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Builder.ai Collapses: $1.5B 'AI' Startup Exposed as 'Indians'?
- xyst 1y agoThe Theranos of AI. What a joke.
- mountainriver 1y agoDo folks think that this was utter negligence by the VCs, or just a pump and dump?
- fakedang 1y agoNot just VCs. Microsoft was an investor too.
- pyman 1y agoMicrosoft invested £250M in Inflection AI, £250M in Builder.ai, and has backed several other companies working on LLMs. They’ve been placing strategic bets across the AI space, but only a few of those companies actually had the talent, infrastructure, and funding needed to build real models. The VP of AI was Craig Saunders, the same person who helped create Amazon Alexa. The problem is, they ran out of money. $500 million sounds like a lot, but it's not even close to what you need to build and train a real LLM. You need billions. Most people just don't realise that. See: https://www.businesswire.com/news/home/20240611122778/en/Builder.ai-Strengthens-Leadership-with-Craig-Saunders-from-Amazon-as-New-Vice-President-of-Artificial-Intelligence https://www.businesswire.com/news/home/20240611122778/en/Bui...
- seanp2k2 1y ago...and given the massive success of Amazon Alexa...
- deleted 1y ago[deleted]
- alephnerd 1y agoFor every investor in Builder, there were multiple that passed. Notice how (aside from MS) most participants were not experienced Enterprise SaaS or AI/ML investors.
- s1artibartfast 1y agoneither? Negligence doesn't make sense because it was the VCs own money- no duty to care. It doesn't seem like anyone cashed out either. Seems like a bad bet that went south.
- sib 1y ago>> Negligence doesn't make sense because it was the VCs own money Almost definitionally, VCs are investing someone else's money (the people providing the capital are called the "limited partners" (LPs); the VCs who raise and invest the money are "general partners" (GPs).) The LPs are often pension funds, university endowments, and charitable organizations. Yes, GPs do typically have a capital contribution requirement, but it's generally in the area of 1% of the fund, so the vast majority of what VCs are investing is other people's money, for which they definitely have fiduciary responsibility.
- s1artibartfast 1y agoThat's fair.
- petesergeant 1y agoI dunno, there's a world where this ends differently, and the company was liquid for six more months and transitioned to "actual" AI instead, having already built the customer base and sales channels, and everyone's happy. Launching your AI product before the AI works appears not to be especially unusual and is only a problem if the money runs out before you finish building the AI.
- flowerthoughts 1y agoThere's a more-or-less useful adage in investing: scared money don't make money. Startups will always carry a risk, and VCs are not betting that the company will be asymptotically good, just good enough to make an exit.
- compiler-guy 1y agoAnd even more than that, just that some company they invest in will be a winner. It's OK for most to fail, as long as one of them does well. So they invest in lots of long-shots.
- MegaButts 1y ago> VCs are not betting that the company will be asymptotically good, just good enough to make an exit. This is a misunderstanding of VC investment. Any competent VC expects most of their investments to go to zero. They're hoping a small percent of their investments will make up for the losses. The goal of a decent VC isn't to avoid bad investments so much as it is to make sure they get one good investment. A good investment in AirBnB/Google/Facebook will make up for dozens of speculative bets that go to zero.
- flowerthoughts 1y ago> This is a misunderstanding of VC investment. Any competent VC expects most of their investments to go to zero. I'll be doing a linguistic nit pick now, as I felt it was a bit harsh to label my statement as a misunderstanding. The bet is still on each investment to have a good exit. With the implied assumption that betting is a probabilistic game.
- MegaButts 1y agoNo, this is wrong. VCs regularly bet on companies they expect to fail, and occassionally even know will fail. They sometimes put money into companies knowing they will never get it back. They do not expect a positive return on every investment.
- Ancalagon 1y agoReally weird considering how much AI is actually available now
- immibis 1y agoAlmost like it doesn't work as well as they market it as working?
- klipt 1y agoNot all companies are equal. At the same time that Tesla was making actual electric cars, Nikola was rolling fake "electric trucks" downhill. Grifters exist, but not everyone is a grifter.
- Supermancho 1y agoCapitalism rewards dishonesty. Every company is a grifter to some degree. This is more widespread in technical service companies.
- sib 1y agoIt's a wonderful thing that no other economic systems reward dishonesty. /s
- Supermancho 1y ago>>> Grifters exist, but not everyone is a grifter. >> Capitalism rewards dishonesty. > It's a wonderful thing that no other economic systems reward dishonesty. This is a whataboutism. To rephrase, "all economic systems reward dishonesty." - That's the point. Saying not every market participant is a grifter is a form of denial.
