Oh, the Humane-ity
Last weekend, the Bay Area hosted the NBA Dunk Contest.1 Today, it will host the Humane dunk contest. We're going to get slam after slam after slam against the company after it was announced that they were acquired by HP for $116M.2 A regular person might read that headline and think, "wow, a startup sold for nine-figures – impressive." Of course, it's not impressive in this case. It's a fire sale for a company that has been under duress for months after their product, the Ai Pin, failed to catch fire in the market. Actually, that's not technically true. There was a literal risk of fire when charging the device, which led to a recall. And so you'll forgive me for sort of re-using a headline here – but this situation is much more akin to the Hindenburg disaster from which the phrase originates.
This is harsh. And some people won't like that – notably, the investors in Humane. But don't feel too badly for them, they can afford the zero dollars they'll be getting back here. And actually, a few might get some of that $116M – depending how much debt was on the books to pay off.3 Certainly not getting any money out of this deal are the employees of Humane. The company had raised something to the tune of $240M, so the purchase price wouldn't nearly clear the rest of the preference stack even if it could clear the debt. So feel badly for them. At least Humane was able to find a home that will ensure they all have jobs, if they want them. Kudos for that.4
Yes, Humane was a startup and startups are hard. Still, they clearly made it harder on themselves and there are some lessons to take away from that...
First and foremost, the PR strategy was an obvious disaster from the get-go. This is easy to say in hindsight, but many people were saying it in real time. From their grandiose but nebulous introduction video to their first product tease on stage at TED, it was seemingly less a sound strategy than a vignette of cliches. I don't know the founders Imran Chaudhri and Bethany Bongiorno, but from most accounts you hear, they absolutely wanted to leverage their Apple backgrounds and lay out a bold vision to try to make that proverbial dent in the universe. But as a startup, you obviously shouldn't do that.5 You shouldn't do that first and foremost because it's expensive and cash is king when you're a startup. But you also shouldn't do that because it paints just a massive target on your back.
And the Apple pedigree will actually just make that target even larger. I'm guessing there was some degree of "let's lean into it, not shy away from it, and play it up" but again, that's just a bad strategy. It just sets expectations way, way, way too high. And even in the case of product perfection – which will never happen with a first product, just ask, um, Apple – you're setting the company up for a let down.
And the let down came in a major way with those first reviews of the Ai Pin. That's a nice way of putting it. It was more like a beat down. But again, this was set up by that initial PR strategy for the company. So what could have been a "stealth startup tackling a new space with a big vision launches first product" morphs into "hyped-up, massively-funded product from team that helped make the iPhone, sucks". And that sucks for everyone involved, but again, namely the employees who obviously put a ton of work into bringing this product to market. They were all teed up for the takedown by the roll-out strategy.
That included a $699 price point which was obviously never going to work for this product. And on top of that, a monthly subscription fee. Yes, these may have been the prices needed so as not to just completely bleed out (money) right out of the gate, but that itself just speaks to the product roadmap failure here.
If the above was easier said in hindsight, this absolutely is, but it's still no less true: the first version of the Ai Pin should have been a much simpler, and thus, far less expensive product. They obviously thought about this, but perhaps wanted to "go for it" with a complete, iPhone-like product from day one. Again, you're a startup. You have to start far smaller than, say, a laser-projected screen. Make a pin that does one thing well, not four or five things ranging from just okay to poor.
Perhaps a second version does two things well. Maybe it adds a camera. Probably still not the laser-projector. Probably never the laser-projector, but I digress...
This leads to something they undoubtedly couldn't have fixed without that benefit of hindsight: timing. Humane started building in a world before ChatGPT kicked off the true AI revolution. Had they launched afterwards, I think it would have been obvious to create a simple pin where all it does is act as a wearable ChatGPT communicator. That's it. That's the product. Sort of like Siri, but with an AI that is infinitely better. And no screen. It would have to tether to your smartphone, but still, I think a lot of people would have been compelled into buying this just to try out. Especially if the price was right. Say, $199?
Why do I say this is obvious? Because many other startups have been trying to work on and launch this in recent months. Yes, even after the failure of the Ai Pin (and Rabbit, etc). Because again, they're learning from what not to do here. And their timing is better. But they also lack one key ingredient which Humane would have had: Sam Altman was not just an investor, he was their largest shareholder.
I mean, my god, what a timing miss here. Sure, that undoubtedly would not have stopped OpenAI itself from working on their own hardware and perhaps eventually competing, but well, it's 2025 and there's no sign of any immediate ChatGPT wearable. Had Humane have had better timing, they could have had a product which would have made a compelling case. Alas...
Anyway, it's basically impossible to time a market, but Humane simply didn't give themselves enough flexibility and optionality to be able to get in a better position to be right place/right time. They burned far too much money making far too complicated and expensive of a product and then painted a giant target on their backs to jack up the difficulty mode for no obvious reason other than hubris. Presumably someone around the table knew that the Ai Pin wouldn't be received well in the market, but either no one spoke up or the company had no choice given all the time and money burned getting to that point. And so they shipped.
That is something that many startups also fail to do – and certainly many hardware startups. But to question Alfred Lord Tennyson, tis better to have shipped and lost than never to have shipped at all? Hard to say here given all of the self-owns. Hopefully HP's printers benefit from the lessons...
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Aka, the Mac McClung showcase.
2 Kudos to John Gruber for correcting calling an HP acquisition here. Sometimes, snark pays off.
3 Given this was a hardware startup, this amount may simply be used to pay off any outstanding debt, would be my guess.
4 In my experience, in such unfortunate situations, there are often other offers -- yes, even for a company as problematic as Humane as they undoubtedly have interesting patents, if nothing else. So perhaps there were other offers giving them slightly better terms, but wouldn't have found homes for those employees. Just a guess, but again, I'm glad they found landing spots.
5 This feels related to an issue you see come up a lot with many (not all, but a lot) of startups that launch from people who come out of long-time work at Apple: a startup is almost the opposite of Apple. You can't -- and shouldn't -- aspire to build the perfect product that millions will use out of the box after years of building in secret. And you shouldn't launch it on stage as if that's going to be the case. Obviously you want to dream big, but you have to be realistic too. Start smaller -- as Apple itself did -- and grow into that. That should be the aspiration. Put in the early, messy work to get to the point where you can become the next Apple and can ship products the way in which they do one day. One day far away.