When do bots beat apps? When context and convenience matter most

by Peter Rojas


There's a question I've been asking founders when they pitch me their bots: "Why is this a bot and not an app or a website?" I've been fascinated by the explosion of developer interest and startup activity around chatbots and am pretty bullish on their potential as both a user and an investor, but it's important to take a step back and think about why we're all so focused on conversational interfaces. That means understanding that is often context that determines whether a bot is more useful than an app or website. 

It's undeniable that a huge part of what makes chatbots so attractive is that they promise to make computing more natural by stripping away graphical-user interfaces and instead let us simply ask for what we want. We're not there yet -- and won't be for a while -- but today's chatbots show us a glimmer of that future, one where we can simply speak or write something and the computer will understand what we want and give it to us. 

That gap between what chatbots can do now and what we know they'll be able to do in a few years can be enormously frustrating -- anyone who has tripped up Alexa or Siri by not phrasing a request quite the right way can tell you that. Certainly one of the biggest hindrances for chatbot adoption will be the amount of syntax you need to memorize in order to interact with them. Eventually, advances in natural language processing and AI will get us past all that and to a place where you can ask a computer for almost anything and it will be able to know what you mean. 

Although we're not there yet, today's bots can still be useful despite not having anything resembling true AI. We're already starting to see how a whole host of everyday tasks can be accomplished by chatting with an automated agent. Even if that bot isn't especially intelligent and requires you to employ a bit of syntax in order to interact with it, there's something about being able to have a quick conversation with a chatbot to get something done which can seem sort of magical.

The ease of conversational interfaces might be the primary driver of adoption, but there's something which has been missing from the debate over chatbots vs apps, and that is that the context in which you're trying to do something matters a lot, maybe even more than ease of use. A large part of what makes chatbots so compelling is that conversational interfaces have the unique ability to be integrated into the context we're already in. That's why chatbots make the most sense when the cost to switching contexts is high. Whether it's information, content, or a service, being able to ask for what you want via chat isn't merely about making something easier to do via an app. It's also about making it easier to have that interaction while having the minimal amount of disruption or interruption to whatever it is you're already doing. Because of this, a chatbot doesn't necessarily have to be easier to use than the corresponding app. It just needs to be more convenient to use given the context in which you want to accomplish a given task.

Let me explain what I mean. I have an Amazon Echo in my kitchen. Probably the number one thing I ask for each morning is the weather. Could I just pull my phone out and check the weather there? Sure, but it's much easier when I'm making breakfast to just say "Alexa, what's the weather today?" I don't have to stop what I'm doing and switch modes. Similarly, Slack bots make it easy to do whatever you need to do inside of a collaborative work environment rather than doing it outside and then pulling that information (or whatever it is) back in. Integrating your service with Slack as a bot lowers barriers to adoption because it can be used right inside the conversational flow which the business is already in. 

Chatbots are a bet that we are going to be spending more and more of our time within messaging apps like WeChat, Facebook Messenger, Kik, Telegram, etc and that it will be easier to access the services we want via a bot within those apps than to jump into another app or use the web. This is already proving to be the case in China, where a huge number of WeChat's 650 million users spend an enormous amount of their time within the app. They're not just spending that time chatting with friends, they're also accessing a whole range of services within WeChat itself, including shopping, virtual friends, games, etc. 

This is why Facebook is making such a big push with their forthcoming bot platform for Messenger. What they're rolling out will presumably make it possible for pretty much anyone to offer their content or service within Messenger. But while a lot of that will be the same stuff you can get via an app or via the web, Facebook isn't just wagering that the ease of interacting via a conversational interface will drive uptake of chatbots amongst its 800 million users. Ultimately they're doing this because they believe that the convenience of chatbots will get people to live inside Messenger in the same way that WeChat users live inside that messaging app. It's their way of making an end-run around both iOS and Android as app platforms by bringing all those services within Messenger as chatbots -- and thus onto a platform which Facebook controls. Uptake may be a bit slow as first users get accustomed to interacting with chatbots, but it's not hard to imagine user behavior changing over time, particularly as richer, more app-like UI elements get incorporated into chat platforms that further blur the line between chatbots and apps.

If bots win, it won't simply be because of their ease of use, but by the sheer usefulness of being embedded within the context in which we are already working or conversing, thus saving us the hassle of having to jump into a separate app or website to accomplish what we want done. Ultimately what will get us chatting with them is the convenience of having them there when we need them. You shouldn't have to go out of your way to get what you need from a bot. 


