The Humane Ai Pin is an artificial intelligence-powered wearable gadget. A few days before gadget reviewers gave it their impressions, the company’s founders called a meeting and told staff members to get ready. They cautioned that the reviews could be unsatisfactory.
Humane’s founders, Bethany Bongiorno and Imran Chaudhri, were right. In April, reviewers brutally panned the new $699 product, which Humane had marketed for a year with ads and at glitzy events like Paris Fashion Week. The Ai Pin was “totally broken” and had “glaring flaws,” some reviewers said. One declared it “the worst product I’ve ever reviewed.”
Three people with knowledge of the conversations said that Humane began discussing the possibility of selling itself for more than $1 billion with HP, the computer and printer manufacturer, approximately a week after the reviews were released. Other possible purchasers have surfaced, although discussions have been informal and no formal sales procedure has started.
According to three individuals with knowledge of the arrangements, Humane hired investment bank Tidal Partners to assist with the negotiations and oversee a fresh round of funding that would put the company’s valuation at $1.1 billion.
The changes amount to a major setback for Humane, which had established itself as a leading competitor in the field of artificial intelligence hardware manufacturers. Strong Silicon Valley investors contributed $240 million to the San Francisco-based start-up, including Salesforce CEO Marc Benioff and OpenAI CEO Sam Altman, who estimated the company’s potential and ambition at $1 billion. Humane failed despite spending five years developing a gadget meant to challenge smartphones.
According to two individuals acquainted with Humane’s sales, as of the beginning of April, the company had gotten about 10,000 orders for the Ai Pin—a negligible portion of the 100,000 units it wanted to sell this year. The business has also struggled with staff turnover in recent months and modified its return policy to handle canceled purchases. Due of a potential fire hazard with the Ai Pin charging case’s battery, the company requested on Wednesday that users cease using it.
Its failures fit into a pattern of blunders in the field of generative artificial intelligence when businesses produce less-than-perfect products. In the last two years, Samsung has added artificial intelligence (A.I.) features to a smartphone that have been praised as “great at times and perplexing at others,” Microsoft has touted a Bing chatbot that experienced hallucinations, and Google has introduced and then scaled down A.I. search capabilities that suggested people eat rocks.
Its failures fit into a pattern of blunders in the field of generative artificial intelligence when businesses produce less-than-perfect products. In the last two years, Samsung has added artificial intelligence (A.I.) features to a smartphone that have been praised as “great at times and perplexing at others,” Microsoft has touted a Bing chatbot that experienced hallucinations, and Google has introduced and then scaled down A.I. search capabilities that suggested people eat rocks.
“You don’t know everything before you launch,” Ms. Bongiorno said. Given the product reviews, Mr. Chaudhri said, they “definitely wish that we were able to resolve some of those things a little bit differently.”
HP didn’t respond to requests for comment.
23 current and former workers, advisers, and investors who sought anonymity because they were not permitted to talk publicly about the topic or were afraid of reprisals provided the basis for this description of Humane. Bloomberg earlier reported on the start-up’s potential sale.
Many current and former workers claimed that Ms. Bongiorno and Mr. Chaudhri ignored concerns concerning the Ai Pin’s low power consumption and short battery life because they valued praise over criticism. They claimed that after raising concerns about the product, a senior software engineer was fired, and additional engineers quit in annoyance.
Mr. Chaudhri said his company, which had 250 employees at its peak, encouraged workers to offer feedback. The departures were a natural consequence of transitioning from creating a new device to sustaining it after its release, which he said appealed to “a different type of person.”
Humane was founded in 2019 by Mr. Chaudhri and Ms. Bongiorno, both of whom were employed at Apple. Their goal was to design a lapel pin that uses a magnet to attach to garments. An AI-powered virtual assistant that can send messages, browse the web, and take pictures is available to users of the gadget. In addition, a laser that projects letters onto the user’s palm is included for operations like pausing a song while listening to music. It also features cellular service, a speaker, and a camera.
