Where Crypto Meets AI with Chris Dixon & David George

0:00How will the money flow, how will copy right work? There's also just interesting questions that you can kind of think of downstream. I think there's 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 up search. What is it 100 -something billion -a -reven? Yeah, it's the best business out there and I do not envy them. There's all these people talking about P -Dume and Terminator stuff and then they're talking about models. They're sort of either really tactical or really like cosmological scale or something.

0:32My sense is a lot of the actual interesting questions are sort of in the middle. 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 in growth stage investing, discussed 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. 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.

1:19Please note that A16Z and its affiliates may also maintain investments in the company's discussed in this podcast. For more details, including a link to our investments, please see a16z .com forward slash disclosures.

1:35Chris, obviously you spend the vast majority of your time in crypto. Yeah. Talk about what the state of crypto is today, where we at, what's most important? 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 build a 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.

2:07So that's great. So core blockchain infrastructure has gotten much better. For those tracking it, stablecoins have grown dramatically and usage just now. And the trillions of dollars higher than Visa per month. Yeah. 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. So that's been great. Yeah. Talk about some of the use cases. Like, maybe stable coins double click first. Yeah. I think you called it, you know, what's that moment for money? Like, what do you mean by that? What are some of the big use cases?

2:33It's sort of like when we go to DC, for example, explaining blockchains and stable coins, it's essentially digital services where you remove the intermediaries. So instead of having to send money through having an issuing bank, an emerging bank, an visa, an payment processor, you have a block chain. but it's essentially acting like a service provider with a very lightweight intermediaries. And so in the same sense that WhatsApp came along when you had to use 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 sub -networks.

3:05And you had WhatsApp and other kind of over -the -top networks, which created a single unified network. And so you can think of stablecoins as, you're creating a single global unified network without intermediaries to allow you to make payments. 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 a network that right now don't feel like they can participate in the network.

3:39So 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. And then the exciting thing about the stablecoin thing right is the next thing once you have money flowing through 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 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 were invested in had to to really limit their product development, but it also I think scared off a lot of entrepreneurs from even entering the space.

4:22And 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. Yeah, yeah, absolutely. Yeah, I mean, the stablecoin thing to me is one of the items that has become mainstream, 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.

4:51So quite optimistic with you on that. Yeah, they spent quite a bit of their time and for those who don't know, like Stripe has a mixed history of the 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 then they're 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, Starlink, uses it to move money from one country to another, things like this. Yeah, like just scale AI has people they have to contract or they have to pay in different countries.

5:22This is the simplest way to actually pay them. But there's all these 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. 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 a reputation system and fully automate the full thing and have a weightless system and all the modern bells and whistles you want to have. So that's exciting. And I'm hoping that's, as I mentioned, stepping down to many other.

5:49We have obviously a lot of speculative use cases in crypto, but we really want to nonspecative use cases, right? Things that are like real products that aren't around trading and things. 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, VISA is extraordinary. So quite optimistic. Let's talk about GNI, maybe to start, just what are your initial impressions as a student of technology? Yeah, I mean, for those of us who've been in technology for a long time, it's amazing to see, I mean, it's obviously incredible.

6:21And 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 and the 2000s and 2010s, if 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 gonna be, there's a 1960s, there's an expert system, actual stock market, kind of bubble. So to finally see it work is amazing, since you're using technology, right? Because in some ways it's predictable and some ways it's unpredictable.

6:51The predictable part, if you go back and look at like Ray Kurtz, Wilde'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 mean, but there's one in the deep learning textbook. And it's like, how does that compare to a bird and a human? And someone was just talking about the great cursor. Well, when I 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.

7:22On the one hand, on the other hand, I don't think many people predicted that generative AI would be the kind of leading use case over more, like I don't know what you call analytical AI or whatever, 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. Can't pay for the laptop. The laptop costs of like, first. Yeah, I mean, like product mail. The email jobs. Yeah. Greatest risk. I don't think many people predicted that.

7:50Well, coming for creatives before like robotic tasks is surprising back that long. I mean, I think like Martin and Sarah and Eric were just talking about it. There's also as interesting AI specific questions of what are the applications where is the value you're 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 and you and colleagues and the other verticals are more qualified to talk about and I can pontificate, but I think they're the experts. You're pontificating is pretty good.

8:18I think they're 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.

8:53And 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 will come up with Bitcoin and then Washington Post will say stupid and then financial time to say stupid and then it'll be over. Maybe they'd be like a magazine or so like there'd be no way to evangelize it and create a community around it. The way that all the stuff of course happens through social media, the things that have happened in the politics, the Trump stuff and populism and just all the radical changes and culture and I think we're just in the early innings of all the second order effects of social media, right?

9:25But 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 the first order effect of generative AI as 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 featured length films. Films games. Yeah, and that's what happens. But then an analogy I would use is like to photography. So when photography for a started really going mainstream, there was a lot of angst around it.

