The Coming Extinction-Level Event for Brands

Nathan Shedroff
Nov 5, 2018

Here’s my dire warning from the edge of the future.

In the 1990s, the World Wide Web began to free companies, allowing them to build direct relationships with their customers. Before this, retail stores and other outlets controlled access to most customers. Only companies with their own stores or customer service call centers could build reliable, long-term relationships with customers directly. The rest were at the mercy of these gatekeepers.

TCP/IP and HTML enabled the Web to change all of that. The term of the times was “disintermediation” and the vision was that “middle men” were doomed. Freed from the control of these “owned” markets, we’ve since seen a flourishing of new kinds of commerce, services, discourse, and a revitalization of customer experiences. It’s affected every kind of organization, whether for-profit , non-profit, or governmental, as well as individuals. Every size organization, from multinational to small businesses to startup to sole proprietorship has been enabled.

To be sure, today’s sophisticated websites take investment , resources, and skills to build and maintain, but this shift has created a plethora of publishing, commerce, and other services deployed to the Web. It started with home-grown content management systems and grew with applications like MoveableType and then WordPress. From simple commerce engines to NetObjects and, later, PayPal. “eCommerce” is just commerce, today. The explosion of these new channels corresponded with an explosion of new customers who never before used computers or networks.

Many companies had to wait out some of their channel distribution contracts but they could start experimenting, building, and reaching their customers directly to speak with them and learn from them.

Companies no longer had to rely solely on supermarkets and department stores for actual customer data and insights. They no longer needed mall intercepts and focus groups to shore-up the insight they were missing. They had access to their own data.

This is the new formula that all organizations should be focused upon for the future: Value is derived from Relationships via Experiences.

Value can only be exchanged within a relationship—therefore: no relationship, no value.

This makes every company a relationship company, not just a select few. And, if there is no customer experience (or no satisfying one), there is no opportunity to create a relationship—and no value, again. That makes every company an experience company, too.

So, what happens if someone steps inbetween you and your customer at either point? If Amazon (or anyone else) takes over the experience, they take over the relationship. Once they do that, the value begins to flow to them (and the influence over that value). This is true of your customers, partners, vendors, and other stakeholders.

When someone gets between you and your customer they take away your ability to derive value from those relationships. This is what’s happening under our very noses.

Today, just before the dawn of the 2020s, just as companies have build direct relationships with their customers, they’re about to lose those relationships—possibly, for good.

Today, the openness of the Web is under attack from “owned networks.” Amazon, Facebook, Goolge, Tencent, Baidu, Alibaba, and even Ebay (just to name some of the biggest) are increasingly walled gardens so powerful that they’re picking-off brands like superstores and big box stores did in the past.

Increasingly, Amazon is selling more and more advertising to displace search results on a page, creating a pay-to-play scenario just to get seen by shoppers. Just when you thought that we had left the days of having to pay exorbitantly for eye-level shelf space in the store aisle, it’s back—with a vengeance—on digital platforms.

Amazon (and, soon, others) is diverting business to its own brands and those who pay the most for the privilege of being high in the results. To make matters worse, they are now pushing brand-named goods further and further down, giving their own, new “house brands” preferential placement in their quest to grow revenues.

Of course, this has played-out time and time again in the physical world but we had thought the digital one would be more egalitarian. It won’t be — not anymore.

In fact, this effect is about to get even worse.

Bang &Olufsen BeoSound Shape Speaker System.

When you buy an expensive and beautiful Bang & Olufsen stereo or home theater, you get the option to use it with Amazon or Google voice assistants. You can say “Alexa…” or “OK Google…” to control the sound or picture or connect to Amazon or Google stores and services. It’s the same with Sonos and many, many other devices. The speakers — and stereo — are already disappearing into the background.

This helpful and all very sci-fi but let me ask you the single most important question in business: “Who owns the customer relationships in this scenario?”

In other words, who is the customer speaking to and who is she merely speaking through?

It’s not just in the home, either. BMW has already contracted Amazon for voice services in their cars. Very soon, if you can’t already, you’ll be able to ask your car “Hey Alexa, where’s the nearest charging station?” Or, “Hey Alexa, when’s my next oil change?”

Who owns the customer relationship, now?

How long before BMW is just another hardware OEM to Amazon?

Just a few weeks ago, Amazon launched hundreds of new products that compete directly—and ruthlessly—with thousands of their very customers: you know, Panasonic, Westinghouse, Toshiba, GE, Braun, etc.

