Fintech’s Big Wakeup CallRead More

Feb. 3, 2023 12:00 PM PST

At 7 a.m. on August 22, 2022, Yaron Inger woke up to find his business irrevocably changed. The co-founder and chief technology officer of Lightricks, which develops Facetune and other popular media-editing apps, scrolled through his newsfeed, his eyes flicking from one image to another. While Inger slept, Stable Diffusion, an open-source artificial intelligence text-to-image generator, had been released and was already shaking up the internet. The quality of the images it was cranking out was breathtaking.

“It was very clear, from the very beginning, that we’re on the verge of something very big—and that we have to be there,” said Inger. Lightricks, which had raised $130 million at a $1.8 billion valuation less than a year before, immediately got to work.

The company’s AI Avatars product (originally branded as YOUniverse) took six weeks to ship, rolling out to Facetune’s waitlist in late September and to the general public in November. After ingesting 10 to 20 uploaded portraits, the tool took a user-generated prompt —“make a selfie of me as Alice in Wonderland,” for example—and pumped out a batch of you-as-Alice images around 30 minutes later.

Before 2022 was up, Lightricks’ AI Avatars had a lot of competition, with new startups and solopreneurs popping up nearly every week with different variations of the same product: on-demand generative AI portraits built off homemade selfies and refashioned into fantasy glam shots. Downloads surged and users began flooding social media with their surreal new computer-generated selves reimagined as Vikings, flower goddesses and cyberpunks.

One competitor, Lensa, in particular went viral with its Magic Avatars, thanks in no small part to its celebrity fans. “Why is this so cool?” commented Chance The Rapper, uploading his painterly Lensa portraits to Instagram. DJ Steve Aoki’s avatars gave him Witcher-meets-Jesus vibes: “Artificial intelligence is an insane artist,” he raved.

Lensa saw around 20 million worldwide installs in December 2022, more than 40 times its October installs, according to Apptopia, an app insight firm. At its peak late last year, it generated $2.5 million per day in net revenue. But as the initial buzz quieted, so did the sales. From January 1 to 10 this year, Lensa’s revenue totaled $1 million. “The AI art fad lost steam,” said Abraham Yousef, an insights analyst at Sensor Tower.

So is the jig up for these generative-selfie suppliers? Not at all, argued Inger. “We have only seen the beginnings of this,” he said. “This is going to be a complete paradigm shift in how we work....It’s going to be integral to our experience.”

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