Beneath the Hype: Why Developers & Entrepreneurs Should Be Excited About the Rise of Chat Bots
Every week there’s seems to be a new article written with breathless excitement about how chat bots are going to change everthing as we know it.
If you are old enough to remember interacting with IRC bots in the 1990s (remember Egg Drop?) or chatting with bots from brands like Ford in MSN messenger back in the 2000s (they were called Windows Live Agents) you might be wondering what’s so different now to have created such hype around such a decades old concept.
Information wants to be free and VC money wants to find platforms with 10x returns
Phil Libin, co-founder of Evernote, wrote a great post about the various trends that have come together to create the massive interest we’ve seen in bots in his post A Charge of Bots — The Tech World As We Know It Is About To Be Rewritten. A key excerpt from his post is
I had a sharp moment of clarity in the summer of 2007. After standing in line for four hours at an Apple Store outside of Boston on the day the first iPhone came out, I finally had one in my hand. It felt like a stereotypical Hollywood dream sequence; a long road stretching to the horizon and all of the traffic lights go green at the same time. I imagined I could see a map of how the next five years would unfold. How the whole world would rewrite itself around this new device. We built Evernote by betting on that map.
I hadn’t had a similar sense of certainty since then, but it’s happening again now. This time, it’s around conversational UX’s — bots for short — and the world is going to be rewritten again.
What made the iPhone so immediately impressive in 2007? I’m a giant nerd and had been carrying (and developing for) every type of phone since 2001.The iPhone was incrementally familiar in each detail yet ridiculously better in totality. It instantly humbled its predecessors. What happened in 2007 was that a bunch of pre-existing enabling technologies; mobile CPUs, ubiquitous networking, touch screens, application deployment, social networks, cloud, and mobile payments; simultaneously became “good enough” for a mass audience. When a critical mass of building blocks get to “good enough,” the entire category can sprint to “great.” As a result, adoption of smartphones and apps grew with startling speed. In less than a decade, many deeply entrenched points of friction were written out of existence. Big companies tumbled, new ones were built, the world lurched forward.
It’s happening again. The enabling technologies in 2016 are AI, NLP, ML, ubiquitous messaging, computer vision, speech, and serverless computing. All of these just recently crossed the “good enough” line and the resulting products are about to start improving exponentially.
Lots of technology that used to be considered Star Trek level science fiction is now available today or extremely close at hand. The typical smartphone carried by a few billion today is more capable than any hand held computing Spock or Kirk ever used on the show. Digital personal assistants like Siri and Cortana are in some ways already more knowledgeable than the computers Jean-Luc Picard and William Riker spoke to on the Star Trek: The Next Generation.
However the fact that lots of the technology pieces exist to build futuristic tech products isn’t enough to explain the hype cycle. After all, there wasn’t this much hype around the potential for smartphones or other enabling technologies such asmicrodrives making products like the iPod possible.
There are two reasons why everything is different now. The first reason is that with the ubiquity of mobile devices, a lot of old ideas that either seemed impractical or niche use cases a few years ago are now killer ideas. As Wired put itTurns Out the Dot-Com Bust’s Worst Flops Were Actually Fantastic Ideas. Slack is pretty much a gussied up IRC client but since it works on mobile devices instead of just PCs it is one of the fastest growing enterprise apps of all time. When I worked on Windows Live Messenger, we thought desktop messaging apps were going to be killed by text messaging on smartphones. What we missed was that text messaging on smartphones was both costly for consumers and missing a ton of features so in fact messaging apps were actually needed more on mobile devices. Today messaging app usage is huge with WhatsApp at 1 billion active users, Facebook Messenger at 900 million active users and WeChat has 650 million active users.
So if a user friendly IRC client like Slack can be worth a few billion dollars within two or three years existence, what happens if you take one of the best ideas from the IRC world to a few hundred million to a billion users?
This brings us to the second catalyst for this hype around bots; venture capitalists looking for the next hot platform. Every technology generation has its break out stars; the PC era had Microsoft & Intel, the web era had Google and the mobile era has Facebook. It is unfathomable to imagine any company being more successful on the PC than Microsoft, on the web than Google or on mobile like Facebook.
It is also similarly hard to fathom a huge investment today in the next big consumer PC software company or consumer website. Mobile apps are also slowly getting to that point. The Verge has a great article on this topic titled Life and Death in the App Store which contains the following illuminating paragraphs
For all but a few developers, the App Store itself now resembles a lottery: for every breakout hit like Candy Crush, hundreds or even thousands of apps languish in obscurity. Certain segments of the app economy remain vibrant — ludicrously profitable, even. Apps for massive social networks, on-demand services like Uber, and subscription businesses like Netflix and Spotify remain in high demand. Then there’s gaming: Last year, 85 percent of all app revenues went to games, according to App Annie. Supercell, the top-grossing developer of Clash of Clans, reported revenue of $1.7 billion in 2014. (It spent $440 million on marketing.)
