Startup Reportedly Claimed Fake Clients as Its AI-Powered Sales Bot Flailed

You've probably heard that AI is going to revolutionize work. That's according to tech tycoons, corporate stenographers, and excited venture capitalists — the folks polluting the air we breathe in order to stuff the internet full of AI-generated slop. After all, who's more qualified to understand the essence of a hard day's work?

But however much AI hype they drum up, the tech keeps running head-first into reality.

Look no further than a new investigation by TechCrunch, alleging a rampant pattern of sketchy behavior by a startup called 11x, a rising star in the AI automation game. 11x's bread and butter is an AI-powered sales robot that's said to place phone calls, scrape data, and schedule meetings without any need for pesky human input. Called the "the leader in AI-powered digital workers," 11x pulled millions in funding over several investor rounds by promising a "new model for how work gets done," according to Joe Schmidt, a partner at Andreessen Horowitz, a major investor in 11x.

But investors won't just throw their money at anything — they want to see that tech companies like 11x can actually get clients and make money. To court their backers, TC writes, 11x showed them just that by fabricating customer endorsements, which were then parroted in investor pitches, on its website, and in AI robocalls.

This is despite what TC sources say was a mass exodus of early adopters thanks to the AI's annoying habit of hallucinating client info and dropping scheduled meetings. As one former engineer put it: "the products barely work."

In order to keep investors as clients fled for the hills, 11x is said to have gotten creative with its accounting, lumping broken contracts in with ongoing customers. On paper, this dramatically boosted 11x's profile, giving outsiders the impression that the startup's salesbot was much more successful than it really was, to the tune of $10 million in revenue in its first two years of operations.

"We were losing 70 to 80 percent of customers that came through the door," an employee of the startup told TC, allowing 11x to "look like it’s doing better than it is."

On top of all this, 11x employees faced what sound like downright awful working conditions, regularly pulling 60 hours a week, working weekends and holidays, and expectations to be available nearly 24/7. That pressure led to burnout and a constantly revolving door, which might explain why some two dozen former employees and investors were willing to air their laundry to TC.

The 11x debacle is just the latest incident confirming that the "AI revolution" is currently little more than marketing hype. Other products meant to integrate into the workplace have been a disaster, like the medical transcription AI that hallucinates patient info, or Air Canada's chatbot that made up nonexistent policies. Last year in the world of sales, a ChatGPT-powered bot agreed to sell a brand new Chevy Tahoe for just $1.

If AI is the future of work, someone better tell tech companies to clock in — before the hype train leaves for good.

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