Some startups are brave and original. Others, like Nate, have set themselves more modest goals: they automatically fill in contacts and customer payment information on merchants ’websites. In exchange for saving them a minute or two of typing on their phone, Nate charges customers $ 1 per transaction. Although the company said it uses artificial intelligence to fill in customer information when ordering, it actually hired workers in the Philippines to manually enter data into retailer websites for most transactions, which Nate made possible in 2021, according to a detailed investigation by The Information.
If you can’t make the effort to enter your credit card and address information when buying jeans online, the Nate app sounds like a service you might be interested in. The company is charged as an artificial intelligence startup that uses artificial intelligence to automatically populate customer information for $ 1 per transaction, saving customers minutes when shopping through the Nate app.
But instead of using high-tech buying methods, Nate’s transactions were often hand-handled by workers in the Philippines, according to an in-depth investigation by The Information. Speaking to two people with direct access to Nate’s internal data, The Information reports that the share of transactions processed by Nate manually rather than automatically varied between 60% and 100% during 2021. A person familiar with fundraising efforts told the media that the company did not share its manual process with some potential investors while trying to raise funds.
People who are directly familiar with the technology that Nate used told The Information that bot blockers on retail sites are a problem. According to an article in The Information, Nate’s software had to figure out how to locate certain buttons on the page, such as the “add item to cart” button, which meant that real people had to enter most transactions manually. According to The Information, some orders were shipped hours after Nate users pressed the “buy” button. That didn’t stop Nate from raising millions in his quest to make something simple enough, even easier. Venture capital companies Coatue Management and Forerunner Ventures have invested $ 50 million in Nate over the past two years.
One of the consequences of the pandemic-driven buying boom is that venture capitalists (faced with fierce contract competition and paranoid about missing the next Strip) have started practically pumping money into start-ups that promised to facilitate e-commerce, even those with questionable business models or technology. Today, amid a slowdown in e-commerce sales and macroeconomic challenges, many startups are facing a challenge.
Across the startup landscape, there is a realization that many companies have had a great story, but their reality has not been. “People are waking up and saying that these estimates cannot be sustained,” Keval said. Desai, Investor at InterWest Partners who have previously supported e-commerce companies such as The RealReal.
Late last year, with only about 100 transactions a day, Nate decided to launch a promotion to increase its business and presence, buying ads on TikTok, TV and public transportation. Users received $ 50 spent on certain websites when they downloaded the Nate app and created a profile, and transactions skyrocketed to $ 10,000 a day. But users have found a way to bypass the system by creating multiple accounts with the same banking data, but using new email addresses and phone numbers. After the company removed duplicate customers and completed the promotion, daily transactions were reduced to 75 or 100 per day.
A Nate spokesman told The Information that those numbers, along with a range of 60-100%, were incorrect and that claims implying Nate’s proprietary technology were “completely unsubstantiated”. But it wouldn’t be the first time a startup has claimed that machines are responsible for the work people do, and that makes Nate’s magic appear in a whole new light.
What do you think about this practice?
Does Nate’s case confirm that the term AI is more of a marketing weapon than anything else?
Do you think Nate is honest in the way he presents his service?
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