Don't Get Killed by the Hype - AI Gadgets Failing to Deliver

0:00I think it says a lot about marketing and product development as much as anything. because it could be AI or it could be anything. But when you make giant promises, you rush to market to be first and you deliver a half-baked product that significantly under delivers on all of the promises that you made or most of them, then you're gonna get killed in the market, right? The people are not stupid long-term. We're all a little stupid short-term from time to time. you know, like I gotta have it. It's called a new iPhone, but even with the new, I'm going to broaden this just a hair to Apple. Um, cause I, I'm not sure what's going to happen with them.

0:45You know, they're, they're generally brilliant, but they really need another good product.

0:54Hey everybody, this is Roland Frazier and Ryan Dice with another episode of business lunch. We were just, uh, getting technical things taken care of there. I have this little track pad that, that is wireless. And somehow I always put it in a place where whenever I put my hands down, I hit stop record and then we have to start again. So I was getting that panically out of the way as the countdown was going, but welcome to the podcast. And Ryan, welcome to, this is as we're recording this Memorial Day, right? Yeah. Yeah. Technically a holiday. And here we are. I don't know why. So I don't like to do vacation-y stuff on actual holidays because every place I want to is crowded.

1:32It's so crowded. Live off peak. Best advice I ever got was reading a book that said, live off peak. And I was like, don't go to work and come home from work with the masses. Don't go to Valentine's day dinner on Valentine's day. You know, now sometimes, sometimes you have to do that, but you know, figure out a way around it. But, uh, I will say it is harder when you have kids in school, uh, because so much of peak is defined by that, but, uh, they are peak. They are the peak we seek to avoid. They were the peak. They just, they ruin everything. But now that we're on the other side of school, school is over.

2:04We can get, we can start living our best off-peak life. And so, yeah, we're going out of town next week. This week, it's like, I can actually get some work done. So, but given this moral day, I still want to honor all of our heroes out there, those who have died for us in American wars, but yeah, also happy to not be out there with the masses battling whatever holiday adventure I know people are doing, just even driving around yesterday during the holiday weekend. It was impossible. We stay in. I smelled the burgers as I was walking around, though. That was kind of fun. I was going for a walk around the neighborhood and it was definitely a bunch of cars, burgers, a bunch of cars, burgers.

2:46It was very clear what was happening. Yes. Well, that all said, you had something interesting you wanted to chat about today so let's uh let's hop into it yeah i want to get your take on all these different ai gadgets because i know you're very ai-rific i know you're on the top of uh top of a lot of these things and there's been a couple of gadgets that have come onto the market and these are essentially hardware that are powered by ai like so the ai is like like the files are in the computer like in this case like the the ai is is in the machine it's in the box and so the two most notable is the Humane AI pin, which I believe you told me about when they first published their launch video.

3:29And then the other one is the Rabbit R1. And so both of these are designed to be AI assistants that either clip to you or that you would carry around. I know for the Humane, it's got a little, it's a pin that magnetically attaches to whatever your clothing is. And so it's looking at the world around you and it's supposed to be giving you feedback on that. It's got this kind of very cool projectory thing that would project onto your hand so that, because there's no other user interface that, you know, really to speak of. The, the rabbit is this kind of cute orange box that supposedly is an AI, you know, a system, but basically the punchline is these devices are getting some of the worst reviews of any new technology device that I've seen.

4:13And that is saying something. So in looking at the Rabbit, I mean, barely reviewable, somehow worse, an unfinished, unhelpful AI gadget. This device won't replace anything, a half-baked device that isn't living up to the promise. So those are some of the headlines of the reviews for the Rabbit R1. Then you've got the Humane Pen, which somehow the reviews for this one were even worse, even though I think the technology is cooler. Markwise Brownlee said, the worst product I've ever reviewed. This is probably one of the most powerful tech reviewers has declared the humane AI pen the worst product he's ever reviewed.

