The tech world is full of whispers about Builder.ai, a company that was once hailed to revolutionize software development using the prowess of artificial intelligence. A success story has become a cautionary tale of overpromising and underdelivering, with investors, clients, and the general AI world asking themselves what is real and what is clever marketing.
Builder.ai caused a stir with an offer that no one could refuse: it would be as simple as ordering a pizza on the internet to have custom-made software. The company, which was co-founded by Sachin Dev Duggal, promised that their AI-based platform would remove the hassle and cost of creating apps.
Builder.ai: The AI Dream or Human Reality?
Startups and small companies flocked to the service, enticed by the prospect of having professional-standard software with none of the inconvenience.
The momentum of the startup appeared unstoppable. Microsoft gave the company its seal of approval in a significant investment, and Builder.ai received the credibility injection that can only be hoped for by tech startups.
The awards came quickly: “Hottest AI Startup” at The Europas and high-profile speaking opportunities at leading tech events such as CogX cemented the perception of a company that had solved the secret to automated software development.
Cash flowed in from everywhere. Builder.ai raised a whopping $250 million Series D funding round from the Qatar Investment Authority, after a $100 million Series C funding round from Insight Partners.
Throughout the pandemic, their “Studio Store” – a catalog of pre-existing apps for small businesses in dire need of going digital – was a lifeline for thousands of businesses struggling to stay afloat during lockdowns.
But behind the slick marketing brochures and blockbuster funding rounds, another story was being told. Several reports now indicate that Builder.ai’s revolutionary AI technology was not as revolutionary as claimed.
Rather than high-level algorithms spewing out code, the company reportedly used an old-fashioned army of human coders, some based in India, to actually write the software their clients ordered.
This realization hits at the very core of why Builder.ai was exciting to investors and customers. The promise wasn’t merely development at a faster rate, it was about revolutionizing the way software is created.
If human developers were actually doing the heavy work all along, then Builder.ai was merely functioning as a standard software development agency with a very new marketing approach.
Builder.ai’s Tumbling House of Cards
Builder.ai’s house of cards came tumbling down financially when one of its biggest lenders, Viola Credit, withdrew $37 million from Builder.ai’s accounts.
This move put the company in default on its loans and left just $5 million in the bank for its new CEO, Manpreet Ratia, who had been in the role for two months. Ratia then filed for insolvency, the end of Builder.ai as financially healthy as investors and customers had ever known it.
The reaction has been quick and ferocious. Microsoft and other high-profile backers have reportedly severed their relationships with the firm, no doubt fearful of their own reputations being tarred alongside it. The real victims, though, are Builder.ai’s own customers – many of them small businesses and young startups who placed their online destinies in the firm’s hands.
These clients are now in an impossible situation. Some are hurrying to reclaim their software projects, and others are trying to port their apps onto other platforms entirely. To small businesses that had spent significant time and money in Builder.ai’s environment, this disruption would be catastrophic.
The Builder.ai narrative is part of a larger conversation about transparency and accountability in the world of AI startups. While artificial intelligence stimulates massive investor interest and consumer frenzy, the allure to hype or distort capability or technology has never been stronger. Businesses are under enormous pressure to become labeled AI-first, even when the reality is less sensational.
This scandal is a reminder that revolutionary claims need revolutionary evidence. While AI continues to revolutionize industries and deliver real value, the Builder.ai debacle reminds us what happens when technology is preceded by so much hype.
To customers, investors, and the AI community at large, it’s a pricey reminder to look beyond the hype and figure out what’s actually driving the products we buy.