- deadeye 1y agoTo an extent. Just not to the extent that dishonesty is rewarded in socialism and communism. At least Capitalism in a free society is largely self correcting.
- Havoc 1y agoI've read indications that this was always aimed at hybrid model rather than pure AI, but hard to tell now because all the news is on this indians train.
- bboygravity 1y agoThat makes more sense, would explain the unbelievable clickbait headlines (as usual).
- giarc 1y agoNot only that..."The deception wasn't new. As early as 2019, The Wall Street Journal exposed Builder.ai's questionable AI claim revealing that the platform relied heavily on human contractors rather than artificial intelligence."
- aitchnyu 1y agoSounds a little more reasonable. In 2016, Builder's founding, Uber was pursuing self driving as well as hiring human drivers.
- rafram 1y agoArticle from a slightly better source: https://timesofindia.indiatimes.com/technology/tech-news/how-this-billion-dollar-london-startup-backed-by-microsoft-made-700-engineers-sitting-in-india-pose-as-ai/articleshow/121572659.cms https://timesofindia.indiatimes.com/technology/tech-news/how...
- pyman 1y agoThis is fake news. Builder.ai, like any other dev shop, had clients and was building apps using developers in India, pretty much like Infosys or any other Indian dev shop. Nothing wrong with that. From what I read online, the real issue was "Natasha", their virtual assistant powered by a dedicated foundation model. They ran out of money before it got anywhere.
- bartread 1y ago> This is fake news. Builder.ai, like any other dev shop, had clients and was building apps using developers in India, pretty much like Infosys or any other Indian dev shop. Nothing wrong with that. Yeeeah... that's a fairly disingenuous take. The difference between every other offshore dev shop backed by developers in India and Builder.ai is that - and I say this as someone who thinks Infosys is a shit company - Infosys and all those other dev shops are at least up front about how their business works and where and who will be building your app. Whereas Builder.ai spent quite a long time pretending like they had AI doing the work when actually it was a lot of devs in India. That is deliberately misleading and it is not OK. It's fraudulent. It's literally what Theranos did with their Edison machines that never worked so whereas they claimed they had this wondrous new blood testing technology they were actually running tests with Siemens machines, diluting blood samples, etc. The consequences of Theranos's actions were much more serious (misdiagnoses and, indeed missed diagnoses of thousands of patients), rather than just apps built by humans rather than AI, but lying and fraud is lying and fraud.
- pyman 1y agoI don't agree. Even Infosys markets AI as part of their offering, just look at their "AI for Infrastructure" pitch: https://www.infosys.com/services/cloud-cobalt/offerings/ai-infrastructure.html https://www.infosys.com/services/cloud-cobalt/offerings/ai-i... Every big dev shop does this. Overselling tech happens all the time in this space. The line between marketing and misleading isn't always so clear. The difference is Builder.ai pushed the AI angle harder, but that doesn't make it Theranos-level fraud.
- gamblor956 1y agoHave been joking with friends that "AI" stand for "Actually Indians". We never thought that it wasn't just a joke...
- ceejayoz 1y agoSee also: Amazon Go. https://www.businessinsider.com/amazons-just-walk-out-actually-1-000-people-in-india-2024-4 https://www.businessinsider.com/amazons-just-walk-out-actual...
- profstasiak 1y agomany such cases
- fazkan 1y agoThis is so weird, its not that hard to actually build an app builder. There are multiple open-source repos (bolt etc), they could have just paid their "AI engineer" to actually build an AI engineer. Shameless plug, but we built (https://v1.slashml.com https://v1.slashml.com), in roughly 2 weeks. Granted its not as mature, but we don't have billions :)
- glutamate 1y agoThey launched in 2016
- throwaway314155 1y agoShould have pivoted faster.
- hnuser123456 1y agoNice, I'll try this out tonight.
- fazkan 1y agothanks, do ping me if you run into any issues faizank@slashml.com
- xkcd-sucks 1y agoIt's plausible they started with a typical software consultancy and its crappy in house app builder scripts, and reformed it as an AI thing in order to inflate its value?
- downrightmike 1y agoThat'd be shameful, and a complete disgrace, it'd be like adding "bitcoin" to your company name or 10k fillings a few years ago to boost your stock
- fazkan 1y ago
- pkkkzip 1y agoDefinitely not helping stereotypes
- terminatornet 1y agospeak on that
- belter 1y agoBeaten to death: https://hn.algolia.com/?q=Builder.ai https://hn.algolia.com/?q=Builder.ai
- joshuahedlund 1y agoThis looks like the first submission to get traction on this latest development. Thanks for the search though: > https://news.ycombinator.com/item?id=30397201 https://news.ycombinator.com/item?id=30397201 This one from 3 yrs ago had some interesting comments > off topic, but they have a very suspect pricing page: https://www.builder.ai/studio-store https://www.builder.ai/studio-store > "Delivery: 12 weeks" > is Builder.ai just a CRUD app for indian sweatshops to build the apps? > > It would not have spawned an entire industry and no code websites every other week or so if it was ‘just a CRUD app’.
