MediaLab acquires messaging app Kik, expanding its app portfolio

Popular messaging app Kik is, indeed, “here to stay” following an acquisition by the Los Angeles-based multimedia holding company, MediaLab.

It echoes the same message from Kik’s chief executive Tim Livingston last week when he rebuffed earlier reports that the company would shut down amid an ongoing battle with the U.S. Securities and Exchange Commission. Livingston had tweeted that Kik had signed a letter-of-intent with a “great company,” but that it was “not a done deal.”

Now we know the the company: MediaLab. In a post on Kik’s blog on Friday the MediaLab said that it has “finalized an agreement” to acquire Kik Messenger.

Kik is one of those amazing places that brings us back to those early aspirations,” the blog post read. “Whether it be a passion for an obscure manga or your favorite football team, Kik has shown an incredible ability to provide a platform for new friendships to be forged through your mobile phone.”

MediaLab is a holding company that owns several other mobile properties, including anonymous social network Whisper and mixtape app DatPiff. In acquiring Kik, the holding company is expanding its mobile app portfolio.

MediaLab said it has “some ideas” for developing Kik going forwards, including making the app faster and reducing the amount of unwanted messages and spam bots. The company said it will introduce ads “over the coming weeks” in order to “cover our expenses” of running the platform.

Buying the Kik messaging platform adds another social media weapon to the arsenal for MediaLab and its chief executive, Michael Heyward .

Heyward was an early star of the budding Los Angeles startup community with the launch of the anonymous messaging service, Whisper nearly 8 years ago. At the time, the company was one of a clutch of anonymous apps — including Secret and YikYak — that raised tens of millions of dollars to offer online iterations of the confessional journal, the burn book, and the bathroom wall (respectively).

In 2017, TechCrunch reported that Whisper underwent significant layoffs to stave off collapse and put the company on a path to profitability.

At the time Whisper had roughly 20 million monthly active users across its app and website, which the company was looking to monetize through programmatic advertising, rather than brand-sponsored campaigns that had provided some of the company’s revenue in the past. Through widgets, the company had an additional 10 million viewers of its content per-month using various widgets and a reach of around 250 million through Facebook and other social networks on which it published posts.

People familiar with the company said at the time that it was seeing gross revenues of roughly $1 million and was going to hit $12.5 million in revenue for that calendar year. By 2018 that revenue was expected to top $30 million, according to sources at the time.

The flagship Whisper app let people post short bits of anonymous text and images that other folks could like or comment about. Heyward intended it to be a way for people to share more personal and intimate details —  to be a social network for confessions and support rather than harassment.

The idea caught on with investors and Whisper managed to raise $61 million from investors including Sequoia, Lightspeed Venture Partners, and Shasta Ventures . Whisper’s last round was a $36 million Series C back in 2014.

Fast forward to 2018 when Secret had been shut down for three years while YikYak also went bust — selling off its engineering team to Square for around $1 million. Whisper, meanwhile, seemingly set up MediaLab as a holding company for its app and additional assets that Heyward would look to roll up. The company filed registration documents in California in June 2018.

According to the filings, Susan Stone, a partner with the investment firm Sierra Wasatch Capital, is listed as a director for the company.

Heyward did not respond to a request for comment.

Zack Whittaker contributed reporting for this article. 

SEC expands its war on cryptocurrency companies with a lawsuit against Kik

The Securities and Exchange Commission has sued Kik Interactive for the $100 million token sale the company announced two years ago.

It’s an expansion of legal actions that began last year as the SEC seeks to rein in companies that the regulatory agency thinks issued securities illegally.

In the lawsuit, the SEC claims that Kik conducted an illegal $100 million offering of digital tokens by selling the tokens to U.S. investors without registering their offer and sale as required under U.S. law.

The complaint alleges that Kik had been losing money for years on its online messaging application and that the company’s management predicted it would run out of money in 2017, precisely when it began laying the groundwork for the launch of its digital token, “Kin”.

The creation of an online marketplace selling through the company’s messaging service was financed by the sale of 1 trillion digital tokens to raise $100 million dollars.

Critical to the SEC’s case is the allegation that Kik marketed its Kin tokens as an investment opportunity, telling investors that rising demand would drive up the value of Kin and that Kik would work to boost that demand.

Kik was supposed to do that by building systems like a Kin transaction service, a rewards system for companies that used Kin, and by incorporating the tokens into the company’s existing messaging app. None of those features existed at the time of the offering, the SEC alleges.

The company also said that it would keep three trillion tokens that could trade on secondary markets and would increase in value as other investors speculated on the currency’s success.

“By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions,” said Steven Peikin, Co-Director of the SEC’s Division of Enforcement, in a statement.  “Companies do not face a binary choice between innovation and compliance with the federal securities laws.”

At the heart of the case against Kik is the argument over the utility of the currency it offered. If it was simply a means of exchange on the company’s platform that customers used to conduct business between different parties, then the SEC’s argument might seem tenuous.

Andreessen Horowitz general partner Katie Haun laid out the arguments that Kik makes in its defense in a lengthy blog post published last month.

The company responded to the SEC in a Wells notice with a few different argument. The first, that all currencies (and therefore all cryptocurrencies) are exempt for securities laws, is a pretty big swing. This argument will depend on whether or not a court accepts that a currency is by definition legal tender (Kin ain’t that).

Beyond that, Kik needs to be able to prove that it’s not a security by showing it doesn’t fit these three criteria: that it’s an investment of money, that everyone who invested is engage din a common enterprise, and that there’s an expectation of profits that results from its efforts.

Here’s how Haun, a former federal prosecutor and clerk for Supreme Court Justice Anthony Kennedy puts it.

