1 week Ago By Thomas Maxwell
The Department of Justice has charged a founder with defrauding investors after his AI shopping app was allegedly discovered to be nothing more than a couple of people in a trench coat. Nate offered a mobile app that promised users a one-click checkout experience on any e-commerce website “without human intervention,” effectively meaning they could store their credit card and shipping information with Nate instead of inputting it on each website. But prosecutors say the company relied almost entirely on human workers to complete checkouts.
Oops. According to the indictment, Nate’s actual automation rate was effectively zero. Instead, the company relied on hundreds of human contractors in a call center located in the Philippines to actually complete transactions.
Maybe by ‘AI’, the company was actually referring to “Asian Intelligence.” Nate raised over $50 million between 2018 and 2021. The Information first reported on the allegations against Nate and its CEO Albert Saniger back in 2022.
Here is an excerpt from the report: Many companies in the AI field still rely on humans to some degree, especially to validate data that has been generated by an algorithm, with the hope being that AI will soon be able to take over entirely. Hot startups like Scale AI are infamous for relying on farms of cheap labor to label data and correct outputs of AI models. EvenUp, a startup that says it uses AI to automate the process of writing legal claims, was reportedly relying on humans as recently as late last year to correct AI-generated texts.
The most successful AI startups thus far are the ones making tools, and mainstream adoption of AI by enterprises remains a question mark over concerns about reliability. Where Nate seems to have gotten into hot water was explicitly claiming that humans were almost never used in the checkout process. Maybe the company thought it could “fake it till you make it” and simply ran out of time to get the product working as intended.
But it was also entering an incredibly crowded space, with Amazon dominating e-commerce and other companies like Shopify introducing their own one-click checkout products. It also is hard to see how Nate could grow a business around a relatively simple feature. Similar companies like Bolt, another one-click checkout startup, have only managed to generate a pittance of revenue .
Nate, which still appears to exist, relied heavily on commissions to try and grow its app, offering influencers the ability to create lists of their favorite products in the app and receive a cut of any sale. Funnily enough, however, Nate may have been onto something with its product. Amazon, OpenAI, and Google are amongst the companies that have recently introduced “agents” they market as being able to automatically perform tasks including online shopping for users.
The products remain nascent, and users have complained they are slow, expensive, and buggy. They do present some potential to automate arduous tasks and make computing more accessible to demographics like the elderly. Saniger is facing one count of securities fraud and one count of wire fraud, both of which could result in up to twenty years in prison.
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