What do you do if you launch a new product, only to have Apple introduce its own version six months later?

You don’t let fear get the better of you. You stay the course, and work to make the best product you can. And you start looking for areas of the market that the big boys aren’t serving. That’s the strategy that worked for api.ai. The company launched its intelligent personal assistant app Assistant in 2011, about six months before Apple introduced Siri. The announcement of Siri was a scary moment, recalls Ilya Gelfenbeyn, founder and CEO. “We didn’t know how the markets would react,” he says.

They reacted in Assistant’s favor, it turned out. Introduction of an iconic product often creates powerful curiosity and demand for similar products, and that’s exactly what happened in this case. It helped that Assistant was the only available option for envious Android users who wanted a Siri-like experience. Gelfenbeyn says after Siri’s introduction, Assistant went from hundreds of downloads every day to about ten thousand.

Here come Google, Microsoft, Amazon…and Facebook?

Apple was only the first of the behemoths to enter the virtual assistant arena. In 2012 Google introduced Google Now, which may lack a cute name but overlays conversational abilities onto Google’s already very powerful voice recognition for search. In 2014, Microsoft got into the act with its own virtual assistant, Cortana. This year, Amazon introduced the Amazon Echo, a free-standing virtual assistant device that has limited capabilities so far but demonstrates the huge potential of this type of always-listening technology. Last but by no means least, Facebook is reportedly about to add something called Moneypenny to its Messenger service. It will connect users with actual human assistants, likely combined with some virtual assistant functions.

Other start-up founders might be flustered to have all these household names entering their market, but not Gelfenbeyn, who sees every new product as just one more proof of concept for his own. “Facebook has both the data and many enthusiastic users to implement the project, so their step in is very welcome,” he says of Moneypenny. “This could provide a great use case for consumers and businesses and open a whole new way of making sense of text and voice communications.”

In fact, about a year ago, Gelfenbeyn saw how a change to api.ai’s business model could create immense opportunity. The proliferation of high-profile virtual assistants had awakened consumers’ desires to talk to their technology and have it understand and talk back. But Cortana, Siri, Google Now, Echo, and (presumably) Moneypenny are all proprietary systems intended to build user loyalty to the companies that introduced them.

That left other vendors who wanted to implement voice commands out in the cold, because creating a voice recognition system from scratch is no easy matter. So api.ai began offering its voice-recognition functionality in an open and free API (application programmer interface) allowing software developers who aren’t experts in voice recognition to build that feature into their products. Since the company began offering its API in September 2014, more than 7,000 developers have signed up to use it. Though free for web-based uses and smaller developers, api.ai draws revenues from the extra services larger customers want, such as the ability to embed voice recognition into software that lives on its own servers. According to Gelfenbeyn, a lot of big customers have come calling, including smarthome providers and auto makers who want drivers to be able to converse with their cars.

Meanwhile, the Assistant app is continuing to grow, and every newly introduced virtual assistant product just seems to raise interest and bring in more customers. “Now we have 20,000 to 30,000 new users every day,” Gelfenbeyn says. “The market is still under-developed.”

As for competing with the big guys, his advice to other start-up founders is this: Have no fear. “You may be in a good position,” he says. “You have intellectual property, experience, and know-how. Big companies are typically slower so they may try to acquire you. Either way, focus on what you’re doing and just do it better.”

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Published on: Jul 18, 2015