Fall in love with a problem, not a product

by Peter Rojas


I haven't been an investor for very long, but even in that short time there's one mistake I've seen more than a few founders make, and that's to fall in love with the product they're building. I know what you're thinking: how can that possibly be a bad thing? Don't investors want people who love what they're working on? Well, not exactly. You want to back founders who are passionate about their products -- in fact, it's odd when they aren't -- but there's a critical difference between being passionate about what you're building and being in love with it.

That may seem like a narrow gap, but it all comes down to motivation. What investors want is someone whose animating purpose is to solve a particular problem (especially one that people don't realize yet that they even have!) or fix something they think is broken. The product is just a means to that end, not an end in itself. To put it another way, you want someone who is more in love with fixing a problem than with the product itself.

What often happens is that a founder puts so much time, effort, and/or money into what they've built that they become blind to its shortcomings. Or, you'll see a founder become so enchanted by how clever or original they believe their product is that they don't want to listen to feedback they're getting from the market that there's no demand for it. This has nothing to do with the effort put into creating it or even how "good" it is -- I'm not talking about situations where the product itself is shoddy. Almost every product that's pitched to me is well-made. Quality is rarely the issue. What's wrong is that these are products which excel in every area except the one that matters most: being something that people want to use.

It doesn't help that the message a lot of founders hear when they encounter a roadblock like this is that they need to ignore the haters and just keep pushing and pushing until they make it, as if sheer perseverance alone can turn a failing product into a successful one. They have such a strong vision of what the product is supposed to be that they're not willing to change course and make significant changes to it. They'll convince themselves that the problem isn't with what they've built, it's that the rest of the world doesn't get it yet -- or worse, they haven't gotten the right people (i.e. bloggers or "influencers" on Twitter or Product Hunt, etc) to pay attention to it. So, they keep repositioning the product and what it's for, trying to find different problems for it to solve.

That's why you want someone who is in love with a problem, who cares more about solving that problem than anything else. A founder like that fixates on that problem and then keeps trying over and over until they figure it out. Part of that means being willing to make whatever changes are needed to the product to make it work, up to and including jettisoning what they've already built and starting over with something entirely new.

It's not always easy to tell the difference between being in love with a product and being in love with a problem, especially when you're in the middle of building a company. There will be days when you don't care at all about solving the problem you set out to solve. Other times you stumble onto something which solves a problem you weren't even aware of, but it is one you end up caring deeply about anyway. In the early days it can be difficult to know whether your product is working or not, and it's natural to want to give it time in the market. But unless you're lucky enough to have one of those products which connects right away and just takes off, sooner or later you have to confront where you're at and figure out whether you're building something which solves the problem you're tackling. When those hard days come, confronting the shortcomings in your product is a lot easier when your overriding drive is finding a solution to that problem.


Eight questions about Virtual Reality in 2016 (and beyond)

by Peter Rojas


Anyone who has spent time with me lately has probably noticed that I can't stop talking about VR. It's the one area of technology that I'm most enthusiastic about these days -- I own a Gear VR and just pre-ordered the Oculus Rift (and will probably pick up the HTC Vive as well). What's especially exciting about all this is that we don't yet know how all this is going to unfold. It feels like we're on the cusp of an entirely new world of immersive computing, but VR as an industry is still completely wide open in a way which more established markets like mobile and desktop computing are not. Here are a few of the questions I have about VR in 2016 (and beyond):

How big will the market for VR be a year from now?

In a way, the size of the VR market a year from now won't matter any more than the size of the smartphone market in 2006 meant about the size of that market now. What we really care about is how big the market can ultimately get and how long it will take to get there. But that said, after plenty of false starts, 2016 is supposed to be the year in which VR finally starts to catch on and become a real thing. So, the number of people who actually start using it will be meaningful, particularly since this will be the first year when regular people (i.e. non-developers) will be able to get their hands on top-notch headsets like the Oculus Rift, HTC Vive, and Sony's PlayStation VR.

As bullish as I am on VR, even if adoption is strong, the number of active VR users at the end of 2016 is still going to be minuscule compared with the number of people using smartphones. My best guess is that we're looking at somewhere around 10 million or so active users. Now, 10 million is not a bad number at all, but it will mean a relatively small addressable market for a lot of the apps, games, and experiences which will be out there. That might be enough if you're selling a game title you're planning on charging $60 for, but if you're building something which is going to make money via advertising, you are going to have a very tough time amassing a sizable enough audience to make any money. There's also the inevitable boom/bust hype cycle which surrounds every new technology, and there will be plenty of VR skeptics out there who will pounce on these relatively low numbers to pronounce that VR has once again flopped.