From the beginning, current and former employees said, the Ai Pin had issues, which reviewers later picked apart.
One was the laser display on the gadget, which used a lot of power and may overheat the pin. According to three persons involved with the demos, Humane officials would frequently chill the device on ice packs before showcasing it to potential partners and investors in order to extend its shelf life. These workers stated that early in a product development cycle, such actions might be typical.
Employees claimed that Humane’s founders responded to their worries about the heat by saying that software updates that used less power would solve the issue. Three persons stated that Mr. Chaudhri, the design lead, wished to preserve the device’s svelte appearance.
The battery of the device was too little to last too long. Current and past employees reported that test units had power outages within hours. According to two employees, Humane opted to include a backup battery and charging case with the product, which resulted in a price rise of over $100.
The problems contributed to Humane’s pushing back the date when it would ship the device to April from October, employees said.
According to three persons, some staff members attempted to convince the founders not to release the Ai Pin since it was not ready. Others urged them to appoint a head of marketing on several occasions. Prior to the product’s introduction, the position was unfilled.
In October, Time magazine named the Ai Pin one of the best inventions of 2023. The next month, Humane revealed the product’s details, promoting it in commercials.
Three sources claimed that Humane had to scale back its plans to build more of the devices since orders were coming in later than anticipated. Regarding sales, Ms. Bongiorno opted not to comment.
Humane let go of roughly ten workers in January. When a senior software engineer questioned if the Ai Pin would be ready by April, she was let go a month later. Following the employee’s termination, two attendees alleged that Mr. Chaudhri claimed the employee had broken company rules by disparaging Humane during a meeting.
Ms. Bongiorno said the company couldn’t comment on individual employees.
The creators claimed to have had conversations with a number of reviewers as they assessed the product and addressed inquiries concerning their observations, which included worries with the Ai Pin’s temperature and erroneous answers to specific requests.
On April 11, reviews in The New York Times, The Wall Street Journal and The Verge blasted the Ai Pin’s shortcomings. Marques Brownlee, a tech reviewer on YouTube with 19 million subscribers, headlined his review “The Worst Product I’ve Ever Reviewed … for Now.”
After the reviews, Ms. Bongiorno said, “we pulled the team together and we said: ‘OK, look, this is going to be painful. We’re going to have to lean into painful feedback.’”
Mr. Chaudhri and Ms. Bongiorno reported that Humane had subsequently addressed the device’s problems. To make the device easier to operate, the start-up has incorporated acoustic effects and more voice navigation choices. The updates include the integration of GPT-4o, the newest chatbot system from OpenAI, which is expected to reduce response times to two seconds and increase battery life by twenty-five percent.
Those updates have addressed the questions raised by reviewers, the founders said. Ms. Bongiorno referred to the reviews and feedback as “a gift that we’ve been given.”
She said that businesses are interested in the device. More than 1,000 businesses, including those in retail, healthcare, and education, contacted Ms. Bongiorno within 48 hours of the pin’s introduction to discuss possible collaboration or software development.
Humane also signed wireless carrier deals to expand the Ai Pin to South Korea and Japan.
Talks about a possible sale and licensing Humane’s technology became part of certain conversations, including one with HP, according to three people with knowledge of the matter. After speaking with Tidal Partners, an investment bank that had counseled Cisco on its recent $28 billion acquisition of the cybersecurity company Splunk, Mr. Chaudhri and Ms. Bongiorno made the decision to hire the firm.
These discussions have persisted as Humane has faced with the revelation that one of its battery suppliers had sent parts that might catch fire. Customers were urged to cease using their charging case accessory on Wednesday while the company looked for a replacement supplier.
According to those close to the company, Humane had enough money to release its product but was still looking to raise more.
“We just want to build,” Ms. Bongiorno said.
Mr. Chaudhri added, “We have to look at how best we fund that.”