$1.5 Billion AI Startup Company Backed by Microsoft, 'BuilderAI', Turned Out to Just Be 700 Indian Dudes Programming From an Office
Business Today – Builder.ai, once touted as a revolutionary AI startup backed by Microsoft, has collapsed into insolvency after revelations that its flagship no-code development platform was powered not by artificial intelligence—but by 700 human engineers in India.
The company marketed its platform as being driven by an AI assistant named “Natasha,” which could supposedly assemble software applications like Lego bricks. But recent reports and commentary have revealed that behind the scenes, customer requests were manually fulfilled by developers, not machines.
Commenting on the unraveling, Ebern Finance founder Bernhard Engelbrecht described it in a widely circulated post on X: “Customer requests were sent to the Indian office, where 700 Indians wrote code instead of AI,” adding that the end products were often buggy, dysfunctional, and difficult to maintain. “Everything was like real artificial intelligence — except that none of it was.”
India has gotta get their shit together. They've been willingly letting themselves get beyond fleeced by the rest of the world (especially America) for decades. Probably centuries. I know there was a time where India had the most robust economy in the world, but somewhere along the line they just bent over and started taking it from the rest of us. I'm sure there's a million examples of this, but my fiancee works for one of the major insurance companies. It's an IT-adjacent job. She makes as much money as I do. Nothing crazy, but a solid salary for a 30+ year old American. But about half of the people she works with on a daily basis, people she relies on heavily to complete her job, are working from India. According to her, they're pretty much as valuable as she is to the company (or maybe slightly less). They put as much time and effort into the job as she does. And I swear to God these guys are making something like $8,500 a year. Just preposterously low wages. I know the USD goes further in India. And I know there are WAY more people over there, so it's a simple case of supply and demand. But God damn it India. Have some pride. Like, you can't even get $20k a year for your people working full time jobs for hundred billion dollar corporations? These are people with valuable IT & programming skills who could legitimately make 10x that in the United States. When you look into what some people living in India who work for US companies are actually earning (not to mention the lengths they'll go to commute-wise to even get to their office), it doesn't even seem real.
And the fact that there's enough money in AI that it's able to sustain a business comprised of 700 Indian dudes sitting in a call center for 8 years... It's wild, it's hilarious, it's kinda sad, it's so many things. BuilderAI managed to raise $445M from investors to back their company. Imagine being Sachin Dev Duggal, the found of BuilderAI who sat down to do that math and decided he could pull it off. He saw how valuable AI was. He saw how much money an AI program capable of accomplishing certain tasks was able to rake in. Then he thought to himself, "You know what? For that amount of money, I could afford 700 Indian programmers. I bet they could keep up with that workload."
picture alliance. Getty Images.What a legend. What a business model. Builder.AI in particular was marketed to businesses who wanted to build a software or an app without having to code it themselves. Builder.AI would do it for them. People sent their ideas to Builder.AI, and BuilderAI's "innovative AI software" would spit them out an app. But as long as a warehouse full of Indian dudes were able to effectively get the job done, then who the hell cares how the sausage was made?
Unfortunately the sausage tasted like shit. To the point that BuilderAI wasn't able to keep up with costs, and had $37M seized by Viola Credit after defaulting on a $50M loan.
Commenting on the unraveling, Ebern Finance founder Bernhard Engelbrecht described it in a widely circulated post on X: “Customer requests were sent to the Indian office, where 700 Indians wrote code instead of AI,” adding that the end products were often buggy, dysfunctional, and difficult to maintain. “Everything was like real artificial intelligence — except that none of it was.”
The downfall began when Viola Credit, a lender that extended $50 million to Builder.ai in 2023, seized $37 million after the company defaulted. That move paralyzed the startup’s ability to operate or pay employees. Additional funds held in India remain frozen due to regulatory restrictions, Bloomberg reported.
Once you can no longer pay your employees it's game over. On top of that, they were misreporting sales. They were using pre-made templates to "create" their apps. Obviously this whole thing was probably never sustainable (unless they were able to raise enough money on the backs of 700 Indian dudes and use it to build a real AI program). Clearly whoever was investing in Builder.AI were in a large part investing in what it could be in the future, as opposed to what it actually was. But maybe there's a world where if Builder.AI had played their cards right, they could have pulled off. Had they pulled it off, it would have been an incredible John Henry vs The Machine-esque story of mankind triumphing over technology (if John Henry was 700 dudes inside of a trench coach and working for slave wages).
But in some ways, this is still kind of a win for mankind. There are still things AI isn't capable of doing. And if someone is able to pull the wool over the eyes of a company like Microsoft because they're so overeager to eliminate the human workforce entirely in favor of computers, then good for them.
But in other, more real ways, if companies are that overeager to shell out millions and millions of dollars for AI software as opposed to employing hundreds of people… that's kinda scary. Apparently nobody even bothered to audit Builder.AI, or look into their software, or visit their offices. They just blindly jumped at the opportunity to throw money at the first company who claimed they were capable of building apps without the hassle of hiring human beings.
Maybe, if were lucky, this will be the first domino to fall in the biggest tech-scandal of our lifetimes. Where we all believed AI was taking over the world, but come to learn the likes of OpenAI, Google Gemini, Grok, etc., were just a bunch of Indians in a warehouse the whole time. Wouldn't that be something. We all thought modern technological advancements were making it so certain tasks could be accomplished in an instant for pennies on the dollar, but in reality, it was the country of India wiling to work for $1.50/hour. We can only hope.
