to talk about. I mean, I can pontificate, but I think they're the experts.

David George: Your pontificating is pretty good. I think they the experts But what I like to sometimes do is think a little orthogonally Like well one thing is I always like to think about second order effects of technology right So you know you go back and you look at the automobile and the first order effect was you can go from point A to point B faster right The second order effect was highway systems and transportation and suburbs and all these other kinds of things that happened as a consequence later on. I think of crypto as being a second order effect of social media. So you go back 20 years ago and like I was thinking about social media, I was working on it. And you would say, okay, someday people have social media and anyone in the world will be able to have a voice and share their expertise. And that was the first order effect. And that happened, of course. But the second order effect is now like crypto as an example. Like if you didn't have social media, think about it. Someone would come up with Bitcoin. And then New York Times would say this is stupid. And then Washington Post would say it's stupid. And then Financial Times would say it's stupid. And then it would be over. Or maybe there'd be like a magazine or something. There'd be no way to evangelize it and create a community around it the way that all this stuff, of course, happens through social media.

Chris Dixon: I think the things that have happened with politics, the Trump stuff and populism and just all the radical changes in culture. And I think we're just in the early innings of all the second order effects of social media, right? But that's interesting. So I think one question with AI is what will be the second order effects there? One thing I think about, just because my interest area is like in media. So, you know, the first order effect of generative AI, right, is you can make obviously like an illustration, you can make videos, and obviously that stuff will improve. And I think very soon, seems like in two years, you'll have people making feature length films. Films, games. Yeah, and that's what happens. But then an analogy I would use is like to photography. So when photography first started really going mainstream, there was a lot of angst around it, you know, in the artistic community. And artists at the time were doing representational art. And they were like, what's the role of the artists in this world? And of course, what ended up happening is at least in the high art world, they moved into abstract art and away from representational art. And then of course, photography proliferated. But then a really interesting new thing happened, right? Which is you had film. And so film obviously requires photography, but is a new form of media that couldn't exist until you had photography get to a certain level of advancement, right? And so you could say that photographs were the, in my vernacular, the skeuomorphic application of cameras. And film was the new native form of media, right? It was a form of media that couldn't exist before.

David George: So I think one interesting question to ask with AI, with generative AI, is of course it will make it easier to create existing forms of media. but will there be new forms of media that simply couldn't have existed before? And my guess is that there will be. I have hypotheses as to what they might be, but... Every previous technology would suggest... That's right, it's always been the case. It becomes native over time, but it starts as skeuomorphic. Yeah, and then another question you'd ask is what are the business models going to be in that world, right? When content is abundant, presumably the cost of content goes down, the value goes down, but people like to engage with other people. They like to engage with artists. There's a human factor to it. There's community formation. presumably people will like. You know, if there's 100 different generative AI science fiction universes, people will probably like the universes that their friends like because there's a community aspect to it.

Chris Dixon: How will the money flow? How will copyright work? There's all sorts of interesting questions that you can kind of think of downstream. And I think those are all questions that in some ways crypto can address. I think at a high level, the way I think about it is, obviously AI lets you create intelligent systems. What crypto is really about is not about intelligence, it's about coordination. It's about solving collective action problems and coordination problems, which I think of as an orthogonal set, a different set of problems to solve versus intelligence. So you just take a typical problem. Well, money is obviously a coordination problem. How do you shift value around the world? How do you get everyone to agree on certain standards? How do you do capital formation in the internet era? That's a collective action question, right? Of like, how do you get all these people together to do something? But, you know, arguably so is, you know, you want to build housing. Like, that's probably partly an intelligence problem, partly a bunch of physical real-world problems, some somewhat of regulatory problems, and some of them are collective action coordination problems, right? So there's sort of a series of things that you need to make progress, and some of those things fall in the category of sort of coordination collective action, and that's where we think our kind of building networks on blockchains fits in.

David George: Yeah, an economy for the internet. A couple data points on that. Sarah and Martine and Eric were talking about it, but not all the technology waves are the same, but they often rhyme, right? One commonality is just this sort of Moore's Law improvement of things, right? So you talked about infrastructure on the crypto side going from 10 bucks to send to a penny to send. On the AI side, there's been a 99% reduction in cost over the last two years. It looks like that will continue to happen. At the same time, you're also seeing dramatic improvements in model quality. So I'm quite optimistic for that reason. I think if you give it a set of tasks that are slightly higher order. I think the models are currently doubling their capabilities every seven months. So... And that's only one dimension of improvement, right? Because you also have the chips. Yeah, of course. Yeah, chips. I mean, look, the chips continue to get better and that will help to improve the cost over time too.