Will headsets be a commodity or a source of competitive advantage?

Will VR headsets end up being more like dumb glass (like TVs and monitors, which have largely become interchangeable commodities)? Or will they end up more like game consoles (which tightly lock users into an ecosystem of games, apps, and content)? Or somewhere in between? Certainly if you're Oculus, you want value to accrue to you and for there to be enough defensible value in your headset that consumers can't easily substitute it with another. Whereas, if you're Valve, you probably have an interest in there being multiple headset vendors driving the price down as quickly as possible, fueling adoption and expanding the universe of potential customers for their SteamVR platform. I'm ignoring the really low-end of the market, since headsets like Google Cardboard are already essentially a commodity (they're being given away for free, if that's any indication). I don't know how this one will play out, but if history is any guide, VR headsets will end up coming down in price quickly and profits from selling them will be few and far between.

Speaking of hardware, what will the relationship be between high-end and low-end VR?

In 2016 there will be two VR markets: a higher-quality experience which involves a dedicated headset tethered to a PC or game console (i.e. Oculus Rift, PlayStation VR, and HTC Vive) and a lower-quality experience which involves using popping a smartphone into a headset and using that for a display (i.e the Gear VR, Google Cardboard, Zeiss VR One, etc). We talk about VR as this monolithic thing, but anyone who has tried both the HTC Vive and Google Cardboard can tell you that there is a huge gulf between the two in terms of immersiveness and level of realism. Will developers try to build apps, games, and experiences which work across both tethered and mobile VR, or will they end up focusing on one end of the market or the other? Will users get a taste of VR on Google Cardboard and then "graduate" to tethered VR, or will mobile VR remain the domain of casual users for enjoying 360 degree videos and experiences while the higher end of the market appeals primarily to hardcore gamers?

Will regular people create and share VR content? If so, how? 

It stands to reason that people will want to create and share their own 360 photos and videos -- we're starting to see a bit of that already -- but will a new social platform or app emerge for that or will it mainly happen on existing platforms? Facebook and YouTube already support 360 videos, for example, but I have yet to see a truly great "VR-native" experience for sharing and consuming other people's VR creations. Hard to imagine that Facebook or Google aren't working on something, but there could be an opportunity for a startup that's just focused on VR to do something awesome here. 

Will there be an app which drives mainstream adoption?

VR gaming is going to be amazing, but given that most people aren't interested in console gaming there's no reason to believe that adding a VR headset to the mix is going to change things--sales of game consoles and gaming PCs are not especially robust, particularly compared to sales of smartphones. Immersive TV and movies will probably find a wider audience, but no one has any idea whether there will be an app for VR which convinces regular people that they need to go out and get a headset. If you're building something for VR which you think will do that, get in touch.

What will be the user experience paradigms which define VR?

I've written about this one before, but I still don't think we're anywhere close to figuring out what a native UX for VR looks like. I have a few ideas about how it might evolve which I'll post at a later date, but I'd love to hear what others are thinking here.  

What will Microsoft end up doing?

Sony has its VR headset for the PlayStation 4, but as far as I know Microsoft has no plans for a headset of its own for the Xbox One. It's possible they have something in the works, (perhaps that they'll announce at E3) but I haven't heard a single thing about it. So far the extent of their strategy for VR seems primarily to partner with Oculus. Given that Windows 10 will be the platform of choice for most Oculus Rift users, and the Rift will ship with an Xbox One controller, that may not be such a bad plan. However, it doesn't do much for all of the Xbox One owners out there who would be interested in having a VR gaming experience like the one Sony is going to offer with PSVR.

Wait, but doesn't Microsoft have a headset? Yes, they have introduced the HoloLens, but that's an augmented reality headset, not a VR headset. It's tempting to lump AR and VR in together, but they're fundamentally different products offering fundamentally different experiences. AR headsets involve taking a view of what you're actually looking at (i.e. actual reality) and overlaying graphics within that field of view. By comparison VR headsets are fully immersive and completely take over the user's entire sensory experience. While there will definitely be a market for AR gaming, it will pale in comparison with the demand for VR gaming, at least early on. In the meantime, Microsoft's VR strategy is a big question mark.

What will Apple end up doing?

