NOT AI

How not to Scale

ScaleFactor is a cautionary tale of overpromising and underdelivering with AI. 

The Austin, TX, startup set out to automate bookkeeping, financial forecasts, and other back-office tasks. Last month, it told Forbes it was shutting down because the pandemic had wiped out nearly half of its annual recurring revenue. After more digging, Forbes reported Monday that the startup’s problems predated the pandemic. 

The backstory

ScaleFactor’s efforts to automate away the accountant didn’t work. 

Customers say ScaleFactor didn’t deliver the automated, real-time bookkeeping tools it promised. In fact, it often relied on traditional bookkeepers and hired a Filipino contract accounting firm. Investors realized ScaleFactor was “more of a services business than a software platform,” per Forbes.

In January, ScaleFactor pivoted to an Uber-esque marketplace model where it would serve as an intermediary between accountants and companies. Investors pulled the plug a few months later. 

Artificial artificial intelligence

Plenty of founders, sales departments, and marketers slap the AI label on their products. This was especially popular in the 2010s as AI took off as a technology and a buzzword. 

But there are fresher examples. From 2019, to wit: 

• Engineer.ai, a SoftBank-backed startup, claimed to automate mobile app development. In reality, the WSJ reported it primarily relied on outsourced developers.
• Forty percent of European “AI startups” didn’t actually use the technology, according to a London VC’s survey. 
• Every FAMGA company was caught using contractors or employees to transcribe voice snippets meant for virtual assistants or automated transcription tools. 

For FAMGA, the human legwork makes natural language processing and voice recognition systems better (through labeled data). It’s a controversial means to an end, but humans were in the loop to improve AI that exists. 

In the other cases, startups exaggerated capabilities they didn’t have. It’s disingenuous, but also unsustainable. The business can’t achieve the unit economics or scalability of AI software, unless it’s bought itself time to build the tech stack it’s describing.

AV

Howdy, Aurora

On Monday, Aurora announced it’s setting a “small” fleet of autonomous test vehicles loose in the Dallas-Fort Worth Metroplex. I’m currently holed up in DFW and will drive around until I find one. I will find one. 

Refresher: Aurora is developing a vehicle-agnostic virtual “driver” and its own lidar systems. Chris Urmson, who Reid Hoffman called the “Henry Ford of autonomous vehicles,” cofounded the Sequoia-, Hyundai-, and Amazon-backed startup.

Go-to-market takeaways

Bigger is better: Aurora is bringing Pacifica vans and Class 8 trucks to DFW. I’m especially interested in the latter, since the startup has confirmed its first commercial product will be in trucking, “where the market is largest today [and] the unit economics are best”. 

• TuSimple, which recently announced an autonomous freight network, has a head start in Texas.

The stars are bright: Texas has large cities, relatively lax regulation, AV-friendly weather, and huge freight corridors. Along with California and Arizona, Texas will be an early autonomy adopter, with Ford/Argo in Austin, Nuro in Houston, Aurora in DFW, and TuSimple and Waymo trucks around the state. I will find them all. 

SPONSORED BY ORACLE NETSUITE

Financial Closes Are Forever

Keeping up with the modern economy means adapting to modern financial processes. In this white paper, Oracle NetSuite lays out why the “continuous close” is so crucial for your business.

As Tom Kelly—Senior Director of Product Marketing and Management at Netsuite—explains, financial closing processes having beginnings, middles, and ends is going the way of the Dodo.

If you want to run a successful modern team, then you need cutting-edge, modern processes. In Mr. Kelly’s white paper, you’ll find out all about the all-powerful continuous close.

You’ll learn how a modern continuous close should look and be defined. You’ll learn why centralizing finances is a key factor for a smooth books-closing. You’ll learn why disparate platforms and systems inhibit a continuous close. 

You won’t learn how many inches of rain falls in the Russian tundra every year.

Your business needs a continuous close. Here’s how to do it, courtesy of NetSuite.

SUSTAINABILITY

The Next Update: no Carbon

Yesterday, Apple said it wants to be completely carbon neutral by 2030. That includes corporate operations, product manufacturing, and its whole supply chain. 

• Product design: Apple will build its electronics with more low-carbon and recycled materials. 
• Supply chain: The company will invest in efficiency upgrades at overseas facilities. 
• Clean energy: Apple is directing suppliers to upgrade to renewable energy. Its corporate operations already run on 100% renewables. 
• Dave: Most importantly, Apple will use a robot named “Dave” to disassemble and recover components from discarded iPhones.

Piggybacking off Apple’s announcement, Microsoft also shared sustainability updates on Tuesday. The company aims to be carbon negative by 2030. 

The commitments are sizable for both companies. Tech carbon footprints are mainly out of sight of the average consumer or business customer. Hundreds of millions of devices are produced and shipped annually; most of the lifecycle is shielded from the consumer. And cloud customers don’t see always-on, power-hungry data centers.

Zoom out: Decarbonization is Episode 111 of “tech companies are governments.” Contact tracing was Ep. 110.

BITS & BYTES

Stat: LinkedIn said yesterday it would cut 960 jobs, roughly 6% of its workforce. In total, 537 tech companies have laid off nearly 72,000 people since the pandemic started, per Layoffs.fyi.

Quote: “On average, Snapchatters opened Snapchat over 30 times every day in Q2 2020.”—Snap. 

Listen: Andrew Yang on Business Casual.

SPONSORED BY VETTERY

Get paid to find your next unicorn role. Vettery is an online hiring marketplace created for those who work in tech or sales. You’ll be matched directly with hiring managers in your field. It’s free to use and you even get a $300 bonus if you accept a job through Vettery. Get started today.

WHAT ELSE IS BREWING

• Intel’s Mobileye will supply automated driving technology to Ford. 
• Amazon is expanding trials of its delivery robot, Scout, to Atlanta, GA, and Franklin, TN.
• Marc Levoy, a researcher who led computational photography efforts for Google Pixel, has joined Adobe to build a “universal camera app.”  
• China may punish Ericsson and Nokia if the EU bars Huawei gear from its 5G networks, the WSJ reports. 
• TikTok tells Axios it plans to create 10,000 American jobs over the next three years.
• Netflix is available on Nest smart displays.

TRIVIA

You’d be hard-pressed to find a topic that’s been in the news as much as TikTok recently Today’s trivia tests your knowledge of the app. If you’ve been reading this newsletter diligently, you should be able to ace this.

Take the quiz here.

TECH THINGAMABOBS

For calm: Snap is rolling out Headspace Mini. It’s one of the first HTML mini apps built within Snapchat. Meditating with friends is probably something we could all use right about now. 

For AI + cake: A developer built an image recognition app to tell you whether or not the object in your picture is cake. 

ICYMI

Catch up on the top Emerging Tech Brew stories from the past few editions: 

• GPT-3, the buzz generator
• European Court of Justice strikes down Privacy Shield
• Breaking down Twitter’s breach