Chris Dixon: You know, I think we could talk about like where value will accrue in business models and all that stuff. But clearly the chips companies are some of the best companies in the world. Applications and the model companies that leg up into the application layer, there's going to be a tremendous amount of value. But I think it does beg the question as you go from skeuomorphic application of these technologies into native, there probably does need to be a different economy associated with them. Just number of transactions, AI to AI payments. Talk about what you think may happen there.

David George: So I would expect, I mean, the way I look at it is in past kind of megatrends, mobile social cloud, they all reinforced and intersected with each other. And I would expect the same thing here. If we're right about crypto and it seems like AI is obviously happening. But, you know, I would expect all of these things to intersect. I think there's sometimes a tendency, like in the crypto world, at least, for people to feel like the other sectors are competitive with them or something. And we're always saying that's not the case. In fact, you have to lean into it. It also has just a thing of kind of resetting the chessboard, right? You just have a whole new set of services. And now we're just talking backstage about how it seems like Google might be under threat now, just from a search perspective. And you should talk about that. It's interesting. But, you know, if that's the case, you're just going to have like a new game and new incumbents are popping up and there's an opportunity to create new architectures and new services around those.

Chris Dixon: Yeah, I mean, the Google thing we were talking about backstage, I was showing Chris a chart that our team put together that showed the volume of the AI native activity against Google queries and they're just moving in opposite directions. It's not nearly the severity of the line on the Google direction as it is just because of the scale, but you can see it happening. And where it's happening right now is knowledge retrieval. So it's like the lowest monetizing forms of Google's revenue model. So yes, they may be losing query volume, but people still go there to search for insurance and vacation rentals and the most valuable search terms. But we're getting pretty close to the point where you can actually conduct business activity on the internet without having to go through Google.

David George: And- That will be with these agents as they're called? Yeah, agents. Yeah, agents is such a loaded term. our infrastructure team just did a good podcast which you should listen to which is like what is an agent but basically it's the ability of the ai to go conduct business on your behalf and i think we're getting pretty close to having it be able to do that and some at least lower level tests of things that you would do on the internet but the problem that google has is they have the classic innovators dilemma like the search business model that they have is so profitable i've talked about it's one of the best business models of all time but it's hard to dislodge yourself from that because it's so good, but it's an inferior product experience. The other thing about Google is not only was all of the technology actually invented there, which is the craziest thing to think about. We backed Noam Shusir and all these other guys, and they're all there. It's just Xerox PARC all over again. It's just Xerox PARC all over again, but with an even better business model attached to it. But they actually have the best models right now. Like, they have the leading state-of-the-art models in Gemini across a bunch of different domains. So what should they do? They should throw out search? What is it, 100-something billion in revenue? Yeah, it's the best business out there. And I do not envy them.

Chris Dixon: One of the things that we talk about a lot is do you back the founder-led company or do you back the company that's run by the professional manager? Yeah. Like it would take a very audacious move for Google to just say, I'm going to do what's needed and embrace the future. The thing is, even then, even if they did that, even if they put in like a chat thing the problem is the whole business model is predicated on getting the link and not the actual product right I mean the whole thing And so the Well the promise they make to users and the other side right is that we will deliver you the traffic. Yeah. We actually should talk about that because you've written about that. You and I have talked about that. Yeah. But the concept of breaking the original pact of the internet, you should talk about that and what you think some of the potential solutions for it are.