Kik’s best argument seems to be (2), that there’s no common enterprise between them and the Kin purchasers. Courts have held that the mere sale of something, without promising more, doesn’t give rise to a common enterprise. Based on the public information I’ve reviewed, it’s not obvious that Kik was under any contractual obligation to the purchasers other than to deliver the tokens. Once that delivery occurred, Kin holders controlled their tokens and could use them how they pleased — whether to buy items or otherwise. And plenty did. Kik created a marketplace that was open and that was meant to achieve real exchange between participants, so Kik wasn’t necessarily a participant in all transactions. Thus, the SEC may have a hard time demonstrating common enterprise between Kik and token purchasers — unless they can come up with evidence showing that Kik had obligations to purchasers after token delivery.

What about (3), the expectation of profits through the efforts of others? In its Wells response, Kik tells a good story about consumptive uses, given its integration with the messenger platform, which had millions of users at the time of the token sale. Apparently, 20% of Kin purchasers linked their wallets to Kik to buy everything from games to digital products and services. That some participants purchased as little as 9 cents in Kin also seems more consistent with for “use” than for “investment”.

Kik’s defense hinges on who used the company’s cryptocurrency to make purchases through its messaging service versus which of the 10,000 acquirers of Kin currency at the time of the token offering were speculating on the cryptocurrency’s potential rise in value.

Here again, Thaun’s explanation of what Kik needs to prove about the Kin offering is helpful.

But anecdotal evidence about why purchasers bought Kin won’t matter as much as the evidence around what Kik led purchasers to expect. This is because the case law focuses less on what was in a particular purchaser’s mind at the time, and more on what the seller “offered or promised” those purchasers. So the key will be what statements can be attributed to Kik before the sale — a great example of how PR, marketing, and other company building functions really matter when it comes to many crypto projects.

Kik says its primary marketing message focused on Kin’s use rather than on Kin as an investment, which makes sense since the project would only work if people actually used Kin. If that’s true, the SEC will need to contend with some of these facts:

  • 50% of participants in the token sale purchased less than $1000 of Kin, which seems more consistent with a consumptive use vs. investment purpose argument.

  • The way in which Kik structured things encouraged broad participation and discouraged speculation, for example, by capping the amount an individual could purchase to ensure more participants used its network.

  • It delayed its token sale to ensure functionality of the network first, making sure it could be used now vs. just in the future.

  • Since the token sale, the use of Kin has increased.

For it’s part, the SEC has its argument laid out in the statement of its charges.

“Kik told investors they could expect profits from its effort to create a digital ecosystem,” said Robert A. Cohen, Chief of the Enforcement Division’s Cyber Unit, in a statement.  “Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”

As the SEC notes, some companies have already settled rather than go to trial. The Commission has previously charged issuers in settled cases alleging violations of these requirements, including Munchee Inc., Gladius Network LLCParagon Coin Inc. and CarrierEQ Inc. d/b/a Airfox, according to a statement from the regulatory agency.

Some VCs want to jump into ICOs, but a host of challenges remain

 Venture capitalists are in a pickle. Companies have raised more than $1.7 billion through initial coin offerings, or ICOs, this year by selling their own customized virtual currencies. For the companies, the trend is a godsend. They can raise the money and use it to fuel new projects without having to give away a piece of their company to venture capitalists. Meanwhile, both accredited and… Read More

Messaging Landscape 2017

“Take a moment think who would actually miss you if you deactivate all your social networking accounts, whatsapp, BBM etc”?—?Anamika Mishra

I’ve started a 30 day blogging challenge (more about it here and you can subscribe for the newsletter). This is day two. Today I’ll be touching on one of the fastest growing categories in tech?—?messaging. Now bigger than social media, messaging apps are on practically every phone, and only growing in engagement. This post is just my own learning process about this subject.

Today you message your friends and family mainly. Tomorrow, you’ll be messaging bots who will do your grocery shopping, book your travel and resolve your customer service issues. Search results in a few years from now, will not necessarily be on Google…

If you think about it, Messaging apps are the most viral. In order for the user experience to be fun and useful, you need to have friends in there, so connecting to your contacts and inviting people is inherent in the onboarding process of the apps.

Messaging is “mostly” private

While Social Networks also enable you to share text, media and documents with your friend, there’s always a question for the user of who has access to that data. With Messaging, there’s a built-in assumption, that it’s a private communication. The reason I’m saying “mostly” is that not all platforms are encrypted. Here’s an interesting chart on who has access to your messages, by Amnesty International:

Who can read your private messages, by Amnesty Interntaional

Who can read your private messages, by Amnesty Interntaional

Even the biggest companies are susceptible to cyber attacks. This is from March 2017:

Testing that was conducted by Amnesty International shows that Signal Private Messenger (iOS, Play) by Open Whisper Systems is probably the best and easiest to use secure messaging app available today.

We give up privacy to avoid controversy

Controversy comes from authorities need to monitor communication to detect threats. Encryption, while it’s important to us as consumers, can come at a cost of others using the platforms for malicious purpose.

In summary

messaging apps are the new social networks, they are valuable, important and sticky. But they’re also not completely private and vulnerable to attacks.

So, where are Google, Apple, Facebook, Microsoft, Amazon and Snapchat when it comes to messaging?

The space is crowded, but the large companies dominate the messaging category in the app stores.

Messaging Apps on the Play Store

Facebook offers messaging as part of every product

Facebook is the dominant player in mobile messaging with 1.2 billion monthly active users for Messenger. But Messaging in Facebook is everywhere you look:  your feed, Messenger, WhatsApp, Instagram has it’s own chat… and then you have Facebook for work, so you can keep chatting in the office. This week it was announced that Facebook will start monetising Messenger via ads. To get a sense of the scale of this dominance, Axios reports: “Facebook-owned WhatsApp is the number one messaging app in 107 countries around the world, and Facebook’s Messenger is number one in 58 countries, according to a SimilarWeb study”

Apple concentrates on iMessage and Facetime

On Apple, all the messaging can elegantly by done via iMessage (text) and Facetime (audio, voip, video). The quality feels better than most other messaging apps, but functionality is limited.