4:59You know, not even close, a case study in poor strategy and poorly designed features. It just, they're just getting panned left and right. So I just want to know from your perspective, I don't know if you've used any of these devices. You're oftentimes quick to jump on some of these and try them out just for funsies. What do you think this says about AI devices and AI-powered tech and hardware? I think it says a lot about marketing and product development as much as anything, because it could be AI or it could be anything. but when you make giant promises, you rush to market to be first and you deliver a half-baked product that significantly under delivers on all of the promises that you made or most of them, then you're going to get killed in the market, right?

5:54The people are not stupid long-term. We're all a little stupid short-term from time to time, you know, like I got to have it. It's cool, the new iPhone. But even with the new, I'm going to broaden this just a hair to Apple, because I'm not sure what's going to happen with them. They're generally brilliant, but they really need another good product to get to the next level. I think they'll be fine as a company, they'll be valuable and everything. But what really made them was iPod, iPhone, and iPad. Right. I mean, that really, and then the services that they were able to sell on the, on the back of all those in terms of devices anyway.

6:36So, um, so I didn't buy either of them because I don't want another thing I have to carry everywhere. I already have my thing that's the iPhone. So I feel like these guys are going to have to dislodge the one thing that people are all carrying around now because we're not looking to be Batman, you know, with a utility belt full of gadgets. and we're not, you know, I've already got this hand is already taken up with this thing, which I pretty much take everywhere, right? So if this needs to do whatever it is, those things are doing. And as I read listening, by the way, on the podcast, this thing he's referring to, he's holding up his, his iPhone, because when you just simply hear that this hand is taken up with something and you take it everywhere with you, let's just say inappropriate minds could go to weird places.

7:31So in this case, left hand is taken up with his iPhone. Yeah. Like it's not a pencil. Those of you who are like, it's a pencil and it's not a pencil. Okay. I don't carry writing instruments. So, um, yeah, thank you, Ryan, for pointing that out. Um, but, but here's the deal. So number one, I think that there, it is not an enhanced, let's get another gadget for people to carry any more than anybody wants to pay for another cable subscription, but the cable subscription you don't have to carry around with you, right? All the time. This is literally another physical thing to weigh you down, to keep track of, to be charged, et cetera.

8:06And we've already got on our wrist, the iWatch, if we wanted to get, or the Apple Watch, if we wanted to get like that next level of thing. And we've got the iPhone or, you know, those of you who have Androids have whatever that does. But that's kind of, I guess it's a game of dislodgement to me. It's a game of replacement, not enhancement, number one. And then number two, the things that I saw that were promised by the rabbit was basically like the stuff that Apple, you know, stops you from doing. And I think one of the reasons it did so well was just the hype of AI, which as a product developer in the AI instruction place, I can tell you that that curve is definitely down from when these things were super hot.

8:55And I don't think that everybody's afraid of getting left behind with an AI gadget now. They also had a really cool design on the rabbit by a company called Teenage Engineering, which makes all kinds of cool stuff. A lot of musical instruments that I've got are Teenage Engineering, and they come up with things that are like completely impractical, but you like you, yeah, that's cool. I want one of those. And I think that helped because they have a huge following and you know, in the industrial design world, but man, it's just, it's gotta be, I feel like you'd have a lot better chance with the pin than you would with the rabbit just from a, you know, ergonomics standpoint.

9:36But, but yeah, it's got to deliver and it's got to deliver at least as well as it's promised or you get killed. And the last two things I want to say before I'll shut up is I think also in terms of like what people are unhappy with is that they spent the money on it and it's not everything they wanted it to be. It's not radically changing or improving their lives in addition to the stuff that's just messed up, right? Because the messed up stuff can be fixed in firmware, usually in follow-ups and software. And people who love a brand will be patient with it. But neither of these brands had any built-in credibility or patience, like no social credibility they built up in the years before.