David George: Yeah, in my book, I have a chapter on it called A New Covenant, essentially. The idea is that it was never explicit, but over the last 20 years or so, the covenant, quote unquote, was formed between kind of distribution, you know, search and social, kind of the places you first go on the Internet to discover. And then the content sites downstream from that. So you go and you search for recipes or for a news article and then you click through. And the basic kind of deal that evolved was that if the content site lets you take a snippet and show something in exchange for you send me some amount of traffic. Right. And occasionally that was broken, like with the one boxing. So one boxing is when Google takes the content and just puts it at the top, like they do with Wikipedia. I was on the board of Stack Overflow, which is a popular programmer Q&A site. That was their biggest fear in life, was that instead of people clicking through and going to the website, they would just put the answer up there, right? This famously happened with Yelp, and then they've done it with travel, shopping, but like to limited success. But in that framework, you can think of AI like ChatGPT as one boxing the whole internet, right? It's just like it gives you the answer. You don't need to click through, right? And so in that world, how does the other millions of websites, what is their business model? It was dependent on getting that flow. And you're seeing like these things like perplexity. And I think chat GPT2, they sometimes put links in there and stuff. But the reality is, I think that's to be nice or something. But like in the end, you don't really need that if it's a good AI. You just get the answer, right? And so presumably that'll be reflected in the click-through rates and things like that. And so the question is, do you just let all of that stuff kind of atrophy and that's it? And if the internet sees 10 websites, or do you have to think about a new business model It doesn't involve getting this flow of link traffic. And that's an interesting question. I kind of just raised, I don't have a full answer to it, but I feel like this is the kind of stuff that like, the obvious next couple of year consequence. I mean, look, I come into it having worked on the internet my whole career. So I think about the internet and what's going to happen to the internet. And so to me, that's a pressing issue. It's also an issue of like, that's a huge income stream and there's a lot of jobs and small businesses. And so what are we thinking? How will that evolve? from a societal point of view. I feel like in the AI world, like, you know, on Twitter at least, there's all these people talking about P-Doom and Terminator stuff, and then they're talking about models. They're sort of either really tactical or really like cosmological scale or something. My sense is a lot of the actual interesting questions are sort of in the middle. They're not like Terminator coming to kill you, but more like this is clearly going to change the structure of the internet. It's going to change business models. And like, how do we think through, you know, how to respond to that, both from a business point of view, but then also like policy and other kinds of things, right? But I think the interesting questions are kind of, I would say, more middle Zoom level, not cosmological.

Chris Dixon: Yeah, I'd say you can see it initially being disrupted in websites that are knowledge-based and where the model can consume the knowledge. Chegg is the best example, right? Which is basically, it was a high-flying public company. It's a place where kids would go to get homework help and study guides and things like that. And then overnight, got hit by a ton of bricks. and it's obviated the need for it. But you would need someone to create that content in the first place for the next thing. So I think that highlights maybe the go forward problem. Yeah, I mean, that's a question. Like if you kill the business model that first created Stack Overflow, you're not going to get future Stack Overflows. And maybe that's an issue for the AI models or maybe it isn't. Maybe you can just pay for it or you can use automated tools or synthetic data or something else. I'd like to believe there's a future though where there's like broader internet that creates stuff. Yeah, I mean, I think we want a business model for things like music and movies, and you want humans involved, and they're going to create new genres and have new ideas. And hopefully those things will then feed into AI systems and they'll help accelerate that. But I believe the ultimate outcome is some kind of symbiotic relationship. Separately, there's sort of a, you know, a human flourishing kind of question of people want fulfilling, meaningful work, and hopefully all of these new systems and tools fit into that somehow, right? I do think there's some risk to it. And to your point on skeuomorphic versus native, the way the most dominant business models on the internet evolved is actually toward a new native form of advertising right like we're dunking on google for being the incumbent but they did create a new form of advertising similarly facebook and instagram created the feed-based advertisement that's very highly targeted so my hope would be that the ai companies once we have the native applications also come up with some native yeah business model that's a different form maybe it's like commerce-based or the piece that's ad-based looks something more like an affiliate. That is like a dirty term, but like something like that, that actually finds a way to compensate the website or whatever. But it's so early.

David George: I mean, you know this better than I do, but I mean, if you look at the last unicorns, like how many are ad-based in the last 15 years? Like two? Like the vast majority are charging, they're freemium, they're enterprise. So that's one question. Is ad-based even going to happen in the future? I think it might go, I think it just goes in, well, in the fullness of time, everything becomes an ad business, right? So that's like the joke in consumer internet. Yeah. But, you know, the best businesses in the world are ad-based, right? And they are the best businesses in the world because the users give the content and to the user it's free and then they're compensated via ads. And so, you know, I think there's a question of how it will play out. Will it just be a simple subscription or is there going to be something more freemium that comes along? I would bet on the latter. I would bet on the latter. But yeah, I think these go in waves. I mean, I think that's the biggest thing. There's not a lot of new ad-based business models because there hasn't been until now much of an opportunity for startups to encroach upon consumer time spent, which is where the advertising comes from. People are talking about, you know, there's a whole industry around SEO and now there's going to be a whole industry around convincing the AI model to promote your product. When you ask it what the best detergent is, there'll be a whole industry around, you know, Well, okay. Infiltrating the training data.

