Bradley Metrock: Hi, and welcome back to The VoiceFirst Roundtable, Episode Six, for August 15th, 2017. My name is Bradley Metrock, CEO of Score Publishing, based in Nashville, Tennessee.
We’re very thrilled today to be joined by Adam Marchick – Adam, say hello!
Adam Marchick: Hello!
Bradley Metrock: Adam, thank you very much for joining us. Adam, you’re a long time entrepreneur – a very successful entrepreneur – give us the elevator pitch for VoiceLabs.
Adam Marchick: Sure. So VoiceLabs exists to help voice app developers be successful. And what’s exciting is there’s a new wave of voice app developers building on Amazon Alexa, Google Assistant and Microsoft Cortana and hundreds are joining daily, and we’re here to help support them.
Bradley Metrock: And you do that by offering an analytics service.
Adam Marchick: Yes. So as a bit of background I’ve been a software developer for a number of years, and this is now my third emerging platform and ecosystem I built a company around. From my experience, whenever there is a new ecosystem, an app development environment, the first thing developers, product people and marketers need is actionable analytics. So we built and launched VoiceInsights voice analytics product about a year ago, and it’s now the #1 voice analytics product in the market.
Bradley Metrock: Very cool. So, everybody, I think who’s listening to this has a pretty good idea of web analytics. The number of people who hit your site, their geography, how long they stayed on the site…but I would venture to say a lot of people have no earthly idea what would be comprised in voice analytics. Share with us some of the metrics, and some of the things that developers are tracking with your service, and some of the things they want to be tracking.
Adam Marchick: Sure. So as with any good description, it starts with Dwayne Johnson “The Rock,” So for anyone who has seen the recent Apple commercial with The Rock talking about Siri. That’s what happens on these platforms — you’re using either Apple Siri or Amazon Alexa, and then you want more interesting things. So, for example, The Rock asked Siri to get him a ride using Lyft. And at that point, Apple hands off that interaction to Lyft.
It’s Lyft’s job to do right by the consumer and figure out where he is and how to get him a ride to the airport. And so that app that Lyft built – it’s not trivial to build a great voice app.
And so VoiceLabs works with companies like Lyft, and our analytics software helps them understand how consumers are using their app, how they’re trying to use the app, but not able to, and how to make their app better. And we have visualizations and data analysis to aid in that effort.
Just as a quick difference in voice experiences, versus web and mobile experiences: First off, when mobile became popular, there was a rise of mobile analytics, and my last company was in the mobile ecosystem and did some mobile analytics. Now with the voice ecosystem arising, one big difference, of many, is that when you look at web analytics – like Google Analytics – one of the key things is funnel analytics: looking through the funnel and seeing how people traverse through it. On the web, you really care about the click-stream. For example, do they enter an email and then click “sign up”? You don’t really care about the value entered.
In voice, the value of an entry is way more important because it has to be interpreted, and interpreted correctly, and led to the right next step. So the value of information needs to be much more front and center for voice analytics than web or mobile.
Bradley Metrock: Can you share with us how many people are using your service?
Adam Marchick: Yes. We’re proud to say that we have over 1900 voice app developers.
Bradley Metrock: Wow. That’s a lot.
Adam Marchick: That is. There’s about 18,000 apps, total, across all the platforms, which probably represents ten to eleven thousand developers. So about 15 to 20 percent of them are using us.
Bradley Metrock: That’s pretty awesome. It’s interesting that your service supports Alexa and Google Assistant both, and I think that would open the door for some interesting insights between how users are using one versus the other. Have you seen insights along those lines, about how Amazon ecosystem folks are using their voice hardware, versus how Google folks are?
Adam Marchick: Well it’s a great question. It’s something that we really like digging into. Both Alex and I were computer science majors, and I did a stint in data science – we like taking data sets and digging in. In January, we actually wrote this thing called The Voice Report, which tried to explain the market and some of the differences. And we conjectured how Google Assistant and Amazon Alexa would diverge. What’s been interesting is that report’s been read over 20,000 times.
