Why Voice Tech is About to See Major Love From VCs

Alon Bonder
Jun 13, 2017 · 10 min read

Smartphones Are a Stepping Stone

Voice-enabled technology has been accessible to us for quite some time via our smartphones. Apple introduced Siri in 2011 and the use of smartphone-based voice assistants has been growing steadily ever since.

Hardware Drives Mainstream Awareness

Growing Number of Third-Party Skills

The rapidly expanding footprint of voice-enabled devices has led to a growing ecosystem of third-party skills and applications. As of May 2017, there were more than 12,000 “skills” in the Amazon Echo marketplace, compared to nearly 100 integrations for the Google Home.

Growing Number of Voice-Enabled Transactions

While monetizing voice applications isn’t yet possible for the broader community of developers, Amazon, a company that has been masterful at encouraging recurring purchase behavior, has already demonstrated that consumers are willing to spend more via voice. Owners of an Echo spend about 10% more and purchase 6% more often on Amazon than they did before they had the device. Revenue from purchases on Amazon made via the Echo will outstrip revenue earned from selling the devices by next year, and the gap will continue to widen from there. By 2020, estimates indicate that Amazon will generate over $7 billion from transactions, on top of the estimated $4 billion from the devices.

This demonstrated purchase behavior is critical for two reasons.

The first is that developers now have a compelling reason to invest in reaching audiences via voice devices.

Speech Recognition is Improving

Investing in the “Voice-Stack”

To identify opportunities for the biggest value creation in the category, it helps to start by visualizing the underlying tech stack (see below).

Exploring Voice’s Native Advantages

As with any new technology, there will be a flurry of excitement around its possibilities. However, the businesses most likely to succeed will be those that truly understand the native advantages of voice-enabled technology and are able to create the services or tools that push the boundaries of our expectations.

Native Advantage #1:

Native Advantage #2:

Native Advantage #3:

Native Advantage #4:

Potential Startup Applications:

Takeaways

Although it may feel like we’re still in the early days of voice technology, the ecosystem has matured significantly over the past few years. Not only has it become easier to build voice applications, but also to train them to deliver unique value at the right moments.


Startup Grind

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Alon Bonder

Written by

VC at Venrock, formerly research & strategy at First Round Capital and VP of product innovation at Publicis Groupe. Follow me on Twitter @AlonBonder

Startup Grind

The life, work, and tactics of entrepreneurs around the world. Welcoming submissions on technology trends, product design, growth strategies, and venture investing. Learn more about how you can get involved at startupgrind.com.