Turns out Builder.ai's AI was 700 engineers in India!
What's the story
Builder.ai, a London-based start-up once valued at $1.5 billion, has filed for bankruptcy after its so-called artificial intelligence was exposed as hundreds of human workers in India pretending to be chatbots.
The company had pitched its platform as an AI-powered solution that made app development as easy as ordering pizza.
Its virtual assistant "Natasha" was supposed to generate software using artificial intelligence.
Deception unveiled
Lender seized $37 million from the company's accounts
However, the reality was that nearly 700 engineers in India were manually coding customer requests, The Times of India reported.
The deception began to unravel last month when lender Viola Credit seized $37 million from the company's accounts.
It was then discovered that Builder.ai had inflated its 2024 revenue projections by a whopping 300%.
An audit showed the company actually made just $50 million in revenue, much lower than the $220 million it claimed to investors.
Ongoing scrutiny
Controversies around Builder.ai
In 2019, a Wall Street Journal report had already questioned Builder.ai's AI claims.
A former executive had even sued the company that same year for allegedly misleading investors and overstating its technical capabilities.
Despite these controversies, the company raised over $445 million from big names like Microsoft and Qatar Investment Authority.
Now, Builder.ai's collapse has triggered a federal investigation in the US with prosecutors in New York requesting financial documents and customer records.
Financial fallout
Builder.ai owes millions to Amazon and Microsoft
Founder Sachin Dev Duggal stepped down earlier this year, with Manpreet Ratia taking over as CEO. Ratia is reportedly the one who uncovered the company's internal misrepresentations.
Builder.ai now owes millions to Amazon and Microsoft in cloud computing costs. The company has also laid off around 1,000 employees.
This incident is one of the biggest failures of the post-ChatGPT AI investment boom and has renewed scrutiny of "AI washing"—the practice of rebranding manual services as artificial intelligence to secure funding.