- belter 1y agoYou need to sort by Date, there was this one just 10 days ago: https://news.ycombinator.com/item?id=44080640 https://news.ycombinator.com/item?id=44080640
- andrewinardeer 1y agoAI = Actual Indians, apparently.
- CobrastanJorji 1y agoYep. Also happened with Amazon's "Just Walk Out Technology:" https://www.businessinsider.com/amazons-just-walk-out-actually-1-000-people-in-india-2024-4 https://www.businessinsider.com/amazons-just-walk-out-actual...
- dmazin 1y agoMy understanding is this turned out not to be true. People were used to label stuff for new stores, but the actual implementation did not depend on some sort of fakery.
- CobrastanJorji 1y agoI imagine it's possible the truth was somewhere in between. But if it worked, why did they stop using it in their grocery stores after putting so much money into it?
- martinald 1y agoIn the UK at least the grocery stores are completely empty. I've barely seen anyone in them. Bizarrely they are shutting loads down in London but opening new ones at the same time. Absolutely no idea what the strategy is, they must be throwing out the majority of the fresh food stock they have.
- rrrrrrrrrrrryan 1y agoThat was the original idea, and that's what Amazon claimed, but IIRC they never got over 70% automated. Phrased differently, 30% of all transactions were still entered by a human overseas watching cameras at the time they decided to pull the plug, years after the initial launch.
- perryh2 1y agoSimilar to EvenUp: https://www.businessinsider.com/evenup-ai-errors-hallucinations-former-employees-2024-11 https://www.businessinsider.com/evenup-ai-errors-hallucinati...
- rdtsc 1y ago> Linas Beliūnas, Director of the financial company Zero Hash, recently exposed that Builder.ai lacked true AI, instead utilising a group of Indian developers who were merely pretending to be bots writing code. They probably had to train people to talk like ChatGPT. Step 0: Make sure you have an em dash shortcut on your keyboard and use that as often as possible. Step 1: Be extremely polite and apologize profusely. Step 2: ...
- zingababba 1y agoStep 2: Do the needful
- TZubiri 1y agoProbably they just wrote code and that was fed into an LLM which LLMified the responses.
- deleted 1y ago[deleted]
- felineflock 1y agoNot to confuse with builder.IO - poor founder was posting these days "FOR THE LAST TIME GUYS THIS IS A DIFFERENT COMPANY".
- seydor 1y agoactually he should buy the bankrupt name and be the same company
- nikcub 1y agoI expect the builder.ai story will break into the mainstream via a book / documentary. There are some insane details and it's the first large-scale AI hype failure - which people are hungry to get the details on - and some big names involved. Another failure of dd - I really wonder how high-profile investors pour hundreds of millions into a co without doing something simple like ordering an app using a burner account.
- ethbr1 1y ago> I really wonder how high-profile investors pour hundreds of millions into a co without doing something simple like ordering an app using a burner account. You'd think that if you're investing $1M+, there's budget for at least getting an intern / assistant to do that.
- pyman 1y agoMicrosoft invested £250M in Inflection AI, £250M in Builder.ai, and has backed several other companies working on LLMs. They’ve been placing strategic bets across the AI space, but only a few of those companies actually had the talent, infrastructure, and funding needed to build real models. The VP of AI was Craig Saunders, the same person who helped create Amazon Alexa. The problem is, they ran out of money. $500 million sounds like a lot, but it's not even close to what you need to build and train a real LLM. You need billions. Most people just don't realise that. See: https://www.businesswire.com/news/home/20240611122778/en/Builder.ai-Strengthens-Leadership-with-Craig-Saunders-from-Amazon-as-New-Vice-President-of-Artificial-Intelligence https://www.businesswire.com/news/home/20240611122778/en/Bui...
- koakuma-chan 1y agoOh no, qwik was my favourite JavaScript framework
- zachncst 1y agoIsn’t this what they always tell startups to do? Fake it and get product market fit. I recall the stories of task rabbit where the founder was delivering all the meals.
- pyman 1y agoSee: https://www.businesswire.com/news/home/20240611122778/en/Builder.ai-Strengthens-Leadership-with-Craig-Saunders-from-Amazon-as-New-Vice-President-of-Artificial-Intelligence https://www.businesswire.com/news/home/20240611122778/en/Bui...
