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WeChat Therefore We Bot?

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The Commercial History of WeChat, and the roles that bots have played.

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WeChat Therefore We Bot?

  1. 1. WeChat Therefore We Bot? The Commercial History of WeChat May 2016 By Joe Medved (@joevc @LererHippeau) & Entry Level VC Candidate* *Contact @joevc for introduction
  2. 2. Messaging Has Become the Dominant Social Medium See full report here: http://www.businessinsider.com/the-messaging-app-report-2015-11
  3. 3. Enterprises Want to Join the Conversation
  4. 4. Are Bots the Answer? Sometimes But Not Always “ How are you today ” “ Do you know tomorrow’s weather? ” “ New York ” “ Where are you based ” Summary of the weather
  5. 5. ? 2010s 2000s 1990s 1980s 1970s 1960s 1950s SmarterChild: Launched in 2001, this chatbot on AIM & MSN reached 30M users Humanoid Robots: Robots capable of interacting with humans commercialized Loebner Prize: Awarded to a bot that beats the Turing test. No winners since start in 1990. Deep Blue: In 1997, IBM’s Deep Blue chess machine beats world chess champion Garry Kasparov. Chinese Room: In 1980, John Searles’ paper Minds, Brains and Programs proposed the “Chinese room” experiment, arguing that just because a computer can have a conversation by recognizing symbols, it does not prove the machine can think and have consciousness as the Turing test proclaims. Interactive Voice Response (IVR): Advances in speech recognition technology spawned the growth of IVR within the call center industry, enabling automated systems to more efficiently route callers with a simple, scripted voice interface. ELIZA: In 1966, MIT Professor Joseph Weizenbaum published ELIZA, a program applying primitive natural language processing to users’ responses to scripts. ELIZA utilized pattern matching rules to determine its replies. Turing Test: In 1950, Alan Turing developed a test of a machine's ability to exhibit intelligent behavior equivalent to, or indistinguishable from, that of a human. The test requires a machine to convince users of its human intelligence 70% of the time after five minutes of conversation. Where Are We in the Bot Evolution?
  6. 6. WeChat is Recognized as the Mobile Messaging Pioneer So what does WeChat’s history tell us about the potential for commercialization in messaging, and what role bots may play? Connecting 700 million People with chats, calls and more
  7. 7. The Commercial History of WeChat
  8. 8. HOUSEHOLD NAME IN CHINA MOBILE PLATFORM ENTRY TO TENCENT SOCIAL MEDIA EMPIRE CENTRAL COMMUNICATIONS AND SERVICES HUB EXTRA KEY LAYER TO DIFFERENT TYPES OF APPS HIGH USER STICKINESS ON HIGHLY INTEGRATED PLATFORM 161 355 500 697 0 200 400 600 800 FY2012 FY2013 FY2014 FY2015 WeChat MAU (mm) WeChat – From a Messaging App to the Social Services Hub
  9. 9. Moments • Share articles & pictures / write posts • Follow Official Accounts (merchants, celebrities etc.) WeChat Started as a Messaging App Multimedia content • Send pictures, stickers, files Message • Send text, audio messages • Create group chats Long-distance calls • Enables voice call, video call 1 GLOBAL COMPS 2 3 Find new friends • “Shake” and “People Nearby” enables adding strangers as friends
  10. 10. Example China Eastern Airlines Official Account on WeChat • Shown as a contact in WeChat after users add its official account • Users can check flight info, reserve tickets, check-in, select seats, manage membership through the airline’s WeChat account • All subscriptions are gathered under a separate tab called “Subscriptions” • Good for individuals or companies that provide contents as a core service • Less efficient at collecting data from users and at providing online services than Service accounts do Added Official Accounts for brands  Subscription accounts providing news and media articles – Content is King WeChat  Service accounts providing corporate services to customers – Service is King China Eastern Airlines 4 4 5 5 • “App-within-an-app”: Not full scale apps but simple website-like apps using WeChat’s API • Benefits early stage companies that do not have resources to build a fully developed app
  11. 11. • Requests information either by navigating through menus or sending texts (applies to simple requests such as checking flight) • Builds automated responses → reduces customer calls for businesses Incorporated Bots into Official Accounts Weather update on Yellow Mountain ↓↓↓↓↓↓↓↓ Chumen Wenwen China Southern Airlines • Google Now / Siri type of digital assistant; Supports voice recognition • Answers requests including weather, restaurants, navigation etc. • Connects to other third party apps such as Dianping where users can book restaurants / ordering delivery • Investors include Google “ Is it going to be cold in the Yellow Mountains this weekend? “ 4/27 To Shanghai” “ Please enter origin” “ Beijing ” “ For what day? ” “ 4/27 ” “ Sorry we don’t have tickets that match your need yet ” XiaoIce “ How are you today ” “ Do you know tomorrow’s weather? ” “ New York ” “ Where are you based ” Summary of the weather • Developed by Microsoft; A chatbot that users can add as a friend and casually converse with. Over 20 million users. • Able to answer questions such as weather update, restaurant suggestions etc. • Not only responds to text messages but also identifies and reacts to pictures and voice messages Some popular bots built upon WeChat API 6  More customized, context-based  More conversational  More accurate leveraging chat history  Less apps to be downloaded  Less 800 customer services calls
