Key Takeaways:
- This week’s high-profile collapse of Humane, and the further fragmentation of frontier models, provide case studies on the risks of high-wire bets on AI – wearable and otherwise.
- The US Securities and Exchange Commission (SEC) has announced it will pause its legal defense of a rule that would have required domestic companies to make climate disclosures that the agency now describes as a threat to “capital markets” and the American economy.
- Absent the legal obligation to disclose, brands now face a starker analysis around how far consumers really shop with their consciences – and how technology and process investments aimed at building the data foundations for due diligence should be justified.
As bullish as everyone is on AI, fashion must recognise that risk is a different calculus for established and heritage brands than it is for pure-play tech companies.
Humane, the startup behind the wearable AI Pin that graced the runway in partnership with Coperni less than eighteen months ago, will be finished next Friday. On Tuesday, the company announced that it’s ’selling parts of its business – i.e. the parts that actually seemed to work, which were basic cloud services under the “CosmOS” banner, and a mix of talent, IP, and patents and applications – to HP for $116 million.
On the 28th, every AI Pin sold will essentially cease to function and become the latest eddy in a growing tide of general eWaste. But the story is also a timely warning for fashion companies with AI ambitions.
On its own merits, Humane is a spectacular fall from grace. The company secured $240 million in early funding from major investors, including Salesforce CEO Marc Benioff and OpenAI’s Sam Altman, and reached a valuation of $850 million before even unveiling a product. Six months or so ago, its founders were hoping to sell the company for between $750 million and $1 billion.
A seventh (or a tenth) of that target exit is not just a gigantic slump in an individual company’s worth – it’s a straight counter to the notion that AI businesses are intrinsically valuable. And it’s a caution in particular to organisations that aim to pair AI with new product categories in personal and wearable devices.
Because technically this kind of plunge is nothing new for Silicon Valley and valley-adjacent companies. The headlines – Theranos, Wework, FTX – are all about vertiginous valuations that quickly leak away to nothing, but for every one of those there are tens or hundreds more stories of smaller startups that boom on a big idea and then bust afterwards.
Nobody remembers the names of the smaller, shorter-burning startup stars, because they were single-idea vehicles designed to soar or collapse – nothing in between. And even though two of those three high-profile founders are now in prison, the one who isn’t stands a good chance of getting to do it all again.
In tech and startup culture, memories are short. But fashion brands – especially the ones that have the resources and the ambitions to be thinking about building AI experiences and services, wearable tech products, and combinations of the two – are specifically designed to last.
Consider this: a year or two from now, Humane will be the gadget community’s easiest joke (the new Juicero!) but its founders will be working at HP on something new, and the Humane name is not attached to any other products that a parent company still wants people to buy. A storied fashion brand operates in the opposite scenario; a hypothetical household name renowned for its apparel, for example, shouldn’t expect to be able to launch an AI wearable, shutter it a year later, and still have loyal shoppers buy into its sustainability and circularity credentials.
Or, to put it another way, if the Meta Ray-Bans fail to take off on the scale that people clearly predict – see our wearables analysis from a fortnight ago – and has its AI features sunsetted, which of those two brands takes the biggest hit? The original “move fast and break things” company that’s done exactly that for twenty years? Or the historic eyewear giant that sold its long-term devotees a nice-looking paperweight? The Interline would argue it’s probably not the former.
And this thought experiment isn’t confined to current or prospective hardware. In 2025 it’s less clear than it’s ever been which AI research companies or model providers will emerge on top as the infrastructure providers of tomorrow they obviously want to be. A year ago, OpenAI or Google seemed like logical bets; now we have a raft of open source models and commoditisation happening, and spin-offs from OpenAI are attracting valuations that eclipse the likes of Humane.
Safe Superintelligence, an AI startup founded by former OpenAI chief scientist Ilya Sutskever, could be close to raising more than $1 billion at a $30 billion valuation; and former OpenAI CTO Mira Murati this week announced her new startup – called Thinking Machines Lab – also focused on frontier AI.
On this basis, even the current safest bet – building products and services with the top models in mind – may not stand the test of time, and for fashion companies hoping to create with AI, the ghost of Humane will be looming over their shoulders, encouraging some additional reflection.
The SEC is walking back climate disclosure rules. What do fashion brands who’ve invested in processes and tools for transparency do next?
Just last week Mark Uyeda – the acting chair of the Securities and Exchange Commission (SEC) – took a step toward undoing a rule that would have mandated thousands of publicly traded companies to disclose detailed information on how their operations affect the climate and the environment, reported the New York Times.
That rule would have mandated companies to assess and disclose how their operations contribute to climate change, particularly through the production of greenhouse gases that accelerate global warming. Companies were to have included this data in regulatory filings to help investors gauge the potential risks to their investments. Companies would have been required to disclose the financial costs associated with efforts to reduce their environmental impact.
In an SEC statement, Mr Uyeda called the rule “deeply flawed” and added that it “could inflict significant harm on the capital markets and the [US] economy.” Or, in other words, the well-worn concern that sustainable companies are less competitive, and that transparency and due diligence are heavy burdens for enterprises to counterbalance against their growth ambitions.
The Interline is, in some ways, sympathetic to the idea that disclosure requirements can set a very high bar for compliance in an industry where the average standard of scope 3 supply chain visibility is scant. The distance from the aggregate “here” to the mandatory “there” can feel huge. But at the same time, the environmental and ethical imperatives to act (at least in the civic sense) are incredibly strong, and tools to aid in mapping, measuring, and modelling are more readily available.
What this modification to the US rule (or it being rescinded completely) has the potential to do, though, is change the tenor of the conversation around climate impact assessment and accountability.
Organisations that have already made public commitments and tangible progress are, by and large, likely to keep doing so even if no law directly compels them – but they may also face questions internally about where the return on sustainability initiatives will be measured.
Companies that have held off on setting similar targets will, well, continue to hold off – more than likely working from the assumption that if consumer attitudes to transparency haven’t changed purchasing practices thus far, they’re not likely to change it now.
But what about the fashion companies that have seriously invested in technology and process improvements to get ahead of rules and compliance that they saw as inevitably coming? How will they look at these prior investments if reporting requirements continue to be softened?How will they feel about deepening them?
While not a direct analogue, there is precedent in the EU, where there are pieces of legislation that are expected to be softened and diluted before adoption, namely the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Companies that spent ahead of time to be ready to comply with the letter of those legislations are now, of course, prepared to meet them in spirit – but they may also be feeling aggrieved that they invested in solving a bigger challenge than the one they now face.
Some brands will have strong reasons to stay the course that do not have direct roots in regulations. Consumer loyalty, core values, upselling, and longer-term vision in terms of sustainability and responsibility are all still potent forces. Others, though, may see this as an opportunity to quietly retreat and scale back sustainability (and sustainability tech) initiatives that could have some of the wind taken out of their sails.
Best from The Interline:
Originally published in The Interline’s DPC Report 2024, our Editor-in-Chief explains why DPC is not done yet.
Even the clearest, most compelling strategic vision for digital product creation relies on the design community for execution. Experience tells us, says Elizabeth Reeds, there are some proven ways to secure creatives’ support.
The results of The Interline’s & Bamboo Rose’s Sourcing & Supply Chain Survey Report were published this week. Discover how accelerating digital transformation, AI adoption, and shifting sourcing strategies are reshaping transparency, efficiency, and resilience in global supply chains.
Faced with an unpredictable outlook, fashion businesses that have adopted – or even experimented with 3D and DPC – could be sitting on valuable pieces of a solution to the industry’s most acute challenges.