Demise of Chatbots in 2017

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

Human-in-the-Loop and Other AI Mistakes

• 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