Kik CEO: Payment is the killer feature bots are waiting for

A year ago this week, the Kik Messenger Bot Shop was born. Today, with more than 20,000 bots available — and some, like CNN and Roll bots, already past the one-million-user mark — the Bot Shop has truly arrived.

In the past year of Bot Shop experimentation, Kik CEO Ted Livingston has been outspoken with his opinions about the bot ecosystem, saying that bots are overhyped, that they’re better with buttons and without conversation, and that chat is the new web browser.

The focus of the Kik Bot Shop in year two will be monetization, Livingston told VentureBeat in a phone interview, and, more specifically, payments.

It’s not that making payments on Kik today is impossible. Use the H&M bot, for example, and you will be taken to the company website to buy a shirt or hoodie or dress. But Livingston wants payments inside Kik, perhaps using QR codes, like the company’s well-known investor and advisor, WeChat.

On the occasion of Kik’s one-year anniversary, Livingston sat down with VentureBeat to talk about the challenges that face the bot industry, why all messenger services should be more like WeChat, and the future of Kik Messenger and its 300 million registered users.

VentureBeat: So what did you think about the last year with Kik and the industry at large, and the hype and all the ups and downs? What do you think of everything that’s transpired in this burgeoning industry of bots on platforms?

Livingston: To me it just makes sense. We’ve been working on turning Kik into a platform since 2011, so for over six years now. So for us in 2011 that was native app, 2013 was web apps, and starting 2014 was bots. With bots, they’re easy to build, easy to grow, but they’re hard to monetize, so we just keep moving these three pillars on a platform forward and we get closer and closer. So I think to me, if — oh, was the last year disappointing? I’m like, “No, not at all,” ha. Last year to me was completely predictable. A great platform must solve all three of these pillars — build, grow, monetize — and with no payments they’re not going to solve the third pillar, so therefore it can’t be a great platform. But that’s in our control. We just have to solve payments, that will be the last piece, then you have a viable platform where developers can build real businesses on top of it. So to me the last year isn’t disappointing, it’s very predictable.

VentureBeat: Are there any specific takeaways Kik has learned in this last year of the bot shop’s deployment and working with developers?

Livingston: First of all, as a format, I think they’ve proven their potential, and when I say that, I mean they’ve proven themselves as a way to quickly build a software experience and get it in the hands of users. When you compare a bot to an app, there’s just way less friction. So I think they’ve proven themselves on that point. The thing they have yet to do is make anybody a lot of money. The iPhone App Store for its first year didn’t have any payments either. It’s hard to remember now but back then there was a bunch of fart apps and gimmicks that people were building as hobbies.

The second piece is there is a lot of potential, but payments have been the key missing piece. The thing that I still have a challenge with is which bot can you point to that is game-changing? I’ve spent a lot of time thinking about that, and the question I ask myself is: What is the behavior that bots will unlock that was never possible before? And in that you will find the killer application.

What will it be with bots that was never possible before?

For us we think that’s going to be unlocking the offline world, making it seamless to interact with the world around you. Restaurants and movie theaters and train stations, a lot of them have apps, but the friction is high enough for downloading an app and creating an account and learning how to use it. All of that gets wiped away with bots, to where we see a future where you walk around the world in somewhere like China, there’s QR codes everywhere, you pull up your messenger, you scan them, and they take you to a bot where you have an account, you have payments, and all the experiences are the exact same.

VentureBeat: Is this what people should expect to see from Kik in year two, with help from Tencent and WeChat?

Livingston: I think what people should expect broadly from the industry, including Kik, is this is sort of the last use to make this killer application work. You can go all these places in the world and interact with them, but at the end of most of those interactions it concludes with a payment: You pay for your lunch, your movie ticket, you pay for your train ticket, you pay to get into an event, so payments are really the last and most critical piece to unlock in all that.

VentureBeat: Messenger VP David Marcus said they plan to double or triple down on bots. There’s this idea that bots are overhyped, and that’s something you’ve talked about in the past, the hype that surrounds this industry. Would you put yourself on the side of triple down, or are we still in a state of things being overhyped?

Livingston: I think if I were on the outside looking in, I would be saying bots are so overhyped. And from the outside looking in, they are, because you look at the bots and say “Point me toward a great bot,” and none of the platforms can really answer that question, Then they’re like, “Well ,if you think bots are great but there are no great bots, then therefore it must be overhyped.” But I think from our position at Kik and probably Marcus’ position at Facebook, looking at this from the inside out, the reason there’s potential for bots is clear: It’s a new way to deliver software that gets rid of all friction. But on the other side it’s also clear what their limitation is, which is that you can’t take payments. So I think to us it’s the idea of like, “No, this isn’t overhyped, it’s just not the complete picture.” That picture is not yet finished, and when it is, I think we will look back on today and say they were underhyped.

VentureBeat: Of those 20K, I know you said you haven’t seen any killer bots yet, but are there any in particular that demonstrate the value of this tech?

Livingston: When you turn back and you look at the current batch of apps or bots, they just look so basic compared to what’s coming next, and so they just can’t be impressive. And so I think for us, it’s like, when I look at them now, this is just the tip of the iceberg, the potential of the format. That said, when we talk to our users, they’re spending a lot of time with bots and, to me, I’m like, “These things are so basic. Why would you spend time with them?” But people are looking for things to do inside messengers. That’s where they’re spending a huge amount of time every day, that’s where they’re hanging out with their friends. So I think there are examples today of bots that are doing well, but from my insider perspective seeing all the things that are coming that fill the potential — it’s hard to get excited about it today when I know what’s coming tomorrow.

VentureBeat: What are developers of Kik bots telling you that they need?

Livingston: I think the number one thing we hear is we need a way to monetize. We’ve worked with a bunch of developers, we’ve worked with brands, with retailers and people like this, and the results are amazing. The engagement is amazing, the propensity to want to make a purchase or get a coupon or things like this, and they’re just saying, “Wow, if we could just close the sale at the end of the interaction and then they buy things, this would be amazing,” so I think the key last piece, the number one thing the entire ecosystem needs, is payments. And I think when you look at WeChat today, 40 percent of all mobile transactions in all of China are going through WeChat, and that number was roughly zero percent three years ago. So what happened three years ago that put it on this amazing path where zero percent three years ago and 40 percent today? They added payments. That’s the key that unlocks the whole platform, the whole ecosystem.

VentureBeat: And how are you going to work with TenCent to bring payments to Kik, then?

Livingston: I think TenCent is a great advisor for us, and where we have questions on how they did their thing or why they did it, they’re extremely helpful. But at the end of the day, the two markets are unique, and so when it comes to a lot of this stuff, it comes to us to figure it out and make it happen.

VentureBeat: The sort of things people may be willing to pay for on Kik may be different given your young audience.

Livingston: This is one of the big things we’ve seen is that we do have a young audience, so how do we give them spending power in the most frictionless, seamless, but also safe way? Definitely adds to the complexity and, to your question, could payments look different on Kik than other messaging platforms? Then I think yes it definitely could.

VentureBeat: Yeah, teenagers are probably going to have some challenges making actual payments, right? I don’t know how many have debit cards or the means to make a digital payment.

Livingston: That’s part of the challenge for sure, but we think there are solutions to it.

VentureBeat: Like what?

Livingston: Can’t say yet, but I will when we get there, haha.