Demise of Chatbots in 2017

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In 2017, I saw too many Chatbot AI startups. Then in 2018, they suddenly disappeared.

The performance of deep neural networks scales with data and compute. Extrapolating 2016 results over the next few years shows that we'll have ubiquitous human-level conversational AI and other sophisticated agents.
To prepare for this, we'll be first-to-market by selling the same services today except with humans that the models augment. While this will initially be a loss leader, it will be mighty once the models are good enough to solely power the interaction (without humans). By then, we'll have the best distribution.
Of course, we still don't have the level of conversational AI that can power magic assistants or chatbots without a human-in-the-loop. Most of these startups ran out of money. The most successful ones were the ones that sold to strategic buyers (Cruise/GM, Otto/Uber, Zoox/Amazon) or ones that sold picks and shovels (Scale AI).
We don't seem to be making the same mistakes as in 2016 in the era of generative AI. Some companies are solving for distribution using someone else's proprietary model (e.g., Jasper AI/GPT-3), but these products deliver real value to customers today - with no human in the loop. If LLM performance plateaued, these companies would likely still have some intrinsic value.

My Chatbot in 2017