Microsoft bet on Skype

Skype seems to have fared well in the migration from desktop to mobile. Used for both business and personal, Skype helps users engage with their entire rolodex.

Google’s strategy: Try Everything

Hangouts, Allo, Duo. Even though the dream of every consumer is to have the messaging apps somehow communicate with each other, Google is trying multiple strategies, to see what sticks.

The Verge summarised it well in this article from June 2016:

“So Google has three different ways it’s trying to get back into the messaging race. And again, it is very far behind. But when you’re behind in a race you can’t drop out of, there’s really only one thing you can do: just keep running.”

Snapchat started in messaging

Before Snapchat became a platform for media consumption, it was mainly used for ephemeral messaging. Teenagers replaced texting with Snapchat, but it’s still “only” around 166 millions daily active users.

Snapchat is also concerned from getting every feature copied by Facebook, so it recently acqui-hired the team behind Strong.Code, a way to protect software against reverse engineering by obscuring the code.

What about Amazon? 

Alexa is the closest thing it has to Messaging. There are rumours that Amazon is working on a new messaging app called Anytime. According to Techcrunch, Anytime is “… a full-featured, standalone messaging app for smartphones, tablets, PCs and smart watches designed to let people chat with text and video, send each other fun photos with filters, play games and engage with other Amazon services like music and food ordering (and other shopping), and interact with businesses.”

Amazon Anytime
Amazon Anytime Feature list

Other established players in the messaging landscape

Telegram (Russia, boasted 100 million monthly active users world wide in Feb 2016) can now send disappearing messages just like Snapchat, WeChat (762 million monthly active users in China in June 2016), Line (218 million monthly users in June 2016, two-thirds of whom are from Japan) and Kakaotalk (49 million active users worldwide as of March 2017). Also Viber (260 million monthly active users) Kik and Tango. The Asian messaging apps are years ahead in terms of functionality, and have cracked something that their Western counterparts have not: Monetisation.

Source: Line and WeChat Strike Advertising Gold?—?WSJ, June 22 2016

Who’s winning in messaging?

Quartz looked at the popularity of messaging apps by country, and it’s clear win for Facebook:

Source: Facebook’s global dominance of messaging, in two maps
What does a 2 billion reach look like

Facebook just announced last week that it will start monetising Messenger with ads. Jarrod Dicker from Washington Post thinks that this is kind of the end of websites (I say, not so quickly…). In addition Facebook is

Source: eMarketer, Line, Tencent, pymnts.com; Chart: Lazaro Gamio / Axios

Facebook is rumoured to also be building a standalone app to compete with Houseparty, a standalone group video chat app that’s popular amongst millennials. Houseparty is by the team behind the Meerkat app, which was blocked from Twitter following the acquisition of Periscope.

In his excellent post on the Messaging Landscape 2016, Ben Eidelson, said:

“Messaging is going to bring this human touch back to person-to-business dealings online and give businesses a chance to provide assistance to their customers in a way that has never been better for customers”.

This implies a huge business opportunity for the companies that will able to adapt from web/mobile UI to conversational/chat UI, ideally powered by AI.


Hope you enjoyed my first 30 day challenge post. Subscribe here for the next ones.

How legacy brands and retailers can keep up with our tech-driven world

Hand of worker laying bricks, close-up The U.S. apparel industry is currently valued at $12 billion, and with the high number of dollars pouring into the retail economy, brands are looking to technology to foster deeper connections with consumers and elevate the overall shopping experience. Whether it’s in-store or online, technology is becoming a lever to bolster brand loyalty and customer satisfaction. Read More

Facebook just validated the bot movement for businesses

David Marcus F8 2016

The battle for our attention has once again shifted to a new technological plane within the mobile space. The industry now is starting to turn its attention away from apps and instead focusing on a new interface to drive “conversational commerce,” a concept first named by social designer Chris Messina. It’s centered around “delivering convenience, personalization, and decision support while people are on the go, with only partial attention to spare,” Messina wrote.

Already there are quite a few services lined up to capitalize on this opportunity, including Path’s Talk, Kik, Telegram, Skype, WeChat, and Line. However, nobody appeared to be a market leader — at least until Facebook entered the scene.

At this year’s F8 developer conference, the social networking company announced it was investing more into the messaging platform it launched in 2014. This means we’ll start to see more businesses using Facebook Messenger to communicate with their customers and the introduction of bots to the platform. So with all of the fanfare heaped on the company this week, has Facebook’s entry resulted in a significant impact on this conversational commerce industry?

“It’s a once-in-a-decade paradigm shift,” said Beerud Sheth, CEO of the bot development firm Gupshup, when asked about the technological trend towards engagement in messaging. He believes it could be as significant as when Apple cofounder Steve Jobs introduced the world to the App Store. Mike Roberts, Kik’s head of messaging and bot experience, described it this way: Messaging is the new browser and bots are the websites.

Screen Shot 2016-04-14 at 11.03.29 AM

Forrester analyst Julie Ask believes that bots will evolve into a mechanism that helps us get stuff done, both on our smart device and via virtual agents like the Amazon Echo. Mobile will move from being a collection of apps and web experiences into “the next stage driven by platform experiences” with incumbent assistants Siri, Cortana, and Google Now already having a leg up. “Brands must embrace these emerging opportunities, as they own too few of their own mobile moments. Bots, and the chat platforms they run on, provide an amazing opportunity for brands to deliver contextual experiences on borrowed mobile moments,” she explained.

Brand chatting: Human or AI?

