Why Do Tech Superstars Invest In Huge Blunders?

Humane Ai Pin, Vision Pro, Segway, General Magic, Teledesic...oh my!

Why do hyper-smart tech industry superstars keep investing in big, cool, futuristic ideas that seem destined from the start to fail?

In my three-plus decades of writing about technology, I’ve seen this over and over again, and I don’t get it. The list of past superstar-backed disasters includes General Magic, Teledesic and Segway. We’ve got a couple happening right now: Humane’s Ai Pin and Apple’s Vision Pro.

Marc Benioff, Sam Altman, Tim Cook, Bill Gates, Steve Jobs, John Doerr, Motorola, Sony, Goldman Sachs…what were they thinking?

All they had to do was run the idea through a couple of tests:

1.     Does it land in a good spot on the “adjacent possible” curve?

2.     Does it solve a real problem that real people have now?

Whiff on either of those, and it’s best to walk away.

The most recent big whiff is the Humane Ai Pin. The New York Times did a terrific job of describing what it’s supposed to be, saving me some keystrokes: The two founders, who came from Apple, “set out to create a lapel pin that clips to clothing with a magnet. The device gives users access to an A.I.-powered virtual assistant that can send messages, search the web or take photos. It is complemented by a laser that projects text onto the palm of a user’s hand for tasks like skipping a song while playing music. It also has a camera, a speaker and cellular service.”

Salesforce CEO Benioff invested. So did OpenAI chief Sam Altman. Softbank and Tiger Global pitched in. The company raised more than $1 billion. They all apparently bought into the idea that AI pins would disrupt and replace smartphones.

But it fails the adjacent possible test. The adjacent possible is a concept borrowed from Steven Johnson’s book Where Good Ideas Come From. In our category design work, we use a modified version. In the graph below, the vertical axis is “what technology can do.” Horizontal is “what society can adopt.”

The green space, then, are things that exist, work, and have been accepted into our lives – smartphones, Bluetooth headsets, electric cars, TVs, microwave ovens and so on. The blue space is stuff that doesn’t really exist outside of a lab. The technology is untested, and we can’t get our heads around its use cases. You could put quantum computing firmly in the blue.

The border between those two, as Johnson explained, is the adjacent possible. Innovations catch on and change our lives when they land there. When a product or service nails the adjacent possible, it pushes the technology and creates something cool and new but it also works. And it pushes us all to adopt something cool and new that also seems relevant and understandable. That describes, for instance, the iPhone in 2007 and ChatGPT in 2022.

Introduce a product in the green “existing” space, and it’s probably a not-so-exciting incremental improvement on something we already use. Introduce a product in the blue “not ready for prime time” space, and it’s going to be too far ahead of its time. It likely won’t work well, won’t have an ecosystem to support it, and won’t seem worthwhile to anyone but tech gadget geeks.

A company that bets on a product too far into the blue almost always runs out of money before finding success. It gets the booby prize of being hailed as a visionary once that same thing succeeds a decade or two later – after the tech and the public have caught up.

From the first story I read about Humane’s Ai Pin, it seemed obvious it was too far into the blue – obvious it wouldn’t get traction in any near future. In fact, the company has struggled to make the technology work, as the Times story detailed. People in general are quite enamored with their smartphones, and so are years away from understanding why they’d want an AI pin to replace those phones.

As a result, Humane has no real market to sell into, and no healthy ecosystem of suppliers, developers and partners. The company is sputtering, top executives are leaving, and the press is eating it alive.

While we’re at it, we can try the other test: Does the pin solve a real problem that real people have now? Quick answer is: no. Perhaps the problem could be defined as having to carry around a 7-ounce powerful connected computer that fits in your pocket or purse. Are we desperate to ditch that for a wearable pin that can’t do a fraction as much?

Good tech businesses solve a real problem. Bad tech businesses get enamored with technology looking for a problem to solve.

Which brings us to Apple’s Vision Pro.

Yeah, it’s cool. But here’s the headline on a recent Forbes story: “Apple’s Vision Pro Is Amazing But Nobody Wants One.” The story points out: “This year Apple is now anticipating selling only around 450,000 Vision Pros, far short of their first-year target of 800,000. Compare that to the 73 million Apple iPads that sold in their first year.”

True, the Vision Pro may actually land near the adjacent possible. Apple has made the technology work, although it is bulky and expensive for what it does – kind of like early PCS or earliest cell phones. As for the horizontal axis – adoptability – we’re not there yet as a society. Most people don’t feel a pressing need to put on big goggles every day and disappear into a virtual world.

The “problem” test is a bigger issue for Apple. The Vision Pro is technology in search of a problem. Headline on a Financial Times story this month: “Apple seeks ‘killer app’ for its $3,500 Vision Pro headset.” That’s never a good sign. It means it’s a toy and little more.

Steve Jobs had always been good about showing us the problem his new products solved. The first Mac was a “computer for the rest of us” – because, as he showed us, PCs before that were too technical, corporate and uninviting. The iPhone combined a phone, computer, music device and internet device into one integrated gadget, solving the problem of owning and carrying all those separately. Yet when Cook unveiled the Vision Pro, his presentation was all about how cool it was instead of why it mattered.

Good products solve a real problem. Bad products get enamored with technology looking for a problem to solve.

I’ve seen these big whiffs happen – and wrote about them as a journalist – over and over. General Magic is a legendary example. Founded in 1990, it was essentially trying to build the entire consumer internet way ahead of the adjacent possible. It got a lot of the concepts about the web and mobile devices right, but too early to make the technology work or convince the public it was worthwhile. Like the Vision Pro, it was cool but didn’t solve anyone’s real problem – just a toy. Yet Motorola, Sony, AT&T, Goldman Sachs and Japan’s telecom giant NTT all invested or signed on as partners. Apple took a minority stake and then-CEO John Sculley joined the board.

The product and service never really worked. The actual internet bypassed it. By 1999 General Magic was collapsing and it shut down in 2004.

Teledesic, founded in 1994, was an attempt to build essentially what today is Elon Musk’s Starlink – but, again, too far ahead of the adjacent possible. At a time when most people were just discovering the internet on desktop PCs plugged into a modem, the public didn’t understand the problem of, “Why don’t I have mobile internet?” Teledesic was initially funded by Gates and cell phone billionaire Craig McCaw and it brought in Boeing, Motorola, Lockheed Martin and a Saudi Prince who alone put in $200 million. The company shut down in 2002 and never got operational.

Segway – same kind of story. Founded in 2001, Doerr, then one of the hottest VCs in Silicon Valley, and Bezos both invested. Jobs predicted it would revolutionize cities. You could argue that the original Segway met the adjacent possible test. It was a technological marvel that both worked and wowed the public. But it utterly failed the “what problem does it solve” test. Few people felt they needed one. Even now, the main problem it seems to solve is to help tourists who don’t want to walk see the sites.

Segway was bought by a Chinese company in 2015, which shut down production of the Segway “personal transporter” in 2020.

You may be thinking: If people like Bezos, Benioff and Gates make these blunders, what chance do the rest of us have? But the two tests in this article can help a lot. Next time you are introduced to a big, cool, futuristic product or business idea, try to place it on the adjacent possible chart – where does it land at the intersection of what technology can do and what people can adopt? Then ask: What problem does it really solve, and does that problem matter?

Of course, there will be some exceptions to the rule. But most of the time, if you’re looking at something that doesn’t meet those two tests…you might want to walk away.