10:19But even Apple, I see, is having a challenge with the new iPad, which is the thinnest one we've ever done and faster. And the M, we skipped a whole generation of chips and all that. And I got to tell you, and I'm curious for you, I looked at it and I went through to build one online and it was$2 ,800. And I looked at the one that I've got and I was like, yeah, I think I'm pretty good. It's like, it's not going to be something that improves my life significantly. And I read a lot of articles from people that said, yeah, I started looking at it and I was like, man, those things are really computer prices these days.

10:59And so I think that that also impacts this, that as we see interest rates are up and it seems like maybe finally the whole world is saying, gosh, everything's twice as much as it was just a couple of years ago and my income isn't, and I don't have any free money from governments. What am I going to do? I'm going to have to spend less. So I'm going to be more careful on the decisions that I'm making and not spend on these things. That was a way broader, I think, answer than maybe you wanted to talk about. But I'd love to get your take on all that and I'll be quiet. Yeah, I mean, I see this, two interesting angles from this.

11:37The first is just, what does this say about AI gadgets in general and like the future of this new category of AI gadgets? And I think that, you know, what you said, I think is dead on. Hardware is hard and it's hard for a lot of reasons. But I think one of the main reasons that hardware is so hard is because nobody's really looking to have another device. I love your analogy of the Batman utility belt. Right. It is. And I think we're seeing this a little bit with the Apple vision goggles that like everybody talked about for a week or two and everybody said was going to be completely life changing.

12:14And now nobody's talking about it all because nobody was really looking to just put another thing on their head. Plus, and I'm glad you mentioned it because that was the one thing I thought of as we were talking and I forgot to mention. So I did buy that and it was, I don't know, four grand. It was a lot, right? I haven't used it since the first day that I opened it and charged it and played with it for a few hours because it doesn't really do anything that I need or want that I don't have. I'm guessing that it will maybe a year from now, maybe six months from now. But so I'm also reeling and I bet a lot of Apple people are reeling from having made a pretty significant purchase there that's just sitting on my desk and I don't really want to put it on.

13:01Go ahead. I wanted to just say that one thing was the other gadget. I was like, there's another one recently that came out that that was that same thing. Well, it's instructive that you literally forgot about it and it was$4 ,000. And I think that this is what, and so we're talking about new modern AI hardware devices. So people might be thinking, oh, this doesn't necessarily apply to me. I think the market is out of just, oh, it's fun just to buy new things. So commerce as recreation, I want to buy this thing just because it's new and cool is not where the marketplace is right now. And so if you are saying like, oh, I'm just going to put something new out into the market and people will buy it just because it's new and novel, they're probably not.

13:48And the best brands in the world putting out some of the most new and novel things are one, struggling, sales are disappointing. And two, on the other side of it, when it ultimately doesn't deliver on all the promises that were made or just the general expectations that people came up with, they're furiously disappointed and it's killing brand value. And yes, for companies like Apple, they've got enough brand equity there. They're going to be just fine for these upstarts, you know, I think it's, I think it could potentially be a death blow before they really even had a chance. So if you wanted to kind of extrapolate some lessons, I would say, um, on the positive, the, uh, the hype around the rabbit in particular, I think was very, very well done.

14:37And, um, and they were able to sell a lot. And one of the things that they did. My understanding was there was a Coffeezilla, you know, the guy that does kind of breaks down scams and stuff on the rabbit, as I was recently told. No primary information here, 100 % gossip slash hearsay. But it was, I guess, it was a project that they raised$20 million on to do something else with. And then they couldn't do it or figured it out that it wouldn't work and then just pivoted without a great amount of, of, uh, consultation or, or consent and did this thing and then partnered brilliantly, which to me is the lesson brilliantly with teenage engineering, who does have tremendous, a tremendous audience fan base and a lot of credibility and brand equity.

15:26And that I think helped them tremendously because people were like, never heard of this thing. Oh crap. It's made by teenage engineering. and then think it's teenage engineering. Now, the danger, if you're the incumbent, the guy, the brand that's got the audience, it hurt to me the reputation of teenage engineering. And so the lesson is if you are that company, one thing you could do is partner with somebody, but you're going to want to be sure that you control enough of the process to be sure that QA is in the bag or you will suffer brand damage. If you are the upstart, partnering with somebody that's got that brand equity will give you that leg up that Ryan and I are talking about that I think is a challenge for you.