Many companies, including Facebook, are seeing messaging apps as the new frontier, something that they can build on top of. And if it doesn’t involve interacting with a human agent, then it’s all about bots, software products that have recently seen a renaissance.

Messaging doesn’t have to be an either/or scenario, according to Sonar, a service brands use to participate in the conversational commerce space across multiple apps. Cofounder Neeharika Bhartiya told VentureBeat that bots have to be “laced with people,” requiring human intelligence to teach bots the right messaging to send to customers based on previous responses. Matthew Berman, another Sonar cofounder, believes that bots can be the start of a personalized interaction with a company, but when it comes to more complex queries, a human agent will need to take over.

Screenshots of the experience businesses have on Sonar.

Above: Screenshots of the experience businesses have on Sonar.

Image Credit: Sonar

“The beginning part doesn’t have to be like an IVR (Interactive voice response),” Berman remarked, referencing the computer system traditional call centers use where humans navigate using voice and keypad entries. “Sonar can make it intelligent that you display the appropriate response so it doesn’t look like you’re talking to a machine.”

While conversational commerce is a new way for brands to engage their customers, it’s probably not going to be a major revenue stream for a while. Bhartiya said that the opportunity now lies in marketing services and motivating customers to take action, rather than sponsored posts and making sales right away. It’s about building a great customer experience.

Berman emphasized that when diving into this space, brands should be careful about how they act. He advises avoiding an oversaturation of sponsored conversations, and also figuring out how to message the customers appropriately. “How do you be personable, colloquial, and make your customers think they’re chatting with a friend, not a faceless corporation?” he asks.

“Businesses today don’t get to choose where their customers are. Businesses need to be wherever their customers want them,” said Jeff Lawson, the CEO of Twilio, a cloud communication platform that recently integrated its API into Facebook Messenger.

The role of bots

While messaging apps aren’t new, much of the discussion has centered around bots. But what role does this software play in the conversational commerce space?

To Phil Libin, a partner at General Catalyst, it’s the new application layer: “It’s a product that you interact with without a fixed user interface where you have to push this button, swipe over here, and you don’t have to learn how to use it. You’re just interacting with it conversationally.” His vision about the space is in line with Sheth’s in that bots will cause an upheaval in how we interact with technology — we’re going to turn from applications towards bots.

“A bot is a metaphor,” Sheth said. “What’s truly significant about bots is the interface to the user is through a messaging app. On a small screen (like your phone), you’re opening up a messaging app 100 times a day already, something that’s not being done with any other app. It’s convenient and successful.”

Amazon Echo

There are countless examples of such bots providing services across multiple industries, including commerce, travel and hospitality, and even productivity. While more will likely be a part of messaging apps, companies like Assist have sprouted up to help build the next big bot.

You may be familiar with Assist: It’s a chatbot that can be accessed via SMS or Facebook Messenger that helps you with travel and shopping. But the real company is behind-the-scenes in that it’s akin to the plumbing for the API, commerce, and preference systems.

Shane Mac, Assist’s cofounder and CEO, said that since everyone is already hanging out in messenger apps, bots are being leveraged to enable businesses to reach them. He believes that app fatigue is real — people are tired of downloading apps and then rarely returning to them. “You can do commerce on a platform where people spend their time,” he said. “It’s the Holy Grail.”

Bots have been around for quite some time. In fact, they existed years ago on AOL’s Instant Messaging (AIM) and MSN Messenger in the early 2000s — remember SmarterChild?

“Think about what you do with any website or app and there will be a bot for that,” Sheth said. He also believes that 80 percent of our life behavior will be managed by bots.

And while every service is touting bot support, no one is actually emerging as a winner yet. Ryan Block, cofounder of bot startup Begin, thinks it’ll take some time before a market leader appears — but that it could be Facebook. “Bots are the next natural evolution of human-computer interaction,” he said.

Judging Facebook’s impact

“Facebook’s potential impact on the bot space could be enormous,” Block told us. “I hope they take a big, healthy rip at it, because there just isn’t a ton of consumer interest yet. No one else is playing at their scale right now besides Apple and Google — but that’s OK, because in an abstract way, bots look a lot more like the web than like apps, with many possible paths into bot interactions from across various networks.”

All of the people we spoke with expressed optimism about Facebook’s entry into the space, saying that it validates the market and adds legitimacy. “It aids in awareness,” Sheth remarked. “Facebook is such a prominent company that the media, developer, and brand interest is huge. It can impact a lot of consumers.”

“The entrepreneurial developer community is looking for a new opportunity to meet people where they are on mobile platforms with minimal acquisition costs,” Messina said. “Facebook’s opening of their messenger API last year gives developers license to start experimenting on the platform, and work to define key behaviors between brands and consumers.”

Screen Shot 2016-04-14 at 11.06.25 AM

At F8, Facebook CEO Mark Zuckerberg revealed that the combination of Messenger and WhatsApp processes 60 billion messages daily, compared to 20 billion via SMS. So what’s the next logical step for these services beyond chatting with friends? Businesses. And Facebook wants to lead that way.

For the most part, messenger apps have the same mission: Be a communication service. And while Facebook Messenger falls into this category, it’s banking on its platform to transform how we interact with one another outside of email and phone calls with businesses. It’s not the first to go down this road, as WeChat has been doing this for a while and now reportedly counts 10 million business accounts on its service.

Facebook’s entry into the space is significant in that it exposes people around the world to chatbots and artificial intelligence on a scale that other platforms can’t. It also taps into a behavior that those outside of the U.S. are already accustomed to: not using web-based services. Sheth explained that such users tend to only be exposed to what’s on their mobile device.