Bradley Metrock: And that’s on your Web site, right?
Adam Marchick: [00:06:35] It is – directly on our Web site. And we’re actually in the middle of another data analysis project that will go live in early September…
…where we were tackling just that: “Are Google Assistant consumers diverging from Amazon Alexa consumers?” The answers right now are not statistically significant, but it is getting close.
Bradley Metrock: Interesting.
Adam Marchick: And I think it’s because if you ask someone – you show them an Amazon Echo, and you show them a Google Home, and you say “what are the key differences?” They’re like “one’s circular, and one’s oval.” You know, that’s just kind of where we are. But, in the details, there are a ton of differences already, and those differences will become more and more pronounced.
Bradley Metrock: It’s my perception, for whatever it’s worth, that there aren’t that many people that own both. Are you seeing that, or are there a good many people that do actually own both?
Adam Marchick: Great question. So, in January, we actually did a lot of primary research and we surveyed consumers with the help of one of our partners – InfoScout, a really strong market research firm.
And we surveyed consumers, and we found consumers that owned one of the devices. And we asked them “how likely are you to buy the other device?” And only 11 percent said “I’d buy the other one as well.”
So to date, you’re right, that…in 2017, it’s a ‘winner take entire household’ market, where if you go Alexa, you’re an Alexa house. If you go Assistant, you’re a Google Assistant house. That will become less pronounced in the coming years.
Bradley Metrock: [00:08:31] I hear Alexa talking in the background there.
Adam Marchick: I know – she wanted to chime in, you know?
Bradley Metrock: That is the rite of passage for VoiceFirst.FM podcasts, by the way, is how long it takes to activate that.
And I think that’s only just…I think it’s only going to get worse, in that I’m unaware if Google has this functionality, but Alexa, I was just reading, wrapped up testing for the functionality that will allow Echo devices to serve as networked speakers in the home. So your Echo Show in the kitchen, and your Tap in the bathroom, and your Echo in the bedroom, and your Echo Dot in the basement all know that each other is there. And this is not out yet, but from what I’ve read, it’s imminent. And so it has different applications for, you know, of course, music obviously, but also healthcare. We were talking about The Voice of Healthcare, with Cathy Pearl, about that. But there’s a lot of different applications that would have, and of course, if that’s one of the features, then you would never buy another piece of hardware that’s outside of the ecosystem that you’ve already invested into. Would you agree?
Adam Marchick: I would disagree. So already, because I am not the normal consumer, within eight feet of each other is an Amazon Echo and a Google Home.
Bradley Metrock: Okay.
Adam Marchick: [00:10:12] And currently, when I want to play music, I use the Echo. And when I have a search question, I use the Google Home, because Google Home is way better at general question-and-answer, which is unsurprising, but the more you dig in, the more pronounced and interesting it gets. Whereas Amazon Echo, if you ask it trivia questions or “where’s the closest restaurant that serves Burmese food?” it fails right now.
Bradley Metrock: [00:10:48] Nobody’s asking that out here in Tennessee, by the way.
Adam Marchick: You know, I’ve never been to Nashville, and I think I need to. You guys have a conference coming up, right?
Bradley Metrock: We’ve got…The Alexa Conference is in Chattanooga, but there’s certainly plenty of folks who will take the opportunity. We’ll have some people who are in the United States for the first time, and some people who are in the U.S. will be on the East Coast for the first time in a while. And some people will head over to Nashville from Chattanooga – it’s two hours, ish – you know, after it’s done. Chattanooga is a very compelling place in its own right, and Nashville is a pretty metropolitan place, if you happen to find yourself in Tennessee. But yes, we definitely do – The Alexa Conference will be in January.
Adam Marchick: Great. Exciting.
Bradley Metrock: [00:11:50] Let me ask you about monetizing VoiceLabs. So right now, your service is free to sign up. If you’re a developer, you should go to VoiceLabs.co…by the way, not dot com, but dot C O…and get signed up for their service. But it’s free to sign up for that, and to get that. What is your plan for monetizing this space?
