Character.AI Gave Up on AGI. Now It's Selling Stories

After school, Karandeep Anand often finds his 6-year-old daughter deep in conversation with an AI chatbot as she eats snacks at their kitchen counter. She's too young to type--let alone have her own account on Character.AI--but that hasn't stopped her from nabbing his phone to have voice conversations with a Sherlock Holmes bot, which she uses to build her own mystery stories. Character.AI is an AI companion startup (though Anand likes to say it's an AI role-play startup, which we'll get into later). He took over as the CEO in June in the midst of a potentially devastating lawsuit for its parent company and looming questions about child safety. When I ask if he's concerned about his daughter connecting with an AI chatbot rather than a real human, he's quick to say no.