9:55You know, in the artistic community and the artists at the time were doing representational art, and they were like, what's the role of the artist in this world? And of course, what ended up happening is at least in a higher 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, 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. And so you could say that photographs were the, In my vernacular, the Schumorfic application of cameras, and film was the new native form of media, right?

10:33It was a form of media that couldn't exist before. 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. Hypothesis is to what they might be, but... Every previous technique. Yeah, it's always... That's right. It's always become native over time, but it starts to skew more thick. Yeah, and then another question you'd ask is, what are the business models? is going to be in that world, right? When content is abundant, presumably the cost of content goes down, the value goes down.

11:02But 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 gender AI science fiction universes, people will probably like the universes that their friends like because there's a community aspect to it. How will the money flow? How will copyright work? There's also just interesting questions that you can kind of think of downstream. 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.

11:33What crypto is really about is not about intelligence, it's about coordination. It's about solving collective action problems and coordination problems, which is I think if it's a northogonal set, a different set of problems to solve versus intelligence. So you just take a typical problem. Well money is obviously, it's 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? How do you get all these people together to do something? But arguably so is, you know, you want to build housing.

12:02That's probably partly an intelligence problem, partly a bunch of physical real world problems, somewhat a regulatory problems, and some of them are collective action coordination problems. So there's sort of a series of things that you need to make progress and some of those things fall in the categories for coordination, and collective action, and that's where we think our kind of building networks on blockchains fits in. Yeah, an economy for the internet. Couple data points on that. Sarah and Martin and Eric were talking about it, but not all the technology waves are the same, but they often rhyme, right?

12:36One 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, you know, in 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... That's only one dimension of improvement, right?

13:12Because we 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. I think we could talk about where value will accrue, business models and all that stuff, but clearly the chip's 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 is you go from skeomorphic application and these technologies into native, there probably does need to be a different economy associated with them, just a number of transactions, AI to AI payments, talk about what you think may happen there.

13:50So I would expect, I mean, the way I look at it is in past kind of mega trends, 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's obviously happening, but I would expect all of these things to intersect. Yeah. 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 this thing of resetting the chess board.

14:16You just have a whole new set of services and now we were just talking backstage about how it seems like Google might be under threat now, just from a search perspective. You should talk about that. It's interesting. But if that's the case, you're just going to have a new game and new incumbents are popping up. And there's an opportunity to create new architectures and new services around those. 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 of 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.

14:55And 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. And - That will be with these agents, is there? Yeah, agents, yeah. 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.

15:29But 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 in 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, Salema, 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.

16:02We back home, she's here, and all these other guys. And they're all there. It's just zero X -Carco all over again. It's just, yeah, I spark all over again, but we think 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 the search. What is it, 100, something billion revenue? Yeah, it's the best business out there. And I do not envy them. One of the things that we talk about a lot is do you back the founder lead company or do you back the company that's run by the professional manager?

16:33Yeah. 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 if they did that, even if they put in a chat thing, the problem is the whole business model is predicated on getting the link and not the actual product. I mean, the whole thing is, so the, the, the, it's. Well, the problem is 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 know, I've 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.

17:08Yeah, 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, 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, search 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?

17:37And 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 of it with Wikipedia I was on the board of Stack Overflow Which is a popular program or Q &A site that was their biggest fear in life was it 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 I but in that framework you can think of AI like chat GPT is one boxing the whole internet Right, it's just like it gives you the answer.

18:05You 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 GPT Two 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 that stuff kind of atrophy and that's it?

18:31And at the internet, it's these 10 websites, or do you have to think about a new business model? It doesn't involve getting this flow of linked 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 thing that we should be having discussions about. And so I wrote about it and I've talked about it, hoping to trigger discussion hasn't really worked. To me, that's the kind of stuff that, like, of the obvious next couple of your consequences. I mean, I come into it having worked on the internet my whole career, so I think about the internet and what's gonna happen to the internet.

18:57And 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? Like, 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 sort of be the 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.

19:25It'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? Like I think the interesting questions are kind of, I would say, more middle zoom level, not cosmological. 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. Check 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.

20:00And then overnight, got hit by a ton of bricks. And it's obvious 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 killed the business model that first created SAC overflow, you're not going to get future stack overflows. And maybe that's an issue for the M models, or maybe it isn't. Maybe you can just pay for it, or you can use automated tools or synthetic data. I'd like to believe there's anything else. There's a future, though, where there's like water and internet that creates something.

20:28I 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 human flourishing kind of question of people want fulfilling meaningful work and hopefully all these new systems and tools fit into that somehow. I do think there's some risk to it and to your point on skewmorphic first native, the way the most dominant business models on the internet evolved is actually toward a new native form of advertising.