  12. 12. Tenpay 19% Others 11% Alipay 70% Tenpay 14% Others 9% Alipay 77% Wallet WeChat Pay Incorporated Paymentthat transformed WeChat into a gateway of m-commerce and enhanced user stickiness • Each individual or business account has a unique WeChat QR code that enables users to pay and receive money by scanning the code without adding a contact • Historical growth 2015 2016 1 8 RED ENVELOP VOLUME DURING CHINESE NEW YAER (BN) 100 200 300 2014 2015 2016 # OF BANK CARDS BUNDLED2 (MM) ~ 420mm users (90% of urban mobile users1) Source: iResearch 1 QiEZhiKu (owned by Tencent) 2 Bank cards bundled to WeChat Pay and QQ Wallet 3 Includes WeChat payment and QQ Wallet TENCENT PAYMENT3 HAS GAINED MARKET SHARE OVER ALIPAY 1Q’15 3Q’15 MeilishuoGroup BuyMovie Tickets SpecialRail & FlightsOrder Taxi
  13. 13. • Pay and receive money: card repay, utilities bills, healthcare bills • Mobile credits top up • Link loyalty cards from multiple merchants to one WeChat account • Transfer money among friends • Split bills • Send out red packets, monetary gifts given for special occasions • Crowdfunding • Wealth management products (i.e. LiCaiTong) • Loan application Wallet WeChat Pay GLOBAL COMPS 7 8 7 7 8 8 8 7 9 9 9 Incorporated Paymentthat transformed WeChat into a gateway of m-commerce and enhanced user stickiness • Facilitate B2C transactions and off- platform services: • Enhance C2C transactions: • Provide various financial products MeilishuoGroup BuyMovie Tickets SpecialRail & FlightsOrder Taxi
  14. 14. • Access links under “WeChat Wallet” to some of the most popular third-party apps to enrich more mobile payment scenarios • Weidian: Allow third parties to open stores and connect with consumers on WeChat • Virtual app stores: Announced to launch “Application Account ” where users can subscribe third party services in HTML5 format Wallet WeChat Pay Evolved into Platformthat integrates O2O initiatives and third party apps 10 10 Download on the Virtual App Store To come…. Order taxi on demand Book rail / flight tickets online Online shopping Reserve seats / buy movies tickets GLOBAL COMPS Provide user reviews of local services (i.e. restaurants) and group buying (Bot Store) MeilishuoGroup BuyMovie Tickets SpecialRail & FlightsOrder Taxi Online shopping guide for women
  15. 15. Current Search within Official Accounts, individual / group chats, and Moments Search without leaving current dialogues Bring subscribers to Official Accounts Access to industry expert articles through subscription accounts Available from Sogou platform both on desktop and mobile Challenge Embedded Search function within chats and accounts GLOBAL COMPS 11 Much less contents on WeChat than those on traditional search engines  How to bring traffic to other WeChat third- party services (JD.com, Didi Kuaiche etc.) besides Official Accounts? Search through Official Accounts Search through Moments, Chat history Higher stickiness Search gateway More personal More contextual More traffic to third party services
  16. 16. E-Coupon Game Center Ads on Official Accounts Ads on Moments Accelerated Monetization through diversified product offerings and cross-selling opportunities Sticker Gallery Targeted Ads Future monetization on payment transactions1 Wealth management & other financial services offerings 1 Tencent currently still subsidizes payment transactions, which incurs an increasing burden of bank handling fees
  17. 17. Lessons from WeChat
  18. 18. Most WeChat Bots Take a Hybrid Approach • XiaoIce, Microsoft’s conversational bot, has over 20 million users. It functions reasonably well within the Chinese internet, where conversation is more restricted and less prone to trolling. • However, the majority of bots are conversation-centric but leverage graphical user navigation and/or human involvement • Even as bots inch closer to Turing’s test, GUIs will be utilized in visual messaging platforms • Most conversational commerce will not be text only. GUIs save 100s of keystrokes. • As with IVR systems, some complex user requests require human engagement Chumen WenWen China Southern Airlines
  19. 19. The Power of the Platform • WeChat has over 10 million Official Accounts operated by third parties. Relatively high data costs in China benefit WeChat, with users less prone to download apps. • The entire app ecosystem for Android and iOS is ~2 million each, including games. The bar to create an Official Account with simple “App-within-an-app” functionality is significantly lower. • However, WeChat’s platform dominance is similar to Android and iOS, with WeChat’s proprietary commercial features prioritized much like default apps Wallet WeChat Pay
