HP Layoffs and Raises: Inside the Humane Acquisition

Humane's Acquisition by HP and its Impact on Employees

Humane, a former frontrunner among AI hardware companies in Silicon Valley, revealed on Tuesday that it would be acquired in part by HP for $116 million. This figure represents less than 50% of the $240 million in venture capital funding the company had previously secured.

A Day of Uncertainty for Humane

The acquisition announcement brought a particularly turbulent day for Humane’s approximately 200 employees, according to internal documentation reviewed by TechCrunch and corroborated by two individuals who wished to remain anonymous.

Following the announcement, numerous Humane employees were presented with employment opportunities from HP. These offers included salary increases ranging from 30% to 70%, alongside HP stock options and bonus incentives, as sources indicated.

Selective Job Offers and Workforce Restructuring

The job offers were primarily extended to employees involved in the development of the company’s core software. However, it was also noted that not all software engineers received offers of employment.

Conversely, other Humane employees, particularly those directly associated with the Ai Pin device – including those in quality assurance, automation, and operations – were informed on Tuesday evening that their positions were being eliminated.

HP's Strategic Acquisition of AI Talent

These selective job offers underscore HP’s primary interest in acquiring Humane’s skilled team of AI software engineers. Professionals capable of developing applications around AI systems are currently in high demand throughout Silicon Valley.

While the Humane team did not focus on creating AI foundation models from the ground up – a task undertaken by companies like OpenAI and Google – their expertise remains highly valuable. Securing such talent presents a challenge even for established companies like HP.

The Formation of HP IQ

The companies jointly announced that a new innovation lab within HP, named HP IQ, will serve as the new home for Humane’s co-founders, Imran Chaudhri and CEO Bethany Bongiorno. It will also incorporate Humane’s AI operating system, CosmOS.

This new division will concentrate on integrating artificial intelligence technologies into HP’s range of products, including personal computers, printers, and connected conference room solutions.

Public Reaction and Employee Sentiment

The news prompted reactions on social media, with some users commenting on Humane employees transitioning from a high-profile startup to more conventional roles at HP, such as developing AI-enhanced printers.

However, one source revealed that the offered positions, with their improved compensation packages, were viewed positively by many of those who received them.

The Unexpected Announcement of HP’s Acquisition of Humane

The acquisition of Humane by HP wasn't unforeseen by those working at Humane. Reports surfaced in June, as detailed by The New York Times, indicating Humane’s intention to be acquired by HP for a valuation exceeding $1 billion, although the eventual transaction value proved to be considerably lower.

Prior to the official announcement, Humane’s management had alerted certain staff members to anticipate significant developments by the end of January, as one individual revealed.

However, the formal notification wasn't delivered until mid-February. Employees received minimal advance warning regarding the finalized agreement or the planned cessation of the Ai Pin project.

On Tuesday, around midday Pacific Time, Andie Adragna, Humane’s chief of staff, circulated a Google Meet invitation for a spontaneous, all-hands meeting scheduled within a few hours, as evidenced by internal communications reviewed by TechCrunch. This meeting was held at Humane’s San Francisco headquarters and simultaneously broadcast to remote team members.

During this meeting, Bongiorno informed the staff about the acquisition proposal shortly before the joint press release from Humane and HP became public, according to a source.

A subsequent company-wide meeting on the same day saw Bongiorno elaborate that employment opportunities at HP IQ would be extended to select individuals, while others would not receive offers.

Following this, numerous Humane employees were informed of their termination via email on Tuesday, with their access to company networks immediately revoked, another source stated.

The precise number of Humane employees impacted by these layoffs remains unknown. Both HP and Humane have not yet responded to inquiries from TechCrunch seeking clarification.

A Challenged Beginning for an AI Hardware Venture

For some time, indications suggested that Humane’s business was encountering difficulties.

Initial reactions to the Ai Pin from early evaluators were largely unfavorable, significantly impacting employee morale. Subsequently, the device’s charging enclosure was temporarily identified as a potential fire risk. Further compounding these issues, the company’s lead of product engineering departed in July to establish a new venture alongside other Humane executives.

Escalating Problems and a Price Reduction

The situation deteriorated further as the number of Ai Pin returns began to exceed sales figures. This likely contributed to the decision to lower the price of the Ai Pin from $699 to $499.

Following the announcement of the acquisition, Humane advised customers to “recycle” their $499 Ai Pins, stating that functionality would largely cease within a fortnight.

A Qualified Success?

Despite the challenges, some within Humane consider the company’s journey a relative success for a startup.

The majority of startups do not achieve sales of thousands of units, garner national media coverage, or secure acquisition for a substantial sum. Employees generally understand the inherent risk of failure when joining such ventures, yet pursue their goals nonetheless. In Humane’s instance, a segment of the workforce is being offered lucrative positions at HP and the opportunity to continue projects initiated at Humane.

The Broader AI Wearables Landscape

Notably, the Ai Pin, designed with the ambition of superseding the smartphone, has ceased operations as other AI-powered wearables are gaining traction.

Meta’s Ray-Ban smart glasses, incorporating AI capabilities, continue to demonstrate strong sales, and the company is preparing to launch updated models later this year. Rabbit’s R1 became available in Best Buy stores this week, expanding access to a wider consumer base. Additionally, anticipation remains for the release of Friend, another AI startup focused on developing a wearable device to combat feelings of isolation.

Perhaps most strikingly, Apple unveiled a $599 iPhone model this week that integrates numerous AI features, echoing functionalities of the devices that Humane aimed to supplant.

Timing and Future Prospects

The Ai Pin was almost certainly a product launched prematurely – the central question now revolves around the extent of that timing miscalculation.