Chris Dixon: For those of you close to the internet, we would all welcome the gamified SEO stuff to go away. Let's talk about market structures, if you will. And obviously these technologies, they come in waves. They reinforce one another. What about what determines winners and losers and competitive differentiation, modes, barriers to entry, all that stuff?

David George: Yeah, I think of most of what I've done on the investment side in my career has been sort of network businesses. Crypto is all networks. Basically, everything we invest in is a network. And so I always look at the world through that lens of like, I think networks are the best. They're my personal favorite types of investments because of the defensibility. Once you build it, they can be very capital efficient, you know, a relatively small amount of money and get bigger and have defensibility there. So that's kind of lens I look at it through. I don't know how much that's happening in AI. It feels like a lot of AI doesn't have network effects, but they have brand effects and technical effects. You'd know much better than me. We have a lot of other challenges in crypto, but one thing we have is I think once it works, like Ethereum, Solana, Uniswap, whatever. Once it works, there's a very clear defensibility story. So that's the good news. AI side, I'd love to hear your thoughts because you're the expert. Like, how do you build defensibility? And it seems like right now there's five to 10 companies with comparable foundation models as an example. Yeah, and then, you know, on the consumer side, one with all the traction, right? And so, yeah, right now there's no network effect, at least as far as we can see. I agree that network effects are the strongest form of a competitive moat. Chris always jokes that there's only two things that give you competitive differentiation in any industry. There's network effects and enterprise selling. Because all these discussions we always have is other things like data and distribution and all these other things. Those are the two things that if you just go through and count like the biggest market cap company, it tends to be those two things are dominant. That's not the only things. Yeah, this is the thing that we're wrestling with right now in AI because we've now gotten to the point where there's about a billion monthly active users of consumer AI applications. And this has grown significantly faster than predecessor companies, Google, Facebook, TikTok. And in the case of TikTok, they actually grew through paid customer acquisition. This is so remarkable because it effectively been all organic growth And that super unique in consumer So we gotten to this incredible scale There a lot of usage There a lot of monetization but there is no network effect And so how durable is that customer relationship is something that we wrestle with all the time. And I don't have a great answer for it. I think there will probably be network effects that do emerge and they could be built around certain product features or model capabilities that create a different kind of user lock-in with the vendor as opposed to a user lock-in with the rest of their network as it has been in the last social wave. But it's early. It's too early to call. You tell me, but it seems like the smart folks like you are shifting from thinking the value is going to be in the foundation models to value is going to be in the applications and the chips and sort of a barbell effect. Is that right?

Chris Dixon: Yeah, I think that it's becoming clearer to me and to us, including infrastructure group, you know, everybody, we all sit around and talk about this stuff all the time. Clearly the chips and then clearly the end user applications. And there is a tremendous amount of effort being exerted from a bunch of the ecosystem players to commoditize the middle of that, right? The model layer, the simple API serving. And there's different incentives for why that's the case. For the cloud companies, the ones that don't have their own models, they would like to commoditize that because they want to keep the customer power and they want that simply to be an input and something that they can sell. The application companies obviously would like to commoditize it because they want their costs to go down. And we could go vendor by vendor, but there's different incentive structures. But right now, the prevailing view is simple serving via API is likely to face a tremendous amount of pressure. Obviously, there's some big swing factors like open source and how much that continues to be pushed forward to the frontier because that's also putting a lot of pressure on the price and cost in a good way. But we're very high conviction that at the application layer, you will have tremendous value. And at the chip layer, you will have tremendous value. Beyond that, it's DBD. And the crazy thing is the applications are all so early, right? And so there's only, what, 10 or 20 of them that are really breaking out. But the ones that have broken out in an extremely meaningful way, much faster, as Sarah said, I think, than the predecessors. So that's exciting. So that's the sort of network effects piece. The selling piece on the B2B