  20. 20. “WeChat Wallet” channels exclusively operated by 3rd party services in Tencent’s portfolio DESCRIPTIONS TENCENT INVOLVEMENT KEY INVESTORS • Tencent • Wanda Group • Southern Capital • Online movie ticket booking platform based on WeChat, QQ and WePiao App • 8% market share, 3rd largest • Dec 2015: Announced to merge with Gewara to consolidate ~ 30% of the market share • Developed by Beijing Weiying Technologies, a company owned by Tencent, Wanda Group etc.in 2012 • Tencent • Alibaba • SoftBank • DST Global • Temasek • Added to WeChat platform in Jan 2014 • Invested in Didi Dache since Series B in 2013 • Feb 2015: Didi Dache and Kuaidi Dache merged into Didi Chuxing, forming Chinese biggest taxi- hailing platform • 21mm cab rides were booked in the first month after integration into WeChat platform DIDI CHUXING • Level 1 access to WeChat platform since Mar 2014 (accessed under “Discover” as well as under “Wallet” • Purchased 15% (~ $220mm) in 2014 • Chinese largest B2C e-commerce platform that offers online direct sales in electronics and general merchandise • Mar 2014: Merged with Tencent’s online marketplace Paipai and Yixun • Mar 2015: WeChat and QQ together drove ~20% of JD.com’s new customers • Tencent • Tiger Global • KPCB • Sequoia Capital JD.COM WEPIAO LY.COM • Added to WeChat platform in Apr 2014 • Tencent • Ctrip • Chinese online travel booking services including rail and flight tickets booking DIANPING • Oct 2015: Dianping and Meituan merged to form a dominant player in the group-buying and local services businesses • Jul 2014: Experienced ~ 86% y-o-y growth in MAUs one quarter after landing on WeChat • Tencent • Alibaba • Acquired ~ 20% of Dianping and integrated it on WeChat in Feb 2014 E-COMMERCETAXI HAILING MOVIE BOOKING LOCAL SERVICES TRAVEL BOOKING • Added to WeChat platform in Mar 2014 • Tencent • Sequoia Capital • GGV • Provides Pinterest-like functions that enable women to find clothing and skin care products • Jan 2016: Acquired by MojujieMEILISHUO Investing in Exclusive Commercial Partners
  21. 21. CONCLUSION: Bots Are A Nascent Contributor to WeChat • After stickers, monetization at WeChat was driven by the introduction of Official Accounts and their lightweight, app-within-an-app capabilities • Payments, Platform & Exclusive 3rd Party Apps, Commerce, Branding, Search, and Games have contributed to the commercialization of the world’s most innovative messaging platform • Bots have immense potential but are just starting to play a role on the WeChat platform • Broad bot functionality requires massive investment. Cash-rich companies like Amazon (Echo), Apple (Siri), Facebook (M), Google (Now), Microsoft (Cortana, XiaoIce) & SoftBank (Pepper) are in the early days of developing bots with seamless conversational capabilities. A few startups like Viv, comprised of the former Siri team, will compete to build the leading bot platform. • A wider array of bot startup opportunities will focus on discreet use cases like scheduling with x.ai or weather with Poncho, or rely on some human involvement for broader use cases like Fin. There is also an opportunity for cross platform bot development tools. Beyond just bots, startups can also offer a broader suite of messaging solutions for brands like Snaps. • For enterprises looking to follow consumers into the messaging world, bots alone are not yet ready to facilitate frictionless conversational commerce. The chase for the Turing test continues.
  22. 22.  General  http://www.businessinsider.com/the-messaging-app-report-2015-11  https://www.techinasia.com/talk/5-ways-mobile-messaging-evolve  http://blog.appannie.com/messaging-apps-where-theyre-popular-and-major-revenue-opportunities/  http://www.scaruffi.com/mind/ai.html  WeChat related  http://techcrunch.com/2015/11/26/the-many-ways-of-wechat-how-messaging-is-eating-the-world/  https://www.techinasia.com/wechat-697-million-monthly-active-users  http://techcrunch.com/2016/03/17/messaging-app-wechat-is-becoming-a-mobile-payment-giant-in-china/  http://qrcodetracking.com/qr-codes-help-wechat-become-a-social-media-platform/  https://walkthechat.com/wechat-public-accounts-difference-subscription-service-accounts/  http://dangrover.com/archive/  Apps within an app model: https://blog.passkit.com/wechat-offers-insight-into-the-future-of-apps-and-mobile-payments/  WeChat Third Party Apps  JD: http://technode.com/2015/03/04/tencent-mobile-messaging-apps-drove-20-percent-of-new-customers-for-jd-in-q4-2014/  JD: http://blogs.wsj.com/chinarealtime/2016/01/06/qa-with-jd-mall-ceo-on-balancing-shopping-and-social/  Didi: https://www.techinasia.com/wechat-21-million-taxi-rides-booked  Facebook related  http://techcrunch.com/2016/03/17/facebooks-messenger-in-a-bot-store/ Sources

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