Nate: A Startup That Promised the Future But Delivered the Past
In the high-stakes world of AI startups, few stories are as shocking as that of Nate. The U.S. Department of Justice has charged Albert Saniger, founder and former CEO of Nate, with defrauding investors. The startup had promised a futuristic AI-powered shopping experience. But as it turns out, the tech behind it was far from what was advertised.
Nate launched in 2018 with a big dream: to simplify online shopping using artificial intelligence. The idea was appealing — an app that lets users check out from any online store with a single click. Investors quickly got on board. Big names like Coatue and Forerunner Ventures poured in over $50 million, with $38 million raised in 2021 alone.
However, reality painted a different picture.
The AI That Wasn’t
According to the DOJ, Nate’s promise of “AI-driven checkout” was mostly smoke and mirrors. The system didn’t rely on smart algorithms, but rather on human contractors working from the Philippines. These workers manually completed user purchases behind the scenes.
While the company claimed its AI needed humans only in rare cases, prosecutors now say that automation was nearly nonexistent. The DOJ alleges the automation rate was essentially 0%, despite Nate hiring data scientists and acquiring some AI tools.
Investors Left in the Dark
Saniger’s claims of full automation helped him raise millions. But those funds didn’t go toward building out robust AI. Instead, Nate depended on human labor while giving investors a very different story. The indictment highlights how Saniger’s misleading claims led to “near total” losses for investors. By early 2023, Nate had run out of money and was forced to sell off its assets.
Saniger quietly stepped down as CEO that same year, though his LinkedIn profile now lists him as managing partner at Buttercore Partners, a New York venture firm. Neither he nor the firm responded to press requests for comment.
The Illusion of Automation
This isn’t the first time an AI startup has come under scrutiny for overpromising. In 2022, The Information revealed that Nate relied heavily on manual labor. Other startups have faced similar criticism. In 2023, The Verge reported that a supposed AI-powered drive-through was mostly operated by humans. More recently, Business Insider exposed how EvenUp, an AI legal tech firm, used humans for much of its output.
These stories raise questions about how startups present AI to investors and users. The race to build the next big thing often leads to bending the truth. In some cases, it leads to fraud charges.
The Broader Picture: AI’s Hype Bubble?
Nate’s collapse shows how dangerous the hype around AI can be. Many startups label themselves as AI-powered, hoping to attract funding and media attention. But without proper oversight, it’s easy to blur the line between innovation and misrepresentation.
As AI becomes a buzzword, investors must dig deeper before backing ambitious claims. And users deserve transparency. Trust in technology depends on honest communication, not just clever marketing.
What Happens Next?
Albert Saniger now faces serious legal consequences. If convicted, his case could set a precedent for other AI startups under the microscope. It also sends a clear message: claiming to use AI when you don’t isn’t just unethical, it could be criminal.
As the tech world continues to evolve, it’s vital to separate true innovation from smoke and mirrors. This case reminds us that behind every flashy app and bold promise, the truth matters more than ever.
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