Goldman Calls Bot Overhyped but Are They?

Last week, Goldman Sachs included bot technologies as part of its famous buzzwords series that highlight overhyped technologies in the market. Goldman explained that bots are still in the very early statages of its growth cycle and explained that the majority of bots in the market haven’t experienced beyond ordinarily traction. “Bots are poised for continuous maturation for a couple of reasons. The first is that the channels are in place” Goldman said. “Messaging platforms are broadly adopted in The US and globally. The second [reason] is that the technology behind bots -machine learning- is starting to mature rapidly over the next few years” In plain words, bots are a promising technology trend but, at the moment, they are overhyped.

I am very bullish of bots. In the past, I’ve written extensively about the subject and I firmly believe the space is going to evolve rapidly. I believe that, from an anthropologic standpoint, natural language and voice are a more natural mechanism to interact with software systems than the current generation of user interface models. Having said that, it is hard to completely disagree with Goldman’s points. In the current market, bots have been terribly overhyped as a technology trend and the space hasn’t yet deliver any winners.

Reading Goldman’s report made me thing about some of the main challenges for bot technologies in the current market and some possible solutions.

Bot Market challenges and Some Crazy Ideas

Challenge: Finding the Killer Bot

Despite the explosion of bots being released in the last few years, the vast majority of them have experience little or moderate traction. Many experts believe that the development of the bot market is a classic “big link” problem in the sense that the market needs to produce a few bots that experience a massive level of user engagement and adoption.

Possible Solution: Focus on Gaming

I believe gaming is one of the areas that is likely to produce a few early winners in the bot market. The viral nature of games makes it an ideal candidate to breakthrough the initial bot adoption barriers.

Challenge: Sharing the Runtime with Mobile Apps

One of the elements that helped the adoption of mobile apps was the introduction of a brand new runtime -mobile OS- and new hardware -mobile OS-. Bots, on the other hand, are sharing a runtime and hardware infrastructure with mobile applications which means that users are splitting time between bots and mobile apps which many times makes it easier for users to just use mobile apps.

Possible Solution: Explore New Bot Runtimes

Messaging platforms are the undisputed runtime for bot solutions. However, I believe that expanding onto other software and hardware platforms could help with the adoption of bots. To use an example, bots can be a natural fit for wearable’s in which the user experienced is severely more constrained than mobile apps. Platforms like the Amazon Echo ecosystem are becoming an interesting option as a bot runtime.

Challenge: Monetization

Monetization channels are another of the well known challenges in the bot market. Is really hard to think about solving the monetization problem when we are still trying to figure out how to improve the adoption of the technology but you can rest assured that VCs investing in the bot space are definitely thinking about it. In general, is hard to grow a technology market without establishing the proper monetization channels.

Possible Solution: Focus on Advertisement

Bots represent a new channel for brands to engage with customers. AS a result, bots have a unique opportunity to drive new forms of advertisement and marketing based on natural language and voice interactions. From that perspective, advertisement and other forms of marketing can become the first effective monetization channel for bot platforms.

As mentioned before, I remain super bullish about bot technologies and I some of the challenges listed in this article are just the natural evolution of a disruptive technology trend in an already over hyped market. Despite the challenges, bots should definitely play an important in the next decade of software development.

CEO of IntoTheBlock, Chief Scientist at Invector Labs, I write The Sequence Newsletter, Guest lecturer at Columbia University, Angel Investor, Author, Speaker.

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