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How the Human AI Pin Failed| GuyWhoKnowsThings

Days before device critics weighed in on the Human Ai Pin, a futuristic wearable device powered by artificial intelligence, the company's founders gathered their employees and encouraged them to prepare. They warned that the reviews could be disappointing.

Humane founders Bethany Bongiorno and Imran Chaudhri were right. In April, critics brutally panned the new $699 product, which Humane had marketed for a year in ads and at glitzy events like Paris Fashion Week. The Ai Pin was “totally broken” and had “obvious defects” some critics said. One declared it “the worst product I have ever reviewed.”

About a week after the reviews were published, Humane began talking to HP, the computer and printer company, about selling itself for more than $1 billion, three people with knowledge of the talks said. Other potential buyers have emerged, although conversations have been informal and no formal sales process has been initiated.

Humane hired Tidal Partners, an investment bank, to help navigate discussions while managing a new financing round that would value it at $1.1 billion, three people with knowledge of the plans said.

The developments amount to an intervention by Humane, which had positioned itself as a leading contender among a wave of AI hardware makers. The San Francisco company had raised $240 million from powerful Silicon Valley investors, including OpenAI CEO Sam Altman and Salesforce CEO Marc Benioff, who valued the startup at $1 billion based on its enormous ambition and promise. Humane spent five years building a device to interrupt smartphone – only to fail.

As of early April, Humane had received about 10,000 orders for the Ai Pin, a small fraction of the 100,000 it expected to sell this year, two people familiar with its sales said. In recent months, the company has also had to deal with employee departures and has changed its return policy to canceled order address. On Wednesday, it asked customers to stop using the Ai Pin charging case due to the risk of fire associated with its battery.

Their setbacks are part of a pattern of stumbles in the world of generative AI, as companies release unpolished products. Over the past two years, Google has introduced and reduced AI search skills that recommended people eat rocks, Microsoft has announced a Bing chatbot that hallucinated and Samsung has added artificial intelligence features to a smartphone that was called “excellent at times and disconcerting at others.”

In an interview, Bongiorno and Chaudhri, who are married, declined to comment on a possible sale or fundraising for Humane. They said their ambitions for the Ai Pin had not changed, but acknowledged there was a difference between testing a device and actually using it.

“Not everything is known before launch,” Bongiorno said. Given the product reviews, Chaudhri said, “they definitely wish we could solve some of those things a little differently.”

HP did not respond to requests for comment.

This Humane account is based on interviews with 23 current and former employees, advisors and investors, who requested anonymity because they were not authorized to speak publicly about the matter or feared retaliation. Bloomberg before reported about the possible sale of the startup.

Many current and former employees said Chaudhri and Bongiorno preferred positivity over criticism, leading them to ignore warnings about the Ai Pin's poor battery life and power consumption. They said a senior software engineer was fired after raising questions about the product, while others left out of frustration.

Chaudhri said his company, which had 250 employees at its peak, encouraged workers to offer feedback. The departures were a natural consequence of the transition from creating a new device to maintaining it after its launch, which he said attracted “a different type of person.”

Chaudhri and Bongiorno, who worked at Apple, founded Humane in 2019. They set out to create a lapel pin that attaches to clothing with a magnet. The device gives users access to an artificial intelligence-powered virtual assistant that can send messages, search the web or take photos. It is complemented by a laser that projects text onto the user's palm for tasks such as skipping a song while music is playing. It also has a camera, speaker and cellular service.

From the beginning, current and former employees said Ai Pin had problems, which critics later analyzed.

One was the device's laser display, which consumed enormous power and caused the pin to overheat. Before showing the device to potential partners and investors, Humane executives often cooled it in ice packs to make it last longer, three people familiar with the demonstrations said. Those employees said such measures could be common early in a product's development cycle.

When employees expressed concern about the heat, they said, Humane's founders responded that software improvements that reduced energy use would solve the problem. Chaudhri, who led the design, wanted to maintain the device's sleek design, three people said.

The device's battery was not big enough to last long. The test units ran out of power within hours, current and former employees said. Humane decided to provide customers with a backup battery and charging case, which increased the price of the product by more than $100, two employees said.

The problems contributed to Humane delaying the date it would ship the device from October to April, employees said.

Some employees tried to persuade the founders not to launch Ai Pin because it wasn't ready, three people said. Others repeatedly asked them to hire a head of marketing. The position remained vacant prior to the product launch.

In October, Time magazine named the Ai Pin one of the best inventions of 2023. The following month, Humane revealed details of the product and promoted it in commercial.

But orders were slower than expected, three people said, leading Humane to scale back its plans to produce more devices. Bongiorno declined to comment on the sales.

In January, Humane laid off about 10 employees. A month later, a senior software engineer was fired after questioning whether Ai Pin would be ready in April. In a company meeting after the firing, Chaudhri and Bongiorno said the employee had violated policy by speaking negatively about Humane, two attendees said.

Bongiorno said the company could not comment on individual employees.

The founders said they had spoken to several reviewers while evaluating the device and answering questions about their experiences, which included Ai Pin Temperature Concerns and inaccurate responses to some requests.

On April 11, reviews in The New York Times, The Wall Street Journal and The edge He criticized the Ai Pin's shortcomings. Marques Brownlee, a tech critic on YouTube with 19 million subscribers, titled his review “The worst product I have ever reviewed… so far.”

After the reviews, Ms. Bongiorno said, “we got the team together and said, 'Okay, look, this is going to be painful.' We will have to rely on painful feedback.'”

Bongiorno and Chaudhri said Humane had since worked on problems with the device. The startup has added more voice navigation options to the device, as well as sound effects, for ease of use. The updates include the integration of OpenAI's newest chatbot system, GPT-4o, and one that is set to improve battery life by 25 percent and reduce device response time to two seconds.

Those updates have addressed questions raised by reviewers, the founders said. Ms. Bongiorno called the reviews and comments “a gift we have been given.”

Companies are interested in the device, he added. Within 48 hours of its launch, more than 1,000 companies, including those in retail, medicine and education, reached out to discuss the possibility of working together or creating software for the pin, Bongiorno said.

Humane also signed agreements with wireless service providers to expand Ai Pin to South Korea and Japan.

Some conversations, including with HP, turned into talks about a possible sale, as well as licensing Humane's technology, three people with knowledge of the situation said. The conversations led Chaudhri and Bongiorno to hire Tidal Partners, an investment bank that had advised Cisco on its recent $28 billion acquisition of the cybersecurity business Splunk.

Those conversations continued as Humane dealt with its discovery that a battery supplier had provided components that could pose a fire risk. On Wednesday, he asked customers to stop using his charging case accessory while he looked for a new supplier.

Humane had enough money to launch its device, people close to the company said, but it was trying to raise more.

“We just want to build,” Bongiorno said.

Chaudhri added: “We have to find the best way to finance it.”

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