16:13If you're just, hey, we came out with cool glasses, right? Who are you? Well, we partnered with Apple. Oh, that's going to help a lot. What would you say are some of the other lessons that people could take away from what we're talking about? So setting aside, I think a big lesson is if you want to do something hardware related, just know that you're probably going to have to displace an existing device that's already attached to the human body or is already sitting on somebody's shelf and nobody's looking for it. So it better be a 10X product. It better be 10 times better than what they got because it needs to displace.

16:50I have a question for you about that. So let's call that lesson two or three, depending on who you are, right? That nobody is looking to carry more stuff around. No. Now, question. They went out of their way to avoid competition with other apps at Rabbit by saying this is not an app. It is only possible through the hardware. Now, there was a guy who hacked the system and loaded it up as an app on his iPhone and clearly proved that they were full of crap, which also is 90 % of what it's doing is basically just a chat GPT, you know, overlay. And so, and wasn't that the other thing? What it was that that was using chat GPT and it specifically had code, specifically had code that said, do not acknowledge.

17:42It was supposed to be creating this whole like large action model, this lamb. And so So like setting aside the fact that, that, yeah, I mean, there are people who are calling this product an outright scam, that they basically, you know, just took proceeds, investment that was brought into an NFT crypto project that went nowhere. They redirected those funds. So like everybody else on, you know, social media who, you know, was an NFT crypto, you know, bro. And then they shifted to AI the second that that happened. And they did the same thing into this project, made a lot of promises that people have now put out there and said, like, those were just flat out untrue.

18:21That's the claims that are out there. I'm not here to get into the, like you said, the gossip and the who lied. That's not so much relevant to this discussion. But, yeah, I mean, and I think maybe this is where you were going. pretty much everything that it does, the latest update of ChatGPT 4.0 pretty much does. And so I think you're far better building upon the infrastructure that already exists. Like, I mean, you've got to decide as a business, are you going to lay the rails, right? Are you going to, you know, build and run the trains that ride on those rails? Or are you going to be the service layer that is going to help facilitate the movement of those rails?

19:08Because that is how every business exists. There's infrastructure players, there are application players, the actual, you know, rail cars. And then there's a service layer. So infrastructure, application, service. Be really, really clear on which of those layers you're going to live and just know that unless you are, unless you're basically a sovereign nation or, you know, a fortune five company, you're probably not going to be able to afford to play in the infrastructure layer. And then even then, which really, when you're producing a totally new device, you're kind of saying, I want to create new infrastructure.

19:50Right. That's kind of what you're doing. Like the iPhone was new infrastructure, but even that was built upon existing infrastructure. But I think you're far better off to play in at the app level. Let's build applications for this. But even that seems to be getting gobbled up pretty quickly. It's why most mature economies become service based economies. I think that's probably why they didn't do it as an app. They didn't want the competition. They didn't want to be compared to other apps. They would have no doubt been compared to Gemini and Claude and ChatGPT. But when you're dishonest about it, when you have to put in the program, don't refer to this because we want to keep this a secret.

20:34You're starting already down a lost path. But I think they did something even harder. They said, let's create new infrastructure. So it's like, well, we don't want to compete with the other apps. Okay, so you chose to compete with something even harder? So it just struck me as bad strategy. And I think the other lesson, I think this is the bigger lesson to take from this whole thing. The better you are at marketing, the better your product better be. I mean, truly, because if your product is not amazing and you come out with this massive launch, you got to know that because you're so freaking good at marketing, you're either going to shine the spotlight on something amazing or you're going to shine the spotlight on a turd.

