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Bots are SO Hot Right now....

Where can chat bots go next?

· startups,Bots,AI

"First there were websites, then there were there are bots."

There's been a lot of buzz lately around the rise of chat bots in the market:

  • Fred Wilson of Union Square Ventures is talking about it here, as Kik Bot (a portfolio member) just created a white label solution
  • Forbes had an article about it back in February
  • There were at least 3 different chatbot-related startups that were in this year's Y Combinator class alone: Chatfuel, Prompt, and Assist
  • Sephora already has a bought, Slack has had one for a while...even Staples is creating one (shameless plug)
  • Not a developer, you say??  Don't worry - now you can create your own chatbot, off the shelf, with ease
  • Microsoft's Tay bot became a racist, Hitler loving sex addict (I didn't say it was all perfect - we're still early!)

So for the less tech-savvy reading this, you're likely asking "what the hell is a chat bot?" I'll let The Guardian take it away....nothing like leaving it to a nearly 200 year old British newspaper:

"Chat bots are computer programs that mimic conversation with people using artificial intelligence. They can transform the way you interact with the internet from a series of self-initiated tasks to a quasi-conversation." 

For example..."Without a chat bot, a user might direct his browser to, then type in their zip code to get the forecast. With the Kik’s Weather Channel bot, a user can send a chat asking for “Current Conditions” or a “3-Day Forecast” and the bot will reply with your answer."

In the market for a new pair of shoes? Ask a chat bot.  What about a flight to Dallas? Chat bot.  Forgot to order flowers for your girlfriend?  You get it.  Interesting use cases for chat bots would also including banking (if we're comfortable with Venmo, why not chat bots), insurance, etc.

Image via TechCrunch

At this point, these chat bots are primarily only being used by early adopters and the millennial generation, if not younger...but much like Facebook (raise your hand if your parents aren't using Facebook. No hands? I thought so. My grandmother uses Facebook on her iPad....and she just turned 90.), it won't be long until chat bots reach a tipping point where they reach the masses.

As chat bots continue to evolve and become easier and cheaper to create, what's their next market, you may ask? [well, at least I ask...stay with me.] Small and medium businesses (SMB's). It's the perfect way for them to engage with their customer base in an effort to try to compete with the Amazons and Targets of the world? I'm calling it right here...I don't know when it's going to happen, but it shouldn't be too long.

SMB's are always late to the party when it comes to tech adoption, given lack of money, resources, tech-savviness...whatever you want to call it.  It's not like we haven't seen this before: think about offering loyalty/rewards programs for SMBs, POS systems (paging Square), email marketing (MailChimp), and the latest, "one-stop-shop" digital marketing solutions (basic website, facebook page, SEM help, etc.).  It's only logical that some company is going to figure out how to sell a simple white label chat bot platform to SMB's, perhaps based on industry vertical.

Now, I could be WAAAAAAY off here, but I at least felt like I had to form some sort of opinion around this megatrend.  If I'm dead wrong, this blog is easily deletable, right??

Important caveat with all of this: I'll note that Paul English, formerly of Kayak, is building a travel concierge business that is basically the anti-chat bot. It uses....gasp...REAL HUMANS!! And they just got funded about $18M by General Catalyst. And who could ever forget about Magic's debut in early 2015?

4/9/16 UPDATE: Looks like Facebook is already on it....

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