The rise and fall of Rabbit R1: why is there so much hype around the $200 orange device?

"R1 right now is the best-selling AI device to date. No question about it," stated Jesse Lyu, founder of Rabbit, at the launch keynote this April. He also said that the R1 is the only native AI device that doesn't require a subscription, alluding to competitor Humane's AI PIN that comes with a $24 monthly subscription.

Rabbit R1 has been in the news for the past week after the company shipped the device to early users and tech reviewers. The firm managed to get more than 100,000 preorders and over $20 million in revenue. From a business perspective, it seemed like a solid start.

However, many users and reviewers have noticed that the device is buggy, its battery doesn't last long, and it lacks basic functionality. Even worse, Mishaal Rahman recently found that the entire interface is powered by a single Android app, posing the question of why Rabbit R1 needs hardware at all.

It’s possible that the R1 will end up in the same category as the AI PIN – hardware that no one actually needs.

So, why was there so much hype around the $200 orange device? And who is Lyu, the guy behind the R1? Maybe there’s a future for the device after all? Let’s dive in.

From Baidu to Raven

Lyu isn't a novice in the tech world. His first startup, Raven Tech, was founded in 2014 and participated in Y Combinator, the best startup accelerator in the world.

Raven Tech created conversational AI operating systems before large language models (LLMs) – which underpin chatbots like ChatGPT – were even a thing.

Raven Tech, according to CB Insights, managed to get $18 million in funding from VCs. During the first few years, the company developed an AI voice assistant that was launched in an app called Flow.

According to Tech in Asia, Flow was one of the first apps in China to let users get a cab using voice commands. However, it ultimately failed to compete with virtual assistants from Baidu, Xiaomi, and Apple's Siri.

In 2017, Raven Tech was bought by Baidu – the Chinese version of Google – for around $90 million. Under Baidu, the company developed smart speakers called Raven H in collaboration with Swedish company Teenage Engineering, which later designed the Rabbit R1.

Raven's smart speakers really stood out from the rest. While other companies made them in the form of a cylinder, Raven H was made of 8 squares stacked on top of each other. The top speaker could be tilted to become an LED display, removed, or used as a portable microphone. This product, powered by Baidu's DuerOS, was only available in China and cost around $260.

However, the product wasn't successful. Sales were poor, and the company sold less than 10,000 devices. According to The Information, there were also initial disagreements with Baidu on whether to sell a high-end device or the one aimed at the masses.

Raven Tech, under Baidu, also developed Raven R Smart Robot, also in collaboration with Teenage Engineering. It was called the world's first automated six-axis robot but was never released.

The development of R1

Lyu left Baidu in 2018 and moved to San Francisco, where a few years later, he started his own company called Rabbit, which to date managed to attract at least $30 million from Khosla Ventures and other investors.

Lyu started the creation process of the R1 by ordering Tamagotchis – the once-popular digital pets from Japan. He bought one for each of his team members because he wanted his device to feel fun rather than dystopian, he told Fastcompany.

According to Inverse, before founding Rabbit, Lyu was called by Sam Altman, the founder of OpenAI, who wanted to show him what the company was developing. This conversation led to Lyu testing an early version of GPT-3 and later deciding to create his own large action model (LAM).

LAMs are considered to be one step further than LLMs since they can accomplish tasks without the need for bespoke integrations like APIs. LAMs can create agents – software units that run tasks instead of just answering questions. Lyu called them rabbits. As he puts it, LAM can learn how to use any software it encounters and improve over time.

After three years of creating its LAM and software, and only a couple of months prior to the introduction at this year's CES, Rabbit started designing the R1. Its previous collaboration with Teenage Engineering clearly helped to speed up the process. As Lyu explained to Inverse, the design process took only 10 minutes.

It was harder to communicate with hardware makers. Because of a miscommunication with the flash storage manufacturer, the Rabbit R1 version in March was shipped with 128GB internal storage instead of 32GB. The device also got 4GB of RAM and was powered by a 2.3 GHz MediaTek processor.

Future promises

The R1 generated a lot of buzz at this year's CES. It rode a wave of AI popularity and sold a future vision of Rabbit being your cute virtual assistant that could control apps for you using voice commands. However, four months down the line, this hasn’t been the case at all.

There are only four apps you can use with the R1 without your phone: Spotify, Midjourney, DoorDash, and Uber. During the launch event, Lyu demonstrated how you can play a song, order a cab, and create an image via MidJourney. He admitted that you can also do these things via your phone.

"There’s no shame for us to show features like that because no one has this structure yet, and it is not through API or SDK – this is LAM directly operating as Rabbits or, as some people call them, agents," he said.

Even before the launch, some users criticized the R1, saying that there’s no need for a device that simply mimics things that can be done with a smartphone. This criticism only increased after M. Rahman installed the R1 APK onto a Google Pixel phone and set it up as if it were a Rabbit R1.

Lyu denied that it’s basically an app, explaining to AndroidAuthority that "rabbit OS and LAM run on the cloud with very bespoke Android open source project and lower level firmware modifications." He also said that rabbit OS is customized for R1.

During the launch keynote, Lyu promised that there would be further updates to the R1, including a Teach mode, which would enable users to create their own agents. He also talked about personalized computing that would enable users to create an interface that can be adapted to their needs. In essence, Lyu promised to create "the simplest computer that you don't need to know how to use."

However, for now, after many failed promises and a bunch of negative first impressions, this vision seems more like a fairytale than reality. At the moment, the R1 is just a cheaper version of the AI PIN, without the subscription.