Adam Marchick: Yeah it’s a great question, and obviously, you know, we are very fortunate to have the backing of The Chernin Group as VC investors. And the goal of a company – a for-profit company – is to be sustainable, and hire people, and provide people jobs, and build awesome stuff, and to do that you need a revenue model.
And so I think one of the things that’s been really fascinating – and, for those of you been following VoiceLabs, there’s been some fun times in the past six months – that when you watch one of these ecosystems develop, you know you can’t really charge for software until the developers are actually making money.
And one of the first and best ways developers and emerging ecosystems make money is advertising. And so we actually launched an ad network about three months ago which was resulting in a lot of the voice app developers making real money. For a number of reasons, we decided to hibernate it.
But the larger picture is most of the people have been building these voice apps have not made any money, and therefore it is not rational for us to try and charge them. And so we’re probably still one or two years away from a voice analytics product being able to generate significant revenue. So we’re not trying to force the issue on our analytics business. Now, we have other things in the pipe that we’re not ready to share yet, but we’re really focused on trying to keep the analytics free, because now that this is my third startup and Alex Linares’, my co-founder’s, third startup…we do this because we like supporting ecosystems and blazing trails. It’s kind of our goal.
Bradley Metrock: [00:14:22] Yeah, well there’s many, many, many entrepreneurs, as you well know, who take the approach of get in, get acclimated, create something of value, establish a user base, and then figure out where the opportunity lies. And it looks like that’s what you guys are doing, and that’s exciting. You’re not going to have any shortage of people needing your service if all of this keeps moving in the direction that it’s headed.
Is what you’re hoping to see happen, in the voice space, Alexa and Google allowing developers to charge for their voice applications? Or are you hoping for some other monetization scheme to happen?
Adam Marchick: [00:15:11] It’s a great question. What’s really interesting is I think we’re the only company in the world that has a real data set around voice-first advertising, where before we launched our ad network, we ran over a million experiments. And then we had the ad network ramping really quickly, and we measured – because it’s built on top of our analytics platform – were consumers willing to adopt advertising?
What’s fascinating is there was a vocal minority of people who were upset about the advertising, but if you look at the data, it didn’t hurt the retention of apps being used. And so the goal of any monetization effort is to, in no way shape or form, reduce the amount of usage, while providing developers with a revenue stream, and advertising successfully did that.
So advertising is one way. Another way is to have paid-for apps, which I think a lot of people in theory think is a good idea. But, I think if you polled 50,000 consumers who have, or will have, an Echo or a Google Home and ask them how much they pay for an app…you know, you’d probably get very little revenue out of that.
For example, a great Alexa skill is The Bartender. When I want to make a cocktail, and I don’t know the ingredients, I ask The Bartender, and I love using it. I use it probably once every week. If The Bartender suddenly said “hey, if you want to keep using this, it’s 10 bucks a month,” I’d probably switch to just searching on the Internet.
Bradley Metrock: [00:17:09] Yeah…that is probably high. But, yeah, I mean this is the billion dollar question for this space right now, and I’m sure there’s people at Amazon and Google and Microsoft and even probably Apple, as well as a bunch of other companies, discussing it…and how this needs to work.
Adam Marchick: I’ll give you another counter there. It’s not the billion dollar question.
Bradley Metrock: OK.
Adam Marchick: It’s probably like the $50 million question.
Bradley Metrock: OK…
Adam Marchick: The billion dollar question is how do we actually solve discovery and usage of third-party apps on these ecosystems. Because, if we look at…you know, there’s 16,000 Alexa skills. How many of them have a half-million DAUs?
Bradley Metrock: And what’s a DAU?
Adam Marchick: Daily active user – excuse me.
Bradley Metrock: OK.
Adam Marchick: So how many third-party apps have 500,000 people using it daily?
Bradley Metrock: [00:18:07] Ooh. If I had to guess? Half a percent?
Adam Marchick: Yeah, so that’s like…what is that, 50?
