Business General Technology

Chasing waterfalls

In recent weeks, we’ve seen the launch of two highly anticipated consumer technology products, The Humane AI Pin and the Rabbit R1, and the response has been underwhelmingto say the least.

But these failures could have been predicted and avoided and weren’t. I believe their failures say a lot about what’s wrong with the tech industry today and demonstrate a concerning trend that has been creeping up for some time.

In the field of product development, there is a concept of an ‘MVP’ aka a ‘Minimum Viable Product.’ The idea — derived from the Agile software development practices and popularized by Eric Ries’ book ‘The Lean Startup’ — proposes that the correct way to bring a new product to market is to focus on creating and releasing the simplest version of the product you can that adds value quickly, and getting it into the hands of stakeholders early. This concept allows a company to minimize upfront risk while taking advantage of customer feedback to inform its roadmap, ostensibly leading to products that will be more likely to secure a foothold in a market.

On paper, and in practice generally, this is a sound methodology to operate within, and the folks at Humane and Rabbit would argue they are following this. So what went wrong?

Arguably, among other things, they’ve missed the most essential word in the ‘MVP’ initialism: Viable.

You only get one chance to make a first impression. 

When the iPhone was announced, the product was filling a noticeable gap in the market. Most consumers had clunky feature phones, and the ‘smart’ phones of the day were bulky and complex. Steve Jobs’ famous keynote presentation sold a vision of something better, and incredibly, the product that ultimately shipped to consumers met or exceeded the expectations of the product set by this demo.

While Humane and Rabbit both draw a lot of inspiration from Apple with marketing and design aesthetics, they seem to be missing the key promise that every product Steve pitched lived up to:

Under promise and over deliver.

Steve sweat the details because he knew they mattered. As boastful and braggadocious as he might have come off in that presentation, he knew he had a product that could back it up. One that would blow people away.

Both Rabbit and Humane have spent a lot of time and money marketing the idea of their products and their vision of how they will change consumers’ lives.

However, as many reviews have bluntly demonstrated, in many cases, the features the products ship with today barely work. Much of the visions these companies have sold depend on integrations, features, and experiences that do not currently exist. It seems that neither product, in its current state, does enough today to warrant its existence, especially compared to what a smartphone can already do.

They inevitably knew this. They knew the products would not fulfill those promises on day one, but they launched anyway. 

There is nothing agile about launching a product on the back of a roadmap.

Neither Humane nor Rabbit have set themselves up to succeed.

Agile development aims to prove viability through continuous discovery and iteration, and lean methodology seeks to reduce waste.

The benefit of an MVP is that it allows a company to quickly discover new opportunities and shortcomings, adapt, and change course as necessary. 

By promising functionality unavailable at launch, they’ve released products that cannot, and possibly will never, meet consumer expectations.

By launching to disappointing reviews, many would-be early adopters will likely choose to pass on these products. This essentially negates the value of their marketing efforts thereby squandering most of the value the company would get from an early launch. Had expectations been set lower, this might not be the case.

These companies now face some tough choices: 

  1. They can spend their resources fulfilling their promised roadmap, potentially ‘baking in’ their core mistakes and gaining nothing from the process.
  2. Or they can delay or dispense with their promised roadmaps, go back, challenge their initial assumptions, and rework their products to fix core mistakes identified by the early launch.

Either path is a recipe for disappointment. There is a reason Apple rarely discusses future products or features.

So why is this happening? And why now?

The truth is, we were living in a tech speculation bubble for the last decade or so.

With interest rates near zero percent, entrepreneurs had easy access to capital with few strings attached. This also meant that there was little pressure for a company to deliver a profit. Instead, the metric du jour was user growth. If a company could demonstrate massive user numbers by disrupting a pre-existing industry (like taxis with ridesharing, for example), the prospect of eventual profitability was enough to keep the funding coming in and the company valuation going up. With valuations continuing to skyrocket, early investors were able to cash out with an amazing return. As such, a frequent recipe for “success” was to spend a ton of money to disrupt an industry, get massive user adoption, create public hype, take the company public, cash out, and leave retail investors holding the bag. 

However, this formula came to a screeching halt in early 2022, when companies realized that the pandemic era ‘pivot to digital’ would not produce perpetually sustainable growth numbers (something else that should have been obvious), and inflation started to skyrocket. Investors turned to more conservative investments as the US Federal Reserve Bank raised interest rates to tamp down on inflation, shifting the focus back towards profitability.

So, the pressure is on for companies like Rabbit and Humane. They have grand, long-term visions of industry disruption and transformation, but their investors expect more immediate returns than they did of companies of the recent past.

Because making your own hardware device and accompanying software platform is expensive, the inclination to ship a product as soon as the hardware is ready with a barebones version of the platform is operational is understandable.

Consumers are not investors. They do not buy products based on pitch decks; they buy products based on what they do. If a company sets expectations high, and the product fails to meet these expectations, consumers will walk away, and the odds that they’ll come back are slim. 

In their current form these products are not viable, maybe the idea they laid out one day could be, but because they jumped the gun and launched too soon, they may never get the chance to discover their ‘MVP.’