Magic clones in Southeast Asia are dying

Photo credit: macrovector / 123RF.

Virtual personal assistant services in Southeast Asia are dying. Don’t agree? Just look. Startups in this business are either shutting down or pivoting.

Last week, Indonesia’s YesBoss, which also owns HeyKuya in the Philippines, announced it would reduce operating hours before stopping the service entirely by the end of October. YesBoss’ rival in Indonesia, HaloDiana, closed down early this year.

Malaysia’s Bemalas is also shutting its service, according to sources. Bemalas co-founders confirmed to Tech in Asia that they’re “disengaging completely from concierge” by the first quarter of 2017.

All of these startups are clones of US-based Magic, which graduated out of Y Combinator. It’s an SMS-based virtual assistant that helps you with anything – as long as it’s possible and legal. You may text a request to Magic and its “magicians” will do it for you for a price. In the background, the company uses artificial intelligence to help its assistants complete the tasks.

Doing too much

The ability to request anything was the reason why the concept immediately became popular among users. Yet it’s also the very thing that’s causing the category to crash – in Southeast Asia, at least.

Why isn’t the model working? First of all, for an on-demand service to succeed, there needs to be quality, consistency, and speed in the delivery of the service.

“The business model of getting anything done for a customer leaves the possibility of errors too big,” a former Bemalas executive, who requested anonymity, tells me. “Nearly 60 to 80 percent of tasks fail due to unforeseen circumstances such as traffic, store availability, stock availability, etc.”

The core team of YesBoss in a photo from 2015. The service is shutting down at the end of the month. Photo credit: YesBoss.

The supply side is a problem since many vendors are still conventional businesses, another industry insider who’s an ex-official of HaloDiana points out. It forces startups to deal with thousands of vendors across a wide range of industries (since you’re in the business of doing anything), and that means connecting them to the virtual assistant system is laborious. Without connecting them, the system won’t know whether a store is open or closed, or whether or not an item a customer is asking for is being sold.

“Without real-time connection to the vendors, it will be very difficult to scale and make the operations efficient,” the person adds.

The lack of focus on a particular task or a range of tasks also makes optimization “crazy,” notes the former Bemalas exec. It’s not like other on-demand services such as Foodpanda, for instance. Foodpanda zeroes in on restaurant orders – it has restaurant partners that customers can choose from and whom the company already onboarded to its system, making store and stock availability predictable. Foodpanda is also doing the same task over and over again, allowing the company to provide consistency in the experience.

We are still a good three to five years away from making personal assistants financially feasible.

Daunting price

Changing direction