Even if Amazon offers white-labeled voice assistants (“Hey Hans or Heidi” when you’re in that BMW), all of their data services will still need to be connected to Amazon and all of the user data generated still flows through Amazon’s servers. Amazon still sees into your company in an unprecedented way — and they’ve already proven they aren’t afraid to compete with you. And it’s not yet clear what they could or would do with that data. Who do you think has the advantage?

Each new interface paradigm creates new opportunities and opens-up services to new users. Figures from ArsTechnic

The GUI has dominated digital devices and services for over 30 years. And, it’s been glorious. It’s ushered in completely new opportunities, new services, and countless numbers of new customers. The Web supercharged what desktop computers started and the smart phone threw this trend into overdrive.

It’s about to happen all over again. Conversational interfaces are the next paradigm for digital services. These, too, will usher in countless new users, uses, services, and opportunities.

The dangers of owned networks are already appearing but they will accelerate with CUIs. Web 3.0 (or whatever we call it) won’t be like the Web is today. It will be conversational and agentive.

But, for whom?

Conversational interfaces (let’s just call them “bots” for short), in most places, are just plain easier to use. As long as the agent is well-designed, conversation is the most natural of interfaces. It has always been. This is because conversation was the first interface.

Perhaps, the first interface?

We’ve always imagined conversation as the likeliest of interfaces to control our creations.

Finally, the line between the future and the present, from science fiction to marketplace fact, has nearly been erased.

Today, conversational interfaces are already beginning to transform markets for services.

Wherever there are digital services, bots will be deployed to interact with us via every touch point in our lives: Banking, Healthcare, Education, Transportation, Commerce, Travel, work…

Moving from a chat bot to a voice bot creates a host of challenges. Moving to a full avatar, even moreso. Preparing bots to be our agents, and then giving them the power to make financial transactions for us, presents even more pressing concerns. But, believe me, all of these services are coming — and quickly. For now, who can you turn to in order to enable them?

Today, there are only around 10 companies — worldwide — who can build you a Siri or Alexa-level voicebot. The FAANGs* and BATs have already proven they’re not your friends, nor are they ultimately good business partners.

Going forward, it will become critical that we create, support, and use independent markets for everything: finance, healthcare, media, etc. Besides being proven insecure and untrustable, “owned” marketplaces are predisposed to eat their sellers (that’s you). Open-sourced ones are not.

I believe that we’ll only find the solution in a new generation of non-profit-owned platforms, that are more viable, stable, and trustable in the long-term.

That’s why we’re building an open, trustable platform for conversational interfaces (bots) so that organizations can keep their customer relationships and no company needs to be at the mercy of the FAANGs and BATs.

How would you answer these questions for yourself and your business?

  • Can you trust your platform (not to disintermediate you)?
  • Can you trust a bot?
  • Do you know when you’re talking with a bot?
  • Are you sure?
  • Can your trusted bots trust other bots?
  • Does that trust extend to agency?
    …for financial transactions: KYC/AML
    …for health and personal data: HIPAA/GDPR
  • Who stands between you and your customer?
  • Are they your partner or you competitor?
  • Who do your customers think they’re buying from?
  • Who do your constituents think they’re citizens of?

Trust is Everything in Business, as well as Life.

You can’t trust someone you don’t have a relationship with. Without trusted platforms, progress will stall and the BATS & FAANGS will become even stronger.

Without independent platforms, every organization is at risk of being disintermediated.

This will become increasingly clear in the next 3–5 years. The very nature of relationships is changing rapidly and needs to be reevaluated by all kinds of organizations. Past strategies are no longer valid. Everything depends on whether you maintain the relationship with your customer.

Don’t go extinct. Join us instead.

*Facebook, Amazon, Apple, Netflix, Google, Baidu, Alibaba, Tencent, and probably Microsoft and Samsung, too.

Nathan Shedroff is the CEO of Seed Vault LTD, which is building the Seed Token project. A pioneer in the fields of experience design, interaction design, and information design, he is also the chair of the Design MBA programs in design strategy at California College of the Arts in San Francisco, and author of many books.

ABOUT SEED

SEED is an open, independent, and decentralized marketplace for developers, publishers and users of conversational user interfaces (CUIs) or “bots”, that democratizes AI. The SEED platform provides development tools, intellectual property, and a tokenized network for delivering front-ends to AI technologies.

To learn more you can find SEED on Telegram, or visit the SEED website and sign up for email updates at https://seedtoken.io/

If you have specific questions about the project, please contact ask@seedtoken.io. You can also find SEED on Discord, on Twitter, on Reddit and on Medium.

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