Screen Shot 2016-04-12 at 2.06.34 PM

Right now, Facebook Messenger only has a few bots on it, including 1-800 FLOWERS, CNN, Shop Spring, and the weather app Poncho. It has also released a framework from which developers can build their own bots and submit it to Facebook for approval. Mac thinks that the careful curation is needed in order to meet the end user’s expectations — if an app gets through that deliberately spams people, then it’ll corrupt the impression and push them away from bots.

“You really have to work at it,” Messina noted. “Slack’s @Slackbot is a great example that clearly was carefully crafted. It sets the tone for entire app’s experience. While content strategy grew in relevance on the web and social media, this ratchets things up to a whole new level. Now your content won’t just be static — it needs to be intuitive and improvisational. To achieve that, you need folks with literary and artistic skills.”

The opening up of messenger apps like Telegram and Facebook Messenger gives brands a way to really connect with users. It’s a consolidation of sorts: People don’t like making phone calls, and emailing a company doesn’t seem to be personal anymore — Uber recently shifted its customer support away from email. The solution now is that since customers are already using messaging, why not use that as the platform — don’t force them to come to you.

“Mobile devices are a really fundamental category, and I don’t see them being disrupted for at least a decade, maybe more,” Block said. “Apple and Google won, so anyone who didn’t win that game is going to be looking ahead for the next big platform opportunity. It turns out conversational products are where billions of people live, and what’s more, WeChat has proven they make a great means of disintermediation.”

The modernization of conversation

During his F8 presentation, David Marcus, Facebook’s vice president of messaging products, spoke about the evolution of how we communicate with businesses. “Before the Internet era, everything was conversational: You had to walk to a store, travel agent, or office and talk to someone to get what you needed. Then came the web, and with it, we traded personalization and conversation for interactions at a much, much larger scale. Then came the mobile era, which initially only offered stripped down versions of web, which eventually led to the app world we currently live in. Apps are truly incredible, and they’ve changed our lives in a profound way.”

Screen Shot 2016-04-12 at 1.58.02 PM

“But we download fewer and fewer apps, and we certainly don’t turn on push notifications for new downloaded apps anymore,” he continued. “Meanwhile, [Facebook] Messenger has a lot of great properties: It’s instant, persists identity from all participants at all times, it’s always in context, and all threads are always canonical. That means we’re bringing the best of these interactions that I just shared into one place.”

The consensus from people we’ve spoken with is that although Facebook is a little late to the bot party, its admittance will likely help to accelerate development, progress, and standards among not only the different platforms, but also among brands that want to take advantage of this new era of communication. “Facebook, Kik, Slack, Skype, and others are all playing in what is rapidly emerging as the next big playground for future technology companies,” Messina said.

More information:

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Facebook just validated the bot movement for businesses

David Marcus F8 2016

The battle for our attention has once again shifted to a new technological plane within the mobile space. The industry now is starting to turn its attention away from apps and instead focusing on a new interface to drive “conversational commerce,” a concept first named by social designer Chris Messina. It’s centered around “delivering convenience, personalization, and decision support while people are on the go, with only partial attention to spare,” Messina wrote.

Already there are quite a few services lined up to capitalize on this opportunity, including Path’s Talk, Kik, Telegram, Skype, WeChat, and Line. However, nobody appeared to be a market leader — at least until Facebook entered the scene.

At this year’s F8 developer conference, the social networking company announced it was investing more into the messaging platform it launched in 2014. This means we’ll start to see more businesses using Facebook Messenger to communicate with their customers and the introduction of bots to the platform. So with all of the fanfare heaped on the company this week, has Facebook’s entry resulted in a significant impact on this conversational commerce industry?

“It’s a once-in-a-decade paradigm shift,” said Beerud Sheth, CEO of the bot development firm Gupshup, when asked about the technological trend towards engagement in messaging. He believes it could be as significant as when Apple cofounder Steve Jobs introduced the world to the App Store. Mike Roberts, Kik’s head of messaging and bot experience, described it this way: Messaging is the new browser and bots are the websites.

Screen Shot 2016-04-14 at 11.03.29 AM

Forrester analyst Julie Ask believes that bots will evolve into a mechanism that helps us get stuff done, both on our smart device and via virtual agents like the Amazon Echo. Mobile will move from being a collection of apps and web experiences into “the next stage driven by platform experiences” with incumbent assistants Siri, Cortana, and Google Now already having a leg up. “Brands must embrace these emerging opportunities, as they own too few of their own mobile moments. Bots, and the chat platforms they run on, provide an amazing opportunity for brands to deliver contextual experiences on borrowed mobile moments,” she explained.

Brand chatting: Human or AI?

Many companies, including Facebook, are seeing messaging apps as the new frontier, something that they can build on top of. And if it doesn’t involve interacting with a human agent, then it’s all about bots, software products that have recently seen a renaissance.

Messaging doesn’t have to be an either/or scenario, according to Sonar, a service brands use to participate in the conversational commerce space across multiple apps. Cofounder Neeharika Bhartiya told VentureBeat that bots have to be “laced with people,” requiring human intelligence to teach bots the right messaging to send to customers based on previous responses. Matthew Berman, another Sonar cofounder, believes that bots can be the start of a personalized interaction with a company, but when it comes to more complex queries, a human agent will need to take over.

Screenshots of the experience businesses have on Sonar.

Above: Screenshots of the experience businesses have on Sonar.

Image Credit: Sonar

“The beginning part doesn’t have to be like an IVR (Interactive voice response),” Berman remarked, referencing the computer system traditional call centers use where humans navigate using voice and keypad entries. “Sonar can make it intelligent that you display the appropriate response so it doesn’t look like you’re talking to a machine.”

While conversational commerce is a new way for brands to engage their customers, it’s probably not going to be a major revenue stream for a while. Bhartiya said that the opportunity now lies in marketing services and motivating customers to take action, rather than sponsored posts and making sales right away. It’s about building a great customer experience.