Bradley Metrock: I guess 1 percent is 160…yeah, so it’s less than 100…
Adam Marchick: [00:18:24] Yeah, and that number probably needs to be 500 before we have a robust ecosystem. And once you have…I was lucky enough to be at Facebook in 2008. We had zero revenue, but we had 120 million users. And by the end of the year, we surpassed MySpace, and it all worked out. If you have aggressive usage, good things happen.
Bradley Metrock: So you want Amazon – just taking them, for example – to more logically connect skills to each other, and increase the discoverability, before necessarily developers are allowed to charge?
Adam Marchick: It’s not mutually exclusive. I’m just saying whether an ecosystem…all of them will, at least Alexa – Amazon, Google, and Microsoft, have all shown that they want a third-party ecosystem. The company…the ecosystem… that has the most usage and engagement will ultimately win, over the one that has the unique monetization scheme.
Bradley Metrock: [00:19:34] We’re in complete agreement on that, and you know there are some smart folks working to figure out how to make that happen. And you know, in talking to Brian Roemmele, who is a frequent guest on VoiceFirst.FM podcasts…he’s a big advocate for that as well. His example always involves neurons, and the brain, which I think is very interesting. Yeah…we’re in agreement on that.
Bradley Metrock: [00:20:00] Is there any fear, that you have, that voice is a little bit ahead of its time…that this is just another technology that’s knocking on the door, but then gets told to get lost and come back in 10 years? Or do you really think that it’s here to stay?
Adam Marchick: That’s a great question. And, you know, this is…this is the earliest market I started at a company in. Which is kind of fun, once again, by being company number three, I’ve been really fortunate that people have given us the benefit of the doubt in terms of fundraising and support.
And, you know, what’s interesting is I actually was building voice apps in 1999. My Stanford senior project, I built voice apps on top of Tellme. Back then, voice apps were the future. And Tellme got acquired I think for $500 million by Microsoft, and it turned out that the market was ready for next-generation IVR systems – call center software, you know, when you’ve got to hit 18 clicks before you get to a person.
It was not ready for consumer voice applications. I have the conviction that now is the time for consumer voice applications, and there’s a number of reasons Alex and I believe that. Happy to kind of dig deeper, but now is the time. We’re going to have at least two robust voice ecosystems in the next three to four years.
Bradley Metrock: [00:21:33] It feels like it’s time. It feels like it’s time, if not for any other reason, the accessibility. Accessibility is a common thread of voice technology, and as a result, it’s a common thread of many of our shows. Voice technology opens up new worlds to so many people and then it enhances the world of everyone else. It would be a shame if now is not the time. And it’s fortunate that Amazon…you know, I give Amazon a lot of credit because they are driving the train with the mainstream marketing. You haven’t been able to turn on a sporting event in the year 2017 – a mainstream sporting event – without seeing an advertisement for an Alexa-enabled device of some sort.
And that spending has caused Google to spend in the advertising space, and then it’s caused Apple and Microsoft, I feel like, to accelerate what they’re doing. And so, in my mind, they get a lot of credit. But the industry as a whole – the sector – it’s moving at a rapid pace, and I hope that it continues to evolve into what we hope it does. That’s just my feelings on it.
Adam Marchick: [00:22:48] Yeah.
Bradley Metrock: [00:22:50] I appreciate you joining us Adam. I appreciate you setting this time aside. And for people who have listened to this podcast, who have learned about VoiceLabs and about what you and your partner are doing out in Silicon Valley…what is the best way for someone to contact you?
Adam Marchick: [00:23:10] Info at VoiceLabs dot co.
Bradley Metrock: [00:23:12] Perfect. Adam, thank you very much for setting this time aside. It was a pleasure. It’s always fun to talk to a fellow entrepreneur and especially someone as smart and accomplished as you are. Thank you very much for setting time aside.
Adam Marchick: [00:23:28] Well, thanks a lot. I look forward to engaging with the community, and I really appreciate you having me.
Bradley Metrock: [00:23:33] For The VoiceFirst Roundtable, Episode 6, thank you for listening, and until next time.