We’re building an entertainment company on the back of synthesized conversation.”

The actual ToyTalk app will be an episodic variety show in the style of “The Muppet Show,” starring Winston and other characters, Jacob said. Kids will be able to join the show by turning their cameras on. “Imagine if you could Skype with Bugs Bunny,” Jacob said.

Squeezed into an alley in San Francisco’s SOMA district, ToyTalk’s small office houses 18 people. Half of them work on engineering: Artificial-intelligence projects like speech recognition for kids’ voices, new authoring tools for writing scripts that can go in many different directions, and building the app itself. 

I'm still not sure what ToyTalk is or why so much money was spent before they released anything.

The ToyTalk app will personalize for each child, and it will also be updated over the air — say, with current weather or major sporting events. It’s also meant to be funny and entertaining. And hopefully natural. “The ultimate goal is raw, free-form conversation, like Terry Gross or Charlie Rose,” Jacob said. “But we’re light years from that.”

Because ToyTalk is becoming somewhat known (it has raised $16.2 million from Greylock Partners, Charles River Ventures, True Ventures and First Round Capital, among others), but hasn’t released anything beside a promo video yet, there seem to be some misconceptions about what the company is doing, Jacob said. He said he wants people to know that, one, ToyTalk is not a robot company; and two, ToyTalk is not a physical toy manufacturer