Berman emphasized that when diving into this space, brands should be careful about how they act. He advises avoiding an oversaturation of sponsored conversations, and also figuring out how to message the customers appropriately. “How do you be personable, colloquial, and make your customers think they’re chatting with a friend, not a faceless corporation?” he asks.

“Businesses today don’t get to choose where their customers are. Businesses need to be wherever their customers want them,” said Jeff Lawson, the CEO of Twilio, a cloud communication platform that recently integrated its API into Facebook Messenger.

The role of bots

While messaging apps aren’t new, much of the discussion has centered around bots. But what role does this software play in the conversational commerce space?

To Phil Libin, a partner at General Catalyst, it’s the new application layer: “It’s a product that you interact with without a fixed user interface where you have to push this button, swipe over here, and you don’t have to learn how to use it. You’re just interacting with it conversationally.” His vision about the space is in line with Sheth’s in that bots will cause an upheaval in how we interact with technology — we’re going to turn from applications towards bots.

“A bot is a metaphor,” Sheth said. “What’s truly significant about bots is the interface to the user is through a messaging app. On a small screen (like your phone), you’re opening up a messaging app 100 times a day already, something that’s not being done with any other app. It’s convenient and successful.”

Amazon Echo

There are countless examples of such bots providing services across multiple industries, including commerce, travel and hospitality, and even productivity. While more will likely be a part of messaging apps, companies like Assist have sprouted up to help build the next big bot.

You may be familiar with Assist: It’s a chatbot that can be accessed via SMS or Facebook Messenger that helps you with travel and shopping. But the real company is behind-the-scenes in that it’s akin to the plumbing for the API, commerce, and preference systems.

Shane Mac, Assist’s cofounder and CEO, said that since everyone is already hanging out in messenger apps, bots are being leveraged to enable businesses to reach them. He believes that app fatigue is real — people are tired of downloading apps and then rarely returning to them. “You can do commerce on a platform where people spend their time,” he said. “It’s the Holy Grail.”

Bots have been around for quite some time. In fact, they existed years ago on AOL’s Instant Messaging (AIM) and MSN Messenger in the early 2000s — remember SmarterChild?

“Think about what you do with any website or app and there will be a bot for that,” Sheth said. He also believes that 80 percent of our life behavior will be managed by bots.

And while every service is touting bot support, no one is actually emerging as a winner yet. Ryan Block, cofounder of bot startup Begin, thinks it’ll take some time before a market leader appears — but that it could be Facebook. “Bots are the next natural evolution of human-computer interaction,” he said.

Judging Facebook’s impact

“Facebook’s potential impact on the bot space could be enormous,” Block told us. “I hope they take a big, healthy rip at it, because there just isn’t a ton of consumer interest yet. No one else is playing at their scale right now besides Apple and Google — but that’s OK, because in an abstract way, bots look a lot more like the web than like apps, with many possible paths into bot interactions from across various networks.”

All of the people we spoke with expressed optimism about Facebook’s entry into the space, saying that it validates the market and adds legitimacy. “It aids in awareness,” Sheth remarked. “Facebook is such a prominent company that the media, developer, and brand interest is huge. It can impact a lot of consumers.”

“The entrepreneurial developer community is looking for a new opportunity to meet people where they are on mobile platforms with minimal acquisition costs,” Messina said. “Facebook’s opening of their messenger API last year gives developers license to start experimenting on the platform, and work to define key behaviors between brands and consumers.”

Screen Shot 2016-04-14 at 11.06.25 AM

At F8, Facebook CEO Mark Zuckerberg revealed that the combination of Messenger and WhatsApp processes 60 billion messages daily, compared to 20 billion via SMS. So what’s the next logical step for these services beyond chatting with friends? Businesses. And Facebook wants to lead that way.

For the most part, messenger apps have the same mission: Be a communication service. And while Facebook Messenger falls into this category, it’s banking on its platform to transform how we interact with one another outside of email and phone calls with businesses. It’s not the first to go down this road, as WeChat has been doing this for a while and now reportedly counts 10 million business accounts on its service.

Facebook’s entry into the space is significant in that it exposes people around the world to chatbots and artificial intelligence on a scale that other platforms can’t. It also taps into a behavior that those outside of the U.S. are already accustomed to: not using web-based services. Sheth explained that such users tend to only be exposed to what’s on their mobile device.

Screen Shot 2016-04-12 at 2.06.34 PM

Right now, Facebook Messenger only has a few bots on it, including 1-800 FLOWERS, CNN, Shop Spring, and the weather app Poncho. It has also released a framework from which developers can build their own bots and submit it to Facebook for approval. Mac thinks that the careful curation is needed in order to meet the end user’s expectations — if an app gets through that deliberately spams people, then it’ll corrupt the impression and push them away from bots.

“You really have to work at it,” Messina noted. “Slack’s @Slackbot is a great example that clearly was carefully crafted. It sets the tone for entire app’s experience. While content strategy grew in relevance on the web and social media, this ratchets things up to a whole new level. Now your content won’t just be static — it needs to be intuitive and improvisational. To achieve that, you need folks with literary and artistic skills.”

The opening up of messenger apps like Telegram and Facebook Messenger gives brands a way to really connect with users. It’s a consolidation of sorts: People don’t like making phone calls, and emailing a company doesn’t seem to be personal anymore — Uber recently shifted its customer support away from email. The solution now is that since customers are already using messaging, why not use that as the platform — don’t force them to come to you.

“Mobile devices are a really fundamental category, and I don’t see them being disrupted for at least a decade, maybe more,” Block said. “Apple and Google won, so anyone who didn’t win that game is going to be looking ahead for the next big platform opportunity. It turns out conversational products are where billions of people live, and what’s more, WeChat has proven they make a great means of disintermediation.”