- tacheiordache 1y agoYou say that as if Amazon Alexa was some kind of amazing product. t succeeded because it has Amazon backing and it's kindof a crappy product.
- oblio 1y agoAll voice assistants, at least the original iterations, are only good for 3-4 trivial things people actually want. And they've been around for a decade at this point.
- sokoloff 1y agoIt’s a kitchen timer, music player, and weather sayer. That’s surely worth the $30 I paid.
- jaymzcampbell 1y agoI had to laugh, these are literally the only three things my wife and I use ours for. At a stretch, I'll count the multi-room speaker sync as a great value add to the OOTB audio playback. Anything else, forget it.
- codegrappler 1y ago
- ricardobeat 1y agoSo.. where did the $450M go? A team of 700 developers in India built over eight years would have cost a fraction of that.
- paxys 1y agoThey have been operating since 2016. Companies can and have burned through $450M in funding a hell of a lot faster than that. OpenAI is on track to spend $14 billion this year.
- deleted 1y ago[deleted]
- monksy 1y agoThe Chai budget is completely justifiable expense. (Probably more so than the difference being run away with)
- more_corn 1y ago[flagged]
- pryelluw 1y ago$400M! I get $100M. Maybe even $200M. But $400M? Unforgivable.
- nadermx 1y agoYou figure 700 employees. 400m. Avg cost per hooker can't be more than a few hundred. So by this math each employee got 1,900ish hookers. Since i figure male hookers for the female employees where cheaper well round up to 2,000. That is in fact unforgivable. 1,000 would of been acceptable. 2,000... just excess
- pryelluw 1y agoDid you factor in the nose candy? That estimate seems off. Please crunch the numbers once again. Make sure to factor in inflation.
- tartoran 1y agoWhat happens with all the money they collected from investors? Was it all just squandered away? Pocketed?
- deleted 1y ago[deleted]
- LeicaLatte 1y agoDo things that don’t scale taken to another level :)
- Yeul 1y agoHonestly I feel bad for Indians but yeah everything annoying comes from them. Scamming, call centers and worst of all Microsoft agents.
- orochimaaru 1y agoScamming is Cambodia via the Chinese triad. That’s where all the scam farms are. There’s a lot of poor Indians forced into slave labor conditions there by tricking them into job opportunities. But there is not a lot of call center scams run today in India. Not at the scale at which Cambodia runs them.
- moralestapia 1y agoThe elephant in the room is how many builder.ai(s) are still out there. My personal estimate is that it is about 80% of the startups you see around.
- bigfatkitten 1y agoThe WITCH consultancies make tons of money delivering code of similar quality without pretending that it was done by AI.
- anal_reactor 1y agoIn this whole AI revolution we sometimes forget the power of cheap human labour... and if I recall correctly, that's not the first time such a thing happens. Amazon made a "no-checkout AI automated store" which was a bunch of cameras connected to a bunch of Indians. At this point, I think we should consider "Indians" a valid element of any engineering architecture, because they perfectly fill the niche where you have work that is almost easy to automate, but not quite. Of course, "Indian-as-a-Service" doesn't sound as cool as AI, but besides this, I think it's a valid solution and a business model for many use cases.
- axus 1y agohttps://en.wikipedia.org/wiki/Amazon_Mechanical_Turk https://en.wikipedia.org/wiki/Amazon_Mechanical_Turk , "conceived by Venky Harinarayan in a U.S. patent disclosure in 2001".
- deleted 1y ago[deleted]
- bartread 1y agoThis is not news, or at least not fresh news. The FT reported the collapse ~9 days ago and it was discussed here: https://news.ycombinator.com/item?id=44080640 https://news.ycombinator.com/item?id=44080640
- apsurd 1y agonews to me buddy. this is perhaps a useless comment but then i think, articles resurface every now and again and it's intentional and welcome for those that missed. and this isn't exactly that of course, rather makes me think it's worth a comment: news is relative. discussion ensues, it's all good
- macintux 1y agoExcept that it's contrary to the site FAQ. > If a story has not had significant attention in the last year or so, a small number of reposts is ok. Otherwise we bury reposts as duplicates.
- ManBeardPc 1y agoAnother AI scam. Wasn’t there a similar case with the Amazon stores? Just walk out I think. Could be understood as sound advice if someone pitches you something groundbreaking done by AI.
- cubano 1y agoWe wanted flying cars, but instead got fake AI. Shameful.
