Shaan, Sam, and a guest investor discuss the surprising scale of AI companion apps — Replika, Character AI, and niche one-person operators generating $1M+ in cash flow. The conversation covers why companion apps drive extraordinary engagement, how Character AI hit 310 million monthly uniques, and why AI capabilities are so novel they generate organic word-of-mouth without paid marketing.
Speakers: Shaan Puri (host), Sam Parr (host), Guest (investor/founder, unnamed in clip)
AI Companion Apps: The Hidden Opportunity [00:00:00]
Guest: I have several friends who have shipped AI companionship apps. Just look at paid apps in the App Store by charting — some of those people are generating a million dollars of cash flow for themselves. It’s not because they’re deep AI people.
Sam: When you say companion, you mean like a digital girlfriend or boyfriend?
Guest: I think people think it’s skewed toward girlfriend in a way that’s not necessarily true. You can have your own ethical points of view about whether or not that’s good for people, but it’s a pretty basic human need. And people want all sorts of different things in terms of companionship and how you might distribute that.
Shaan: Aren’t these quietly very huge? Can we do some ballpark — give people a sense of the size and scale that these have gotten to?
Guest: So there’s Replika, which is probably the most well-known one. It’s a digital boyfriend or girlfriend — they kind of try to say “friend,” but I think the use case is a little bit more on the relationship side of things. I don’t remember their exact numbers, but I don’t think I’d be crazy for saying they’re doing like $50 million a year in revenue. And I believe she had bootstrapped it for a while, at least, or raised very little money to get there. Is that right? Tell me if I’m off base — I might be wrong on some of that.
Shaan: Yeah, Eugenia has built a very cash-efficient business.
Sam: Is that like a code for something? Are you an investor in Replika?
Guest: No, I’m not an investor.
Sam: You just said everything without saying a thing. It was basically like, your friends with her, you know the number, and they’re killing it. Are they killing it, from your perspective?
Guest: I think they are making a lot more revenue than most startups.
Character AI’s Insane Engagement Numbers [00:03:00]
Sam: Okay, what are the other ones that are interesting?
Guest: So there’s Character AI, which has some absurd amount of traffic. I’ve heard some things — I don’t know if it’s all legit traffic or what — but there’s Character AI.
Shaan: I want to touch on Character for a second, because the thing that’s really interesting to me about Character, or the companion apps that work really well, is people spend hours with them. How many products do you spend hours with every day? Not a lot. Social media — that’s my product that I spend hours with.
Guest: Yeah. I was at Greylock, I think, when they invested in Discord. And Discord was one of those things that was probably overlooked because it was mostly teenagers who play video games using this thing, and it kind of looked like a chat room. You’re like, how is it going to make money? It’s not like Slack where you can charge the company. But the stat was people were spending like seven hours a day on Discord — something ridiculous like that — just living in Discord. It was their social life. So you’re like, well, there’s definitely something there. And they were able to make a ton of money just even selling the company at that point, because if you have that much engagement, you can’t fake that.
Sam: Yes. By the way, I just went to Character AI and there’s an option to chat with Elon Musk. The preloaded question is, “Why did you buy Twitter?” So I click it, a chat starts with Elon Musk as a character, and the first response literally goes: “You are wasting my time. I literally rule the world.”
Shaan: Okay. So by the way, according to SimilarWeb — which is like, you multiply by two or three and then divide by two or three, so huge range — but according to SimilarWeb, Character AI has 310 million monthly uniques.
Sam: Are you kidding me?
Shaan: That’s more than the Wall Street Journal. It’s more than a bunch of really… that’s insane. Is this company really that big?
Guest: I think people want companions. This is what I’m saying. The engagement characteristics around this stuff are real. So for anybody starting a new business — a one-person company shipping an AI companion app to a niche and generating a million dollars of cash flow for themselves — that’s real.
Word-of-Mouth Growth and the Power of Novel AI Capabilities [00:07:00]
Shaan: Do you know how these things grow? 300 million monthly visits is no joke. What’s the growth channel for something like this?
Guest: I think that’s going to be an advantage in the future. One of the weird things about these AI capabilities is they are so novel and unique that they drive word of mouth. For example, with Character you can make new characters and people share them — so there’s built-in virality there.
Guest: Maybe I’ll give you two other examples of when I say the capabilities are just really new, they’re powerful, and people want to talk about them. I don’t think you can engineer that, but it’s just characteristic of these companies. One example: I’m an investor in a company called HeyGen. You can make a video avatar of yourself and you cannot tell the difference. Reaching that bar of quality is new as of this past year. People create content that’s unbelievable and they share it. HeyGen is now in the tens of millions of revenue. They’ve never spent a dollar on paid marketing.