The modernization of conversation

During his F8 presentation, David Marcus, Facebook’s vice president of messaging products, spoke about the evolution of how we communicate with businesses. “Before the Internet era, everything was conversational: You had to walk to a store, travel agent, or office and talk to someone to get what you needed. Then came the web, and with it, we traded personalization and conversation for interactions at a much, much larger scale. Then came the mobile era, which initially only offered stripped down versions of web, which eventually led to the app world we currently live in. Apps are truly incredible, and they’ve changed our lives in a profound way.”

Screen Shot 2016-04-12 at 1.58.02 PM

“But we download fewer and fewer apps, and we certainly don’t turn on push notifications for new downloaded apps anymore,” he continued. “Meanwhile, [Facebook] Messenger has a lot of great properties: It’s instant, persists identity from all participants at all times, it’s always in context, and all threads are always canonical. That means we’re bringing the best of these interactions that I just shared into one place.”

The consensus from people we’ve spoken with is that although Facebook is a little late to the bot party, its admittance will likely help to accelerate development, progress, and standards among not only the different platforms, but also among brands that want to take advantage of this new era of communication. “Facebook, Kik, Slack, Skype, and others are all playing in what is rapidly emerging as the next big playground for future technology companies,” Messina said.

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Facebook just validated the bot movement for businesses

David Marcus F8 2016

The battle for our attention has once again shifted to a new technological plane within the mobile space. The industry now is starting to turn its attention away from apps and instead focusing on a new interface to drive “conversational commerce,” a concept first named by social designer Chris Messina. It’s centered around “delivering convenience, personalization, and decision support while people are on the go, with only partial attention to spare,” Messina wrote.

Already there are quite a few services lined up to capitalize on this opportunity, including Path’s Talk, Kik, Telegram, Skype, WeChat, and Line. However, nobody appeared to be a market leader — at least until Facebook entered the scene.

At this year’s F8 developer conference, the social networking company announced it was investing more into the messaging platform it launched in 2014. This means we’ll start to see more businesses using Facebook Messenger to communicate with their customers and the introduction of bots to the platform. So with all of the fanfare heaped on the company this week, has Facebook’s entry resulted in a significant impact on this conversational commerce industry?

“It’s a once-in-a-decade paradigm shift,” said Beerud Sheth, CEO of the bot development firm Gupshup, when asked about the technological trend towards engagement in messaging. He believes it could be as significant as when Apple cofounder Steve Jobs introduced the world to the App Store. Mike Roberts, Kik’s head of messaging and bot experience, described it this way: Messaging is the new browser and bots are the websites.

Screen Shot 2016-04-14 at 11.03.29 AM

Forrester analyst Julie Ask believes that bots will evolve into a mechanism that helps us get stuff done, both on our smart device and via virtual agents like the Amazon Echo. Mobile will move from being a collection of apps and web experiences into “the next stage driven by platform experiences” with incumbent assistants Siri, Cortana, and Google Now already having a leg up. “Brands must embrace these emerging opportunities, as they own too few of their own mobile moments. Bots, and the chat platforms they run on, provide an amazing opportunity for brands to deliver contextual experiences on borrowed mobile moments,” she explained.

Brand chatting: Human or AI?

Many companies, including Facebook, are seeing messaging apps as the new frontier, something that they can build on top of. And if it doesn’t involve interacting with a human agent, then it’s all about bots, software products that have recently seen a renaissance.

Messaging doesn’t have to be an either/or scenario, according to Sonar, a service brands use to participate in the conversational commerce space across multiple apps. Cofounder Neeharika Bhartiya told VentureBeat that bots have to be “laced with people,” requiring human intelligence to teach bots the right messaging to send to customers based on previous responses. Matthew Berman, another Sonar cofounder, believes that bots can be the start of a personalized interaction with a company, but when it comes to more complex queries, a human agent will need to take over.

Screenshots of the experience businesses have on Sonar.

Above: Screenshots of the experience businesses have on Sonar.

Image Credit: Sonar

“The beginning part doesn’t have to be like an IVR (Interactive voice response),” Berman remarked, referencing the computer system traditional call centers use where humans navigate using voice and keypad entries. “Sonar can make it intelligent that you display the appropriate response so it doesn’t look like you’re talking to a machine.”

While conversational commerce is a new way for brands to engage their customers, it’s probably not going to be a major revenue stream for a while. Bhartiya said that the opportunity now lies in marketing services and motivating customers to take action, rather than sponsored posts and making sales right away. It’s about building a great customer experience.

Berman emphasized that when diving into this space, brands should be careful about how they act. He advises avoiding an oversaturation of sponsored conversations, and also figuring out how to message the customers appropriately. “How do you be personable, colloquial, and make your customers think they’re chatting with a friend, not a faceless corporation?” he asks.

“Businesses today don’t get to choose where their customers are. Businesses need to be wherever their customers want them,” said Jeff Lawson, the CEO of Twilio, a cloud communication platform that recently integrated its API into Facebook Messenger.

The role of bots

While messaging apps aren’t new, much of the discussion has centered around bots. But what role does this software play in the conversational commerce space?

To Phil Libin, a partner at General Catalyst, it’s the new application layer: “It’s a product that you interact with without a fixed user interface where you have to push this button, swipe over here, and you don’t have to learn how to use it. You’re just interacting with it conversationally.” His vision about the space is in line with Sheth’s in that bots will cause an upheaval in how we interact with technology — we’re going to turn from applications towards bots.

“A bot is a metaphor,” Sheth said. “What’s truly significant about bots is the interface to the user is through a messaging app. On a small screen (like your phone), you’re opening up a messaging app 100 times a day already, something that’s not being done with any other app. It’s convenient and successful.”