I don't think anyone is holding their breath waiting for an Apple VR headset anytime soon. It's not Apple's style to be part of the first wave of a new, relatively untested new technology. Typically they like to hang back and introduce a product when they feel the market is finally ready. Assuming that Apple does eventually end up doing something -- and they have made a couple of relevant acquisitions -- the question is whether it will be more like the high-end tethered headsets we're seeing from Oculus, HTC, and Sony, or will it be more like the Gear VR and be something you pop your iPhone into? It's easy to see the attraction of the latter -- the installed base of iPhones is enormous, so a headset which piggybacked off of that would probably sell like crazy. However, a tethered headset would also offer a markedly better VR experience, and it's possible that Apple would opt to offer consumers a premium experience (at a premium price, naturally) rather than what it felt would be a second-class offering. Then again, Apple is so oriented around mobile that something akin to the Gear VR seems like a better fit. It's not hard to see smartphones being powerful enough and having high enough pixel density in a few years to offer a VR experience that's not that much worse than what you could get from a tethered headset. Either way, whatever Apple ends up doing will shake up the market and I'm sure execs at Sony, Samsung, HTC, and Oculus feeling like they're going to have to race to establish a foothold before Cupertino jumps in.

What do you think?

I'd love to know what questions you have about where VR is going.


Why Publishers Don't Care (Yet) that the Mobile Web is so Awful

by Peter Rojas


There has been a lot of (justifiable) complaining lately about just how awful browsing the web on a mobile device has become. The main culprit? Page sizes, which have grown rapidly in recent years. HTTP Access reports that the average site today is now double the size of the average site from just three years. Bigger page sizes mean increased page load times, a problem which is especially noticeable when browsing on the smaller screen and slower connection of a mobile device. 

You can guess why it's gotten worse. As phones have gotten more powerful and mobile networks have gotten faster, publishers have felt less inhibited when it comes to increasing page sizes than they did at the dawn of the mobile era. These days they're loading up their sites with not just banner ads, overlays, and video players, but all manner of ad network trackers and beacons. More people consuming content on mobile devices means advertising dollars and ad networks, giving publishers opportunities to make money off of their mobile traffic that didn't have just a few years ago. But the real reason why publishers have become so comfortable with making the reading experience on mobile miserable is because they can get away with it. The reality is that they don't care if you hate them. 

It sounds crazy, since you'd think that most websites would care a whole lot about keeping their audience happy, but the rise of social -- and really we're mainly talking about Facebook -- as an enormous driver of traffic has changed the nature of the relationship between websites and their readers. Why? Because Facebook has become the primary interface for hundreds of millions of people for experiencing the web. We don't usually think of it in this way, but the News Feed breaks that direct relationship between websites and readers by unbundling sites into their individual components (i.e. articles and videos) and then re-aggregating them into a largely undifferentiated stream that's algorithmically customized for each user. In a lot of ways this is great for users -- they get to see stuff tailored to their interests without having to put any effort into going out and finding it. It's not entirely bad for publishers either, since Facebook's huge user base offers them a way to grow the audience for their content. 

However, there's a big difference between someone choosing to go to a site because they enter the URL into their browser, click a bookmark, or subscribe to their newsletter, and someone who ends up at a site because they clicked a link which someone shared on Facebook. That difference is the depth of the relationship that the user has to the site. Quite simply, you probably care a lot about the sites you choose to go to directly, and you go back because you know you'll get a quality experience. You don't have that relationship with sites you click on in Facebook. You go because someone you know shared it, and you may not even pay all that much attention to what the name of the site is before you click the back button a few seconds later. In fact, the person who shared it might not have even read it themselves. A study by Chartbeat of 10,000 socially shared pieces of content found that, "There is no relationship whatsoever between the amount a piece of content is shared and the amount of attention an average reader will give that content." 

In the early 2000's the realization that Google was driving tons of traffic led to SEO-obsessed content farms focused on gaming search engine result pages. Similarly, social sharing has changed the dynamics of web publishing and led to a whole host of sites which are focused on creating content they hope will go viral on Facebook. Some of them, like Buzzfeed and the Huffington Post, have done phenomenally well and grown into big businesses, while many older sites have reoriented their traffic acquisition strategies around Facebook in order to keep up. You can see it in how headlines have changed. When the key to driving traffic is getting people to click through on Facebook, you end up with the kind of clickbaity headlines that Upworthy and Buzzfeed pioneered. 

