Humane, a promising startup in the AI hardware industry, is now looking to sell itself for up to $1 billion after the poor performance of its AI Pin. The New York Times recently revealed more about Humane’s struggles, including low sales and a search for potential buyers.
Disappointing Sales and Reviews
In early April, Humane had received around 10,000 orders for the AI Pin, far below their goal of 100,000 units for the year. Priced at $700 with an additional $24 monthly fee for 4G service, the device’s initial revenue was about $7.24 million. However, this figure falls short of the $1 billion valuation Humane seeks. Reviews were brutal, with many calling the AI Pin “totally broken” and highlighting significant flaws. This negative feedback likely discouraged more potential buyers.
Attempts to Sell
Following the harsh reviews, Humane began talks with HP and other potential buyers. These discussions started just a week after the reviews were released, indicating Humane’s urgent need to sell. The company also engaged Tidal Partners, an investment bank, to help with the sale and a new funding round that would value the company at $1.1 billion. Despite these efforts, Humane faces an uphill battle, especially with a recent recall of the AI Pin’s charging case due to fire risks.
Leadership and Internal Struggles
Bethany Bongiorno and Imran Chaudhri, Humane’s founders and former Apple employees, led the company through an ambitious but troubled journey. Interviews with 23 current and former employees, advisers, and investors reveal that the founders often ignored warnings about the device’s issues. This optimistic approach led to frustration among employees and contributed to the product’s failings.
Product and Development Issues
The AI Pin was designed as a lapel pin equipped with an AI-powered virtual assistant capable of sending messages, searching the web, and taking photos. It also featured a laser that projected text onto the user’s hand. However, the device had significant technical problems from the start. The laser display consumed a lot of power, causing the pin to overheat. Humane even resorted to cooling it with ice packs during demonstrations. Employees warned that the product wasn’t ready and urged the founders to delay the launch and hire a head of marketing, a position that remained unfilled until the product’s release.
Market Context
Humane’s struggles are part of a broader trend in the generative AI sector. In recent years, companies like Google, Microsoft, and Samsung have faced challenges with unrefined AI products. Google’s AI search features, Microsoft’s Bing chatbot, and Samsung’s AI smartphone features all experienced issues, highlighting the difficulty of launching new AI technologies.
Response from Founders
In an interview, Bongiorno and Chaudhri acknowledged the difference between testing a device and real-world use, expressing regret that they couldn’t resolve some issues differently. They declined to comment on the potential sale or new funding but insisted their ambitions for the AI Pin had not changed.
Future Prospects
Humane’s future is uncertain as it deals with the fallout from the AI Pin’s failure. With ongoing talks of a sale and efforts to secure more funding, the company is at a critical crossroads. Whether Humane can recover from this setback and achieve its ambitious goals in the AI hardware market remains to be seen.
