AI is Eating Search

**Alessio** (0:04)
Hey, everyone. Welcome back to the Latent Space Podcast. This is Alessio, partner and CTO at Decibel, and I'm joined by Swix, founder of SmallAI.

**Swix** (0:11)
Hello, hello. Today, we're actually diving into a topic that I've wanted to dive into for a while. AI search engines have caused a lot of the sort of rising opposition force of AI search engine optimization. And today we have Robert from Scrunch AI. Welcome.

**Robert McCloy** (0:26)
Thank you. Yeah, great to be here.

**Swix** (0:28)
Alessio, I think you're probably the best place to introduce Robert.

**Alessio** (0:32)
Robert, as I guess, disclosure, Decibel invested in the round that we're going to announce with this podcast. So congrats, Robert. And I guess congrats to us for being picked by you. You were previously the CTO of hearsay, which was started by Clara Shi, who's also a friend of the podcast. And my partner, Jon, was on the board of hearsay. So you guys knew each other from there. So we kind of go back and even back then, you were already working on the space of, I have a business, how do I reach people in a way that is very tailored? And that was more on the financial services side. And then you started Scrunch a couple of years ago. So you were pretty early to the space. And then now everything is blowing up. Everybody's getting traffic from ChatGPT. So maybe talk a bit about when you first realized that LLamps and Search was not just normal search. And maybe the idea may is to get you there and we can take it from there.

**Robert McCloy** (1:29)
Yeah, absolutely. That's a great starting question. And the origin story, hopefully I don't get in trouble for telling this on the pod. The origin story is a little bit convoluted as I think it is for most startups with Scrunch. My co-founder, Chris and I, we had left Hearsay. Chris was actually also a long time executive at Hearsay. He was the Chief Product Officer for a long time. He was the first employee, so we both know all those folks really, really well. We were looking for essentially what to do next in our careers, thinking about starting a company and kicking around ideas, talking to people we knew in the industry. As we were doing that, the elephant in the room was AI. It just became really clear, I think, a couple of years ago that it would be foolish to start a company without thinking about what the impact of LLMs would be on the world. You'd already be behind if you started a company that wasn't in some way LLM native. We went through an exploration process there. As we were talking to the people we knew the best, who are often enterprisey, like large banks and insurance companies, that was a primary audience for Hearsay. It was a tough sell back then to sell them anything related to AI. The number one thing that people were probably asking us for, quite honestly, was, can you put a chat bot on my website? I'd like to have the widget, I'd like to have my version of ChatGPT, I want people to come to my website, and a widget will pop up, and then people could type into it, and ask my website questions, instead of going to ChatGPT.
There are good versions of that now, the versions that were out at that time of that functionality, and so we're mostly not so great. But basically, my core feeling about that at the time was like, nobody wants to use a chat bot on your website. I don't want to use chat bots on people's website. It's like if things pop up on a website when I go to visit it, I fly into a visceral rage. I'm definitely closing the window if not closing the tab.
So we didn't want to do that.

**Swix** (3:20)
I have that feeling, but also I wonder if the normies respond fine to it. Intercom is doing fantastic as a business. I have a self-doubt about how representative we are.

**Robert McCloy** (3:30)
That's a fair question. And I always ask myself that as well as maybe a weird technologist person. I think there's some evidence that people don't love it. I think Intercom is a little bit different because by the time you're engaging with FAN or what have you, hopefully, you're in a relationship to a certain extent with the business. So I do think that people have a little bit more tolerance for using these AI tools. When they're already feeling some rapport with a website or with a business, they're more willing to use your tools instead of saying in the environment they like to use. But if you're just coming to a website and it pops up, people mostly, I think, don't want to do that. People have responded really positively to ChatGPT. Most people I've talked to, and by the way, I live in LA. I've lived in LA for a couple of years since the pandemic. So I'd say more of my social circle is normie than it used to be. People love ChatGPT. The experience people have of using ChatGPT versus browsing the Internet, the old Google 10 blue links and clicking around, is vastly more positive compared to the past. So people really feel, I think, an affinity for the tool and they want to use the tools they like. They want to use whether it's ChatGPT or it's Clawd or Proxity or what have you. They really like that environment. It's convenient, it's productive. They don't have to browse websites that maybe aren't well designed for them. People are not excited about the idea of like, okay, let me click around, find a website, and then engage with the chatbot there. In the same way that I think people aren't like, let me go to the website and use their search bar. People just want to use Google. I do think that's true.