When you break that direct relationship between readers and publishers, you also take away a powerful incentive for publishers to offer those readers a high-quality experience. If there is going to be little or no reputational hit to the brand -- or if the brand doesn't even matter all that much anyway -- someone coming to your page and being exposed to a ton of advertising isn't a bad thing at all. Given the unlikelihood that the publisher will convert them into a direct visitor later on, it's entirely rational for them to optimize for short-term gain, and that means trying to get that visitor to like the page (to drive more traffic) and to be exposed to as many ads as possible (to drive as much revenue as possible). Users might be a bit annoyed by the load time (which they may blame on their phone's connection rather than the site), the preponderance of ads, or the number of pages they have to click through to get to the "actual" content, but as long as the publisher can continue to craft headlines which generate clicks there is little reason for them to change what they're doing. You can see this same dynamic at work in those "Suggested Links" modules powered by Outbrain and Taboola at the bottom of articles. Have you ever noticed how obscure many of those sites are and how determined they are to get you to click on as many pages as possible to read the whole article? 

Sites which rely on their audience to make a conscious decision to go and visit them have the opposite incentive. They want your visit to be pleasant, so they avoid the pop-ups and click-throughs. This sacrifices the short-term value of all that potential advertising revenue they might have made on that one visit for the long-term value of keeping you as a regular reader. I don't have any data on this, but my hunch is that that there is an inverse relationship between how much of a site's traffic comes from direct visitors and how much intrusive advertising and other crap visitors have to deal with when they go there. However, it's easy to advise publishers to make the strategic sacrifice -- to have fewer ads in order to build a brand that some users will want to visit directly or for longer -- but for most of them this would be suicidal.

No one much likes advertising, but it's how most online publishers pay the bills, so it's unlikely that this will change anytime soon. Unless, of course, Apple and Facebook find a way to upend all of this. Facebook's new Instant Articles is such a big deal because it attempts to solve the mobile web experience problem by essentially deprecating the web itself. With Instant Articles publishers host their content within Facebook itself, so instead of clicking out to a web page users stay within the Facebook app and get a faster loading, cleaner version of the same article. (In Facebook's post announcing Instant Articles they pointed out that the average article has an unacceptably long load time of eight seconds on mobile.) Facebook is allowing publishers to keep 100% of the revenue of ads they sell themselves (at least for now), though whether publishers will be able to make as much money hosting their articles on Facebook rather than on their own sites is an open question. The point is that it's not hard to see Facebook's algorithm prioritizing Instant Articles because of how quickly they load (just like how Google has made page load time a factor in how it calculates search results), which would essentially force publishers to choose between either improving their own mobile websites (by reducing both the number of ads and their intrusiveness) or giving in and just publishing to Instant Articles. 

Without much fanfare, Apple has decided to allow developers to build ad blockers for mobile Safari in iOS 9. It's hard to tell right now exactly how big of a deal this is going to be for publishers. Reactions range from "this is an impending apocalypse" to "everything will be just fine." Very few publishers are unconcerned about the effect on mobile ad revenue. Given the precarious position most publishers are already in, even a small decrease in income can be extremely painful. I can tell you from my time at AOL that desktop ad blockers had a material impact on revenue for several properties and it's hard to imagine mobile ad blockers not doing at least some damage. But, I also know from the user's perspective why mobile ad blockers would be so attractive -- they'll go a long way towards making the web usable again on your phone. Apple, which makes hardly any money from mobile advertising, probably cares very little if Google, which dominates the mobile ad market, suffers. As far as for publishers, it's probably not at all surprising that Apple has its own Instant Articles-like solution for them called Apple News which purports to fix everything that's wrong with reading the news on the mobile web. It's not clear yet what Apple's long-term plans are for Apple News, but if publishers are losing significant amounts of money because of mobile ad blockers, they're likely to be a lot more receptive to whatever solution Cupertino offers to help mitigate the situation.   

However things turn out, in the short-term publishers are going to find themselves in an increasingly tough position. It's already become a lot tougher to rely on Facebook for traffic. The competition for eyeballs keeps ramping up as more and more publishers figure out how social works. Simultaneously, Facebook keeps tweaking the News Feed algorithm in ways which make it harder and harder to reach audiences -- unless of course you want to pay for the privilege. It'd be one thing if there were some other source of traffic on the scale of Facebook or Google on the horizon, but as far as I can tell there isn't. (Side note: if you want to build a $250 billion business, just figure out how to drive as much traffic to the web as Facebook and Google do. If you are working on this, please get in touch.) In the meantime most news sites are going to do exactly what they're incentivized to do right now, and unfortunately for us, that means optimizing for ad revenue, not a great mobile web experience.