21:18But make no mistake, you're shining a bright, big, bright spotlight. And if it's not amazing, the worst thing in the world that you could do is have great marketing. And so I think a lot of these, you know, launch models that worked in the past where we're going to hype this thing up and then we're going to come out with this, you know, with this launch and it's going to be imperfect at first. Like a lot of the way Kickstarter stuff, it's going to be imperfect at first, but we're creating this community and in this community, we're going to be making it better and developing it and this and that.

21:50Like, I think the market's kind of over that. I think people are ready, especially if you're going to charge full price. I mean, the rabbit was 200 bucks, which is not all the money in the world, but a lot. I mean, it's$200. And it wasn't delivered through a platform where the expectation was imperfect product, product delays, et cetera, right? No. Yeah. The expectation was it's going to be amazing. And so better than the idea is$700 plus 24 bucks a month, or it's a brick value is always the gap between expectation and what you charge. Like that's the definition of value. What is the expectation and what did you charge?

22:28And so if you're going to charge retail, you better deliver on 100 % of your promises and then some. Because if you're just a little bit lower, then guess what? You over-promised and under-delivered, not enough value. And I think that the biggest lesson of all in these things is this idea of like, oh no, just produce a minimum viable product. That's fine. If you're going to produce a minimum viable product, then do not market it as though you're freaking Apple rolling out this thing that's been in R &D for the last two and a half years and that you've invested hundreds of millions of dollars in.

23:00Okay. Do not follow Apple's launch strategies if you're not ready to roll out an Apple-level product because guess what? Even they come up short sometimes. Speaking of launch and marketing, did you study the marketing at all to say that there were positive lessons in any of the things that those guys did to get there? Their marketing was phenomenal. You could go back and review all of their marketing and say, like, yeah, but I mean, I don't know that there was anything necessarily new there from a marketing perspective. I mean, if you're a skilled marketer, you'll look at it and go, ah, respect, but there was nothing new.

23:36But I mean, their launch videos was absolutely painting a vision of a better, brighter future, which that's what the best marketing does. The best marketing acknowledges where we are right now and the problems and challenges of that. And it paints a picture of a better, brighter, more hopeful tomorrow. And then it sticks the product right in the middle of those two worlds and says, this is the vehicle that's going to transport you from this less desirable before state to this more desirable after. and the messaging around it was phenomenal. The demonstrations, the way they demoed it, both products.

24:11You're like, I want to live in that world. They painted the picture of a beautiful futuristic world that was going to be happening, not just in our lifetime, but in months because of this amazing product. And then when you get it, not only does it not do that, but it's also just kind of a pain in the butt in general. Yet another thing you got to freaking charge that under delivers. So yeah, great marketing, great marketing, not great products. And they're because the marketing was so good, they're not going to get the benefit of the doubt. I think if you know your product isn't ready, the best thing that you could be is a very small circle of self-selected insiders, dirty little secret.

24:56Like that's what you want to be. If you know you're not ready for prime time yet, then amaze and inspire the people who are those folks who are willing to go first. Do not go out to the unwashed masses with your amazing marketing. Do not, do not, do not do that. Get a very small group, really, really excited, truly build that community. Get them to the point where they're starting to tell their friends. And when their friends are getting excited as well, now that's probably time. Now you're probably time for the launch. I like it. Well, I hope you guys found that interesting. We would love to hear your thoughts on these AI gadgets.

25:32Are you excited? Will you spend money the next time? Are you starting to be a little bit more, let's wait and see, then, you know, as I think both Ryan and I have become, then let's go get it and try it. And also, any takeaways that you have from the marketing that you'll apply to your, I mean, excuse me, from the discussion we talked about that might apply to your business or any insights that you'd like to share. We'd love to hear from you on the socials, on YouTube, Instagram, et cetera. We're all those places with the Business Lunch Podcast. And anything else, Ryan, or should we say goodbye for now?

26:04I think I would just say for these devices, I think the ultimate AI device is called the iPhone and Android is my prediction. And the world likely doesn't need a second device. So I don't know if you're in this space, good luck to you. I really am rooting for you, but good luck. All right. See you guys next time.

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