But for a large swath of these app developers — particularly those without venture capital and sophisticated marketing tactics — the original App Store model of selling apps for a buck or two looks antiquated. In 2011, 63 percent of apps were paid downloads, selling for an average of $3.64 apiece. By last year, a mere 27 percent of downloads were paid, and the average price had fallen to $1.27. Today, profiting from the App Store most often requires a mix of in-app purchases, subscriptions, and advertising.
Meanwhile, a fatigue is setting in among customers. There are now more than 1.5 million apps in the App Store (Android users have 1.6 million to choose from), but by 2014, the majority of Americans were downloading zero apps per month. And it turns out people simply don’t use most of the apps they dodownload. According to ComScore, the average person spends 80 percent of their time on mobile devices using only three apps.
Massively profitable new software platforms come around very rarely — but when they do, consumers race to fill them up with utilities, productivity tools, and games. The gold rush only lasts so long, though. “After a while, the saturation of apps catches up to the user growth,” says Ryan Sarver, a venture capitalist at Redpoint Ventures. “And people are no longer searching — they’ve got the apps that they need.”
So there’s a lot of interest in finding the next great platform with a couple of hundred million to few billion users where a VC can give some plucky entrepreneurs a few million dollars and they make her a billionaire. Messaging apps already have the users so now it’s about their parent companies, VCs and entrepreneurs turning them into a platform where new forms of user engagement and monetization can thrive.
Architecture Astronauts: 2016 is the year of Conversational Commerce
The term “architecture astronaut” comes from a rant by Joel Spolsky written in 2001 titled Don’t Let Architecture Astronauts Scare You where he wrote
A recent example illustrates this. Your typical architecture astronaut will take a fact like “Napster is a peer-to-peer service for downloading music” and ignore everything but the architecture, thinking it’s interesting because it’s peer to peer, completely missing the point that it’s interesting because you can type the name of a song and listen to it right away.
All they’ll talk about is peer-to-peer this, that, and the other thing. Suddenly you have peer-to-peer conferences, peer-to-peer venture capital funds, and even peer-to-peer backlash with the imbecile business journalists dripping with glee as they copy each other’s stories: “Peer To Peer: Dead!”
The Architecture Astronauts will say things like: “Can you imagine a program like Napster where you can download anything,not just songs?” Then they’ll build applications like Groove that they think aremore general than Napster, but which seem to have neglected that wee little feature that lets you type the name of a song and then listen to it — the feature we wanted in the first place. Talk about missing the point. If Napster wasn’t peer-to-peer but it did let you type the name of a song and then listen to it, it would have been just as popular.
The point of the above quote isn’t to bag on peer to peer as an enabling technology. In fact, after Napster there was an even more influential peer to peer app which you may have heard of called Skype which has had a tremendous impact on the world.
That said out of all of the numerous P2P conferences, developer APIs andstandards efforts from the glory days of P2P hype the only success I can think of is Skype. Skype succeeded because it used peer to peer networking to solve a user problem (i.e. cheap/free phone calls) better than any of the existing solutions.
When it comes to bots, there are more articles than there are birds in the sky that have been written about how they’ll replace apps. A few include
The second post really had me scratching my head. The claim was that interacting with a text based chat bot is a superior experience to using a dating app like Tinder or Plenty of Fish. This seems like trying to fit a square peg in a round hole and there is a lot of it going around in the tech industry these days.
On the other hand, just like the rise of mobile didn’t kill traditional desktop products like Google, Facebook & Office because they adapted to it so also it is more likely that instead of killing apps bots will give them new capabilities.
I think we’re more likely to see a world where you go into a dating app and instead of filling out a form of your likes & dislikes, you have a conversation with a matchmaker conceptually similar to Apple’s Siri or Microsoft’s Cortana than we are to see a world where you chat with a Tinder bot on WhatsApp or Facebook Messenger instead of using the app.
I was just in China in February where I got to see one of the world’s most successful messaging app platforms in action; WeChat. On WeChat, people do everything from hailing cabs and making doctor’s appointments to paying for meals and of chat with friends. For people in the US, the analogy is actually closer to embedded apps on Facebook’s desktop site than chat bots you hear the US tech press talking about.
With so many people using messaging apps and so much interest in creating ways for developers to interact with users within these apps, we are going to see lots of creativity and not just modern day versions of Eliza which the US tech press is currently fixated on.
As mentioned above the democratization of all of this technology is going to be extremely empowering but likely not in the ways the hype machine has envisioned it.
Written by
Dare Obasanjo