Amazon Echo

There are countless examples of such bots providing services across multiple industries, including commerce, travel and hospitality, and even productivity. While more will likely be a part of messaging apps, companies like Assist have sprouted up to help build the next big bot.

You may be familiar with Assist: It’s a chatbot that can be accessed via SMS or Facebook Messenger that helps you with travel and shopping. But the real company is behind-the-scenes in that it’s akin to the plumbing for the API, commerce, and preference systems.

Shane Mac, Assist’s cofounder and CEO, said that since everyone is already hanging out in messenger apps, bots are being leveraged to enable businesses to reach them. He believes that app fatigue is real — people are tired of downloading apps and then rarely returning to them. “You can do commerce on a platform where people spend their time,” he said. “It’s the Holy Grail.”

Bots have been around for quite some time. In fact, they existed years ago on AOL’s Instant Messaging (AIM) and MSN Messenger in the early 2000s — remember SmarterChild?

“Think about what you do with any website or app and there will be a bot for that,” Sheth said. He also believes that 80 percent of our life behavior will be managed by bots.

And while every service is touting bot support, no one is actually emerging as a winner yet. Ryan Block, cofounder of bot startup Begin, thinks it’ll take some time before a market leader appears — but that it could be Facebook. “Bots are the next natural evolution of human-computer interaction,” he said.

Judging Facebook’s impact

“Facebook’s potential impact on the bot space could be enormous,” Block told us. “I hope they take a big, healthy rip at it, because there just isn’t a ton of consumer interest yet. No one else is playing at their scale right now besides Apple and Google — but that’s OK, because in an abstract way, bots look a lot more like the web than like apps, with many possible paths into bot interactions from across various networks.”

All of the people we spoke with expressed optimism about Facebook’s entry into the space, saying that it validates the market and adds legitimacy. “It aids in awareness,” Sheth remarked. “Facebook is such a prominent company that the media, developer, and brand interest is huge. It can impact a lot of consumers.”

“The entrepreneurial developer community is looking for a new opportunity to meet people where they are on mobile platforms with minimal acquisition costs,” Messina said. “Facebook’s opening of their messenger API last year gives developers license to start experimenting on the platform, and work to define key behaviors between brands and consumers.”

Screen Shot 2016-04-14 at 11.06.25 AM

At F8, Facebook CEO Mark Zuckerberg revealed that the combination of Messenger and WhatsApp processes 60 billion messages daily, compared to 20 billion via SMS. So what’s the next logical step for these services beyond chatting with friends? Businesses. And Facebook wants to lead that way.

For the most part, messenger apps have the same mission: Be a communication service. And while Facebook Messenger falls into this category, it’s banking on its platform to transform how we interact with one another outside of email and phone calls with businesses. It’s not the first to go down this road, as WeChat has been doing this for a while and now reportedly counts 10 million business accounts on its service.

Facebook’s entry into the space is significant in that it exposes people around the world to chatbots and artificial intelligence on a scale that other platforms can’t. It also taps into a behavior that those outside of the U.S. are already accustomed to: not using web-based services. Sheth explained that such users tend to only be exposed to what’s on their mobile device.

Screen Shot 2016-04-12 at 2.06.34 PM

Right now, Facebook Messenger only has a few bots on it, including 1-800 FLOWERS, CNN, Shop Spring, and the weather app Poncho. It has also released a framework from which developers can build their own bots and submit it to Facebook for approval. Mac thinks that the careful curation is needed in order to meet the end user’s expectations — if an app gets through that deliberately spams people, then it’ll corrupt the impression and push them away from bots.

“You really have to work at it,” Messina noted. “Slack’s @Slackbot is a great example that clearly was carefully crafted. It sets the tone for entire app’s experience. While content strategy grew in relevance on the web and social media, this ratchets things up to a whole new level. Now your content won’t just be static — it needs to be intuitive and improvisational. To achieve that, you need folks with literary and artistic skills.”

The opening up of messenger apps like Telegram and Facebook Messenger gives brands a way to really connect with users. It’s a consolidation of sorts: People don’t like making phone calls, and emailing a company doesn’t seem to be personal anymore — Uber recently shifted its customer support away from email. The solution now is that since customers are already using messaging, why not use that as the platform — don’t force them to come to you.

“Mobile devices are a really fundamental category, and I don’t see them being disrupted for at least a decade, maybe more,” Block said. “Apple and Google won, so anyone who didn’t win that game is going to be looking ahead for the next big platform opportunity. It turns out conversational products are where billions of people live, and what’s more, WeChat has proven they make a great means of disintermediation.”

The modernization of conversation

During his F8 presentation, David Marcus, Facebook’s vice president of messaging products, spoke about the evolution of how we communicate with businesses. “Before the Internet era, everything was conversational: You had to walk to a store, travel agent, or office and talk to someone to get what you needed. Then came the web, and with it, we traded personalization and conversation for interactions at a much, much larger scale. Then came the mobile era, which initially only offered stripped down versions of web, which eventually led to the app world we currently live in. Apps are truly incredible, and they’ve changed our lives in a profound way.”

Screen Shot 2016-04-12 at 1.58.02 PM

“But we download fewer and fewer apps, and we certainly don’t turn on push notifications for new downloaded apps anymore,” he continued. “Meanwhile, [Facebook] Messenger has a lot of great properties: It’s instant, persists identity from all participants at all times, it’s always in context, and all threads are always canonical. That means we’re bringing the best of these interactions that I just shared into one place.”

The consensus from people we’ve spoken with is that although Facebook is a little late to the bot party, its admittance will likely help to accelerate development, progress, and standards among not only the different platforms, but also among brands that want to take advantage of this new era of communication. “Facebook, Kik, Slack, Skype, and others are all playing in what is rapidly emerging as the next big playground for future technology companies,” Messina said.

More information:

Get more stories like this on TwitterFacebook