- paxys 1y ago> Less than two months ago, Builder.ai admitted to revising down core sales numbers and engaging auditors to inspect its financials for the past two years. This came amidst concerns from former employees who suggested sales performance had been inflated during prior investor briefings. I was hoping for something interesting, but it is just plain old fashioned accounting fraud.
- deleted 1y ago[deleted]
- moonikakiss 1y agoI did due-diligence on Builder.AI for a venture firm I was interning at (circa 2019). It was extremely apparent (Glassdoor, talking to any employee) it was complete BS. When I say apparent, it took less than 15 minutes and a couple of google searches to get a sniff of it. Somehow, you can still raise $500MM ++. I think about that a lot
- aprilthird2021 1y agoYou have to elaborate! What were the signs? When you did due diligence what were you told about the company? Was the marketing or premise itself fishy or you only realized it was fraudulent after starting the due diligence?
- dang 1y agoRecent and related: Microsoft-backed UK tech unicorn Builder.ai collapses into insolvency - https://news.ycombinator.com/item?id=44080640 https://news.ycombinator.com/item?id=44080640 - May 2025 (136 comments)
- deleted 1y ago[deleted]
- dang 1y agoTwo claims are being made here, one boring and one lurid. The boring claim is that the company inflated its sales through a round-tripping scheme: https://www.bloomberg.com/news/articles/2025-05-30/builder-ai-faked-business-with-indian-firm-verse-to-inflate-sales-sources-say https://www.bloomberg.com/news/articles/2025-05-30/builder-a... (https://archive.ph/1oyOw https://archive.ph/1oyOw). That's consistent with other recent reporting (e.g. https://news.ycombinator.com/item?id=44080640 https://news.ycombinator.com/item?id=44080640) The lurid claim is that the company's AI product was actually "Indians pretending to be bots". From skimming the OP and https://timesofindia.indiatimes.com/technology/tech-news/how-this-billion-dollar-london-startup-backed-by-microsoft-made-700-engineers-sitting-in-india-pose-as-ai/articleshow/121572659.cms https://timesofindia.indiatimes.com/technology/tech-news/how..., the only citation seems to be this self-promotional LinkedIn post: https://www.linkedin.com/feed/update/urn:li:activity:7334521571966877696/ https://www.linkedin.com/feed/update/urn:li:activity:7334521... (https://web.archive.org/web/20250602211336/https://www.linkedin.com/feed/update/urn:li:activity:7334521571966877696/ https://web.archive.org/web/20250602211336/https://www.linke...). Does anybody know of other evidence? If not, then it looks bogus, a case of "il faudrait l'inventer" which got traction by piggybacking on an old-fashioned fraud story. To sum up: the substantiated claim is boring and the lurid claim is unsubstantiated. When have we ever seen that before? And why did I waste half an hour on this? (Thanks to rafram and sva_ for the links in https://news.ycombinator.com/item?id=44172409 https://news.ycombinator.com/item?id=44172409 and https://news.ycombinator.com/item?id=44175373 https://news.ycombinator.com/item?id=44175373.)
- pyman 1y agoI couldn't find any reference on the BuilderAI website claiming they use GenAI to build software. So the second claim lacks evidence. Update: They mention AI to assemble features, not to generate code. So it's impossible to know whether they were actually using ML (traditional AI) to resolve dependencies and pull packages from a repo.
- ivape 1y agoSpeculating, don’t they offer dev services that’s supposed to be done by AI? If the dev services were offered by devs, then that would be the scam. Now that I’ve said the second part, it does seem lurid because who the hell is paying for AI first code deliverables. —- Message to HN: Instead of founding yet another startup, please build the next Tech Vice News and fucking goto the far corners of the tech world like Shane Smith did with North Korea with a camera. I promise to be a founding subscriber at whatever price you got. Things you’ll need: 1) Credentialed Ivy League grad. Make sure they are sporadic like that WeWork asshole. 2) Ex VC who exudes wealth with every footstep he/she takes 3) The camera 4) And as HBO Silicon Valley suggests, the exact same combination of white guy, Indian guy, Chinese guy to flesh out the rest of the team. See, I need to know what’s it like working for a scrum master in Tencent for example during crunch time. Also, whatever the fuck goes on inside a DeFi company in executive meetings. And of course, find the next Builder.ai, or at least the Microsoft funding round discussions. We’ve yet to even get a camera inside those Arab money meetings where Sam Altman begs for a trillion dollars. We shouldn’t live without such journalism.
- stuartd 1y agocowboys
- a_void_sky 1y agoNobody has mentioned that they were reselling the AWS credits they had. We had them as our billing partner with very good discounts. The day it happened, AWS sent us a mail to remove them as our billing partner.
- scothooker 1y ago[dead]