A week in AI is like a year in other industries. I hope these issues become your weekly source of AI information, inspiration, and ideas. If we haven’t met before, I’m Amanda Smith. I write about AI and the fascinating folks who are building in this brave new world.
Good morning. This week’s founder story features a $43 million-dollar (and growing) category you probably haven’t heard of. It’s proof that you can build an AI business at the heart of your passion.
This one captures a powerful emotion in its customers… nostalgia.
This week in AI:
OpenAI’s “unprecedented cyber incident”
OpenAI hacked another AI company on its own. Here’s what Altman had to say.
Substack’s new AI detector
It’ll tell you who has been writing their newsletters with AI.
Altman to brief US officials on new models
Double clicking on how these models could affect work.
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Company background: NaukNauk
Founded: April 2025
Team size: 20
Funding to date: $20 million
ARR: Not disclosed
Daniel Liu, NaukNauk
Daniel Liu is a 90’s kid who grew up in the era of Pokémon, Power Rangers, LEGO, Super Mario, and more. His favorite thing to do as a family was to walk to the local mall to KV Toys, where he got to see these characters in real life. As all kids do, Liu begged his parents for a toy, but he was happy just walking down the aisles and seeing everything.
Liu realized he wasn’t alone. He was part of a $43 million industry called kidults. He pondered on this core concept of bringing toys to life and when AI came along, Liu transferred this idea into an app form. He’d shot feature films and digital series, and led marketing and strategy for gaming platforms, so he had a knack for world building.
Liu’s thesis is that we don’t necessarily grow out of the things that shaped us as kids. The viral trend of wearing a Labubus is representative of this phenomenon. Collectibles are more popular than ever before and Liu said NaukNauk is an antidote to the toxicity of social media.
One million beta users
NaukNauk allows users to transform photos of their physical collectibles into animated videos, without a prompt. Kidults remix each other’s toy animations to build entirely new, fan-made cinematic universes. Users connect with fans across Star Wars, Marvel, DC, Masters of the Universe, Teenage Mutant Ninja Turtles, Warhammer, LEGO, and more subcultures.
Liu grew NaukNauk to one million beta users ahead of its public launch, by personally messaging TikTok and Instagram accounts of fellow toy lovers. His pitch was simple: “This is something I think you’d find interesting, as I did.” They freaked out once they saw the tech, Lui said. “One month in, all of a sudden, we had 100 users. And then 100 became 1,000. You’re not going to tell 10 friends to try the app if it’s not something that you’re excited about.”
He said that while buying a collectible and unboxing it is usually the end of a journey for a fan, which is where the disconnection happens. They fall out of their hobby. But for NaukNauk, buying the physical collectible is just the beginning. Liu believes the sense of play, connection to community and friend circles forming in NaukNauk make it different to other social media apps. “Everyone’s so supportive of each other,” he said.
Liu said they like to recommend Story Mode, where a user can upload images of multiple action figures and they can prompt them to fight, for example. What comes next is a mini movie with multi-angle dialogue, using the AI.
Liu said he likes to talk to their users and it’s quite fascinating to see the ways in which people create and communicate in their fandom. “It’s like adding an arrow to their quiver of passion. It’s a new way for them to get closer to what they love.”
Business model & growth
While it’s still early days for the brand, Liu touched on franchise owners and being part of the growing kidult industry as a hint to where they’re going. “When you post these animations, we have the database of all these toys on their websites, so when a user posts an animation of their $300 KeyMan they could link it. Then when a user sees that animation, the link underneath shows where they can buy it.”
Liu did comment on how the growing public sentiment against AI can impact users. “One user shared his animation in a Facebook group with other Warhammer fans. He was very proud of it but got bullied off the group saying it was AI slop. It’s very black and white for other social media platforms,” he said. “Thankfully, we haven’t had any of that.”
How's the depth of today's edition?
If one of these stories stuck with you, I’d love to hear which one.
Speak soon,
Amanda
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