Go read this report on an AI shopping app that really only used humans


If you can’t be bothered to fill in your credit card and address information when buying jeans online, the Nate app sounds like a service you might want to have. The company bills itself as an “artificial intelligence startup” that uses AI to autofill customer information for $1 per transaction, saving shoppers a few minutes completing purchases through the Nate app.

But instead of using high-tech methods to complete purchases, Nate transactions were often handled manually by employees in the Philippines, according to a deep dive through The information† Speaking to two people with direct access to Nate’s internal records, The information reports that “the proportion of transactions that Nate has handled manually rather than automatically will be between 60 percent and 100 percent” in 2021. A person with knowledge of fundraising efforts told the outlet that the company did not share its manual process with some potential investors, while the company tried to raise money.

People with direct knowledge of the technology used by Nate said: The information that bot blockers on retailer sites were a problem. “Nate’s software had to figure out how to find specific buttons on the page, such as the one that adds an item to the cart,” the report said, leading to a large portion of transactions being manually entered by real people. Some orders were placed hours after Nate users clicked the “buy” button. The information reports.

That didn’t stop Nate from raising millions in his quest to make something already easy even easier. Venture capital firms Coatue Management and Forerunner Ventures have invested $50 million in Nate over the past two years:

One consequence of the pandemic-fueled retail boom is that venture capitalists — faced with fierce competition for deals and paranoid about missing out on the next Stripe — have practically started swinging money at startups promising to make e-commerce smoother, even those with questionable business models or technology. Today, amid slowing e-commerce sales and macroeconomic challenges, many startups are facing reckoning.

“In the startup landscape, people realize that a lot of companies had great stories, but their reality didn’t,” said Keval Desai, an investor at InterWest Partners who previously supported e-commerce companies like The RealReal. “People are waking up and saying that these valuations cannot be sustained.”

At the end of last year, with only about 100 transactions per day, Nate decided to run a promotion to increase his business and presence, buying ads on TikTok, TV and public transit. Users were given $50 to spend on select websites when they downloaded the Nate app and created a profile, and the transactions increased – up to 10,000 per day.

But users had come up with a way to play around the system by creating multiple accounts with the same banking information but with new email addresses and phone numbers. After the company removed duplicate users and ended the promotion, daily transactions dropped to 75 to 100 per day.

A Nate spokesperson told: The information those numbers — as well as the 60 to 100 percent range — were inaccurate, “casting the claims into question” [Nate’s] proprietary technology are completely unfounded.” But it wouldn’t be the first time a startup has claimed that machines are responsible for the work of humans — and casts.”the magic” by Nate in a whole new light.

Read The information report here


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