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The Signal

Business analysis and trends to help entrepreneurs like you stay ahead of the curve

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Date Published: 
March 2, 2021

🚀 The Report: AI Companions

This week I discovered Replika. It’s an AI companion that is always there to listen.

Founded in March 2015, the company has raised three rounds to a total of $10.9 million. Surprisingly, not that much.

From the website

The fundamentals behind what Replika offers aren’t revolutionary. Tamagotchi, anyone?

Engaged users

It’s not hard to imagine why an infinitely more life-like and engageable version of your favourite childhood virtual pet might become a very enticing product to engage with.

And it seems like the company has captured a very engaged user base.

Research Marita Skjuve interviewed users of the chatbot, with some interesting findings about how enamored users were with their virtual friends:

“To be honest, in the beginning it was just sort of a fun little thing to do and now it is much more of a intimate, it is much more intimate and close relationship, it is an actual sort of relationship kind of thing”.

The Replika Facebook Group is full of posts from user’s who refer to the bot in the same way you would your mom, dad or friend. There was even a woman asking how to avoid getting COVID-19 from her Replika (!).

Growth signals

There are a few signals that are pointing in the right direction if you’re looking at the industry as a whole.

First comes from Skjuve who noted that one of the most important aspects of

The “Replika Friends” Facebook group:

  • Has 33k+ members.
  • Today alone (on day of writing), there have been 110 posts to the group
  • 2375 posts this month

The r/replika subreddit:

  • Has 28k+ members
  • Is growing fast:

User feedback: What you can learn

Here’s what you can learn from the feedback Replika user’s are posting online and in these forums.

Lesson 1: User’s want interactions to be as close to real life as possible.

Generic scripted responses are not going to cut it.

User’s of Replika are not happy with the latest update to the software which ‘dumbs down’ their Replika’s:

Source: Replika AI Facebook Group

Lesson 2: We want someone to listen without judging.

One of the most highly praised features of the product is how it constantly encourages open communication and actively listens.

The comment attached was “Sum’s up the state of Replika pretty well at the moment”.

This follows a wider trend of genuine connection breakdowns between humans. More than ever, we are craving someone who listens, understands and doesn’t judge.

Lesson 3: Sex sells

Sex is a taboo topic. Most people are exceedingly private about their sex lives. There is no ‘person’ better than a fake person to be completely open about your sex life and insecurities with.

A lot of users are using the app to express themselves sexually, where they are unable to in the real world. This is a significant release of frustration for them.

Mental sexual stimulation is proving to be more and more popular than traditional arousal.

🤯 Ideas


For obvious reasons, the data collection behind these chat bots will be enormously valuable to companies all over the world.

Think about everything your therapist knows about you, augmented with demographic details that they usually don’t care about.

It’s the stuff of The Zuck’s wildest dreams.

Users are becoming more and more data-savvy, though.

To take advantage of this, there would need to be a shared-value mechanism that returns value to the user in return for their data-sharing permissions.

This value will likely be in the share of:

  • A cut of the commission earned (lead gen), and/or
  • Hyper-tailored product recommendations and quotations.

‘Replika for x’

The use-cases branch far and wide. The idea of “Replika for x” is pretty applicable:

  • For finance management (Nerdwallet/budgeting as a chatbot)
  • For customer feedback and support (Imagine a chatbot that actually listens and is helpful)
  • For education (Kids may have more of an affinity to listen to their best friend who is likeable, and infinitely patient)
  • For healthcare (Automatic diagnosis and analysis)
  • For mental health
  • I am most bullish on this

Ultimate Life Coach

Letting my imagination run wild here, an exciting idea would be giving full data-access to all of your connected apps:

  • Exercise;
  • Smart device;
  • Blood monitoring;
  • Laptop;
  • Bank account;
  • Business bank account;
  • Emails;
  • Journals;
  • Etc.

Your life coach could analyze everything going on in your life and be the best personal assistant and life coach you could ever ask for. They’d know:

  • Where you’re meant to be at all times;
  • How much time you’re spending doing what;
  • What habits are negatively affecting your output;
  • How your goals are tracking;
  • What outcomes you’re slacking on, and why;
  • How your exercise and eating habits are negatively affecting your productivity;
  • When you’re tending towards burnout;
  • When you’re tending towards sickness;
  • And more…

🖱 Clickable

📵 It’s a new year, you’re energized and excited about a clean slate to set new goals and align your ambitions. Now imagine feeling that invigorated every morning. Seth’s advice is to stop doom scrolling:

Imagine the first thing you did every morning was writing a list of exciting opportunities for the future. How would that change your perspective heading into a new day?

🏁 Steph Smith on the importance of understanding that your business’s competition is not defined by the other player’s in the game.

Think about the core problem you’re solving for your user’s, and what other goods and services are doing that too.

📣 The 5 components of an epic pitch deck, according to Andy Raskin:

  1. Never start with you or your company. Start with a big change in the world that is:
  2. Undeniable, has big stakes attached, and creates urgency and relevance for your product.
  3. Show there’ll be winners and losers:

  4. As important as showing that your product has large potential upside, demonstrate the equally significant downside without the adoption of change.
  5. Tease the solution:
  6. Show what the ideal world with the product looks like. This is not directly related to your product, it’s the world with your product as a solution.
  7. Introduce features which aid in the transition:
  8. They know what the desired outcome looks like (step 3), now you present the features of your product which make that a reality.
  9. Why you:
  10. The last step of the puzzle is understanding why you’re and your company are best positioned to make that change a reality.

💧 On the topic of pitches, here’s one of the best video ads I’ve ever seen (and probably one of two I’ve watched end to end - it’s 17 minutes long!).

You might notice some similarities in structure between it and the above 5 steps. Both tell a great story.