Days before gadget critics were due to give their opinions on the Humane Ai Pin, a futuristic wearable device powered by artificial intelligence, the company's founders gathered their employees together to brace themselves: The reviews, they warned, might not be what they expected.
Humain founders Bethany Bongiorno and Imran Chaudhry were right. In April, reviewers savagely panned the $699 new product that Humain had been promoting for a year in ads and at glitzy events like Paris Fashion Week. They called the Aipin “totally broken” and “blatantly flawed.” One reviewer called it “the worst product I've ever reviewed.”
About a week after the review was released, Humane began talks with computer- and printer maker HP Inc. about a sale for more than $1 billion, according to three people familiar with the talks. Other potential buyers have also been floated, but the talks are informal and no formal sale process has yet begun.
Humane has hired investment bank Tidal Partners to handle discussions and also manage a new financing round that values the company at $1.1 billion, according to three people familiar with the plans.
The rollout amounts to a major setback for Humane, which had positioned itself as a top contender in a wave of AI hardware makers. The San Francisco company had raised $240 million from Silicon Valley's most powerful investors, including OpenAI CEO Sam Altman and Salesforce CEO Marc Benioff, who valued the startup at $1 billion based on its lofty ambitions and promise. Humane spent five years developing a device that could have disrupted the smartphone, but ultimately failed.
As of early April, Humane had received about 10,000 orders for Aipin, a fraction of the 100,000 it plans to sell this year, two people familiar with the company's sales said. The company has also been working to reduce employee departures in recent months and has changed its return policy. Address of cancelled orderThe company on Wednesday urged customers to stop using the Ai Pin charging case due to a fire risk related to the battery.
The company's setback is part of a pattern of stumbling across the world of generative AI as companies release unfinished products. In the past two years, Google introduced and then rolled back an AI search feature that recommended eating rocks, Microsoft touted its hallucinogenic Bing chatbot, and Samsung added AI features to its smartphones that were described as “sometimes brilliant, sometimes baffling.”
In an interview, Bongiorno and Chaudhri, who are married, declined to comment on the possibility of selling Humane or raising capital. They said their ambitions for Aipin remain unchanged, but acknowledged that there is a difference between testing a device and using it in real life.
“You can't know everything before launch,” Bongiorno said. Taking product reviews into account, “definitely we wish we could have addressed some of those issues a little bit differently,” Chaudhuri said.
HP did not respond to a request for comment.
This story about Humane is based on interviews with 23 current and former employees, advisers and investors who requested anonymity because they were not authorized to speak publicly about the matter or feared retaliation. Bloomberg previously reported on the startup's possible sale.
Many current and former employees said Messrs. Chaudhuri and Bongiorno preferred positive feedback to criticism and ignored warnings about Aipin's poor battery life and power consumption. One senior software engineer was fired after raising questions about the product, and others quit out of dissatisfaction, they said.
Mr. Chaudhri said the company, which had 250 employees at its peak, encouraged employees to give feedback. Attrition was natural as the company moved from developing new products to maintaining them after they were launched, and he said the new products appealed to “a different type of person.”
Chaudhuri and Bongiorno, both of whom worked at Apple, founded Humane in 2019. The two began developing a pin badge that would attach to clothing with a magnet. The device would provide users with an AI-powered virtual assistant that could send messages, search the web, and take photos. It also has a laser that projects actions onto the user's palm, such as skipping songs while playing music. It also has a camera, speaker, and cellular service.
Current and former employees say Aipin had problems from the start, and reviewers later roundly criticized it.
One is the device's laser display, which draws huge amounts of power and causes the pins to overheat. Humane executives often put the device on ice packs to make it last longer before showing it to potential partners or investors, three people familiar with the demonstrations said. The employees said such a move could be common early in a product development cycle.
When employees expressed concerns about the heat, Humain's founders responded that the problem would be solved with improved software to reduce power consumption, the people said. Mr. Chaudhri, who led the design, wanted to maintain the device's sleek design, three of the people said.
The device's battery wasn't large enough to last long; test units ran out of power after a few hours, current and former employees said. Humane decided to offer customers extra batteries and charging cases, but this increased the price of the product by more than $100, two employees said.
Humane employees said these issues caused the company to push back the device's expected shipping date from October to April.
Some employees tried to persuade the founder not to launch Aipin, saying it wasn't ready, according to three people familiar with the matter, and others repeatedly asked him to hire a head of marketing, a role that remained vacant until the product launched.
In October, Time magazine named the AiPin one of the best inventions of 2023. The following month, Humane revealed details about the product and promoted it in a commercial.
But orders have been slower than expected, and Humane has scaled back plans to ramp up production of the device, according to three people familiar with the matter. Mr. Bongiorno declined to comment on sales.
Humane laid off about 10 employees in January. A month later, a senior software engineer was fired for questioning whether the AI pin would be ready by April. In an internal meeting after the firing, Messrs. Chaudhuri and Bongiorno said the employee had violated policy by speaking negatively about Humane, two people who attended said.
Bongiorno said the company could not comment on individual employees.
The founders said they spoke with several reviewers as they evaluated the device and answered questions about their experiences, including concerns about the temperature of the iPing and inaccurate responses to some requests.
On April 11, reviews in The New York Times, The Wall Street Journal and The Verge slammed the Ai Pin for its shortcomings. Marques Brownlee, a YouTube tech reviewer with 19 million subscribers, headlined his review “The Worst Product I've Reviewed So Far.”
After the review, Bongiorno said, “We got the team together and said, 'Okay, this is going to be tough. We have to embrace the tough feedback.'”
Bongiorno and Chaudhri said Humane has since been working on the device's issues. The company has added voice navigation options and sound effects to the device to improve its usability. Updates also include the integration of OpenAI's latest chatbot system, GPT-4o, a system that improves battery life by 25% and reduces the device's response time to two seconds.
The founders say these updates address questions raised by reviewers, with Bongiorno calling the reviews and feedback “a gift that has been given to us.”
He also said that businesses have shown interest in the device: Within 48 hours of its launch, more than 1,000 companies, including those in retail, healthcare and education, had contacted him to discuss possible collaborations and developing software for the pin, Bongiorno said.
Humain has also signed deals with wireless carriers to expand Ai Pin to South Korea and Japan.
Some of the talks, including with HP, have evolved into discussions about potentially selling as well as licensing Humane's technology, according to three people familiar with the matter. Those talks led Messrs. Chaudhuri and Bongiorno to hire Tidal Partners, the investment bank that advised Cisco on its recent $28 billion acquisition of cybersecurity company Splunk.
Humane is in those discussions to address findings that its battery supplier supplied parts that pose a fire hazard, and on Wednesday the company asked customers to stop using its charging case accessories while it searches for a new supplier.
A person close to Humane said the company had enough funding to launch the device but was seeking to raise more money.
“We just want to build,” Bongiorno said.
“We need to look at how to best fund it,” Chaudhuri added.
