The company whose ‘AI’ was actually 700 humans in IndiaDisaster as Microsoft-backed unicorn implodes.By David Braue on Jun 05 2025 01:15 PMPrint articleCustomers thought they were talking to a faceless AI. Photo: ShutterstockRed faces and recriminations are flying thick and fast after revelations that UK AI company builder.ai has been tricking customers and investors for eight years – selling an advanced code-writing AI that, it turns out, is actually an Indian software farm employing 700 human developers.Founded in 2016, the company, also known as Engineer.ai, became a darling of the AI space and marketed itself so well that it attracted $700 million ($US444.5 million) investment from the likes of SoftBank, Qatar, and Microsoft – which integrated Builder.ai into its Teams collaboration suite.Builder.ai CEO Sachin Dev Duggal built the house of cards based on the purported capabilities of the company’s AI assistant ‘Natasha’, which was said to be a no-code tool that could build apps six times faster than traditional development processes and be 70 per cent cheaper.Duggal became an AI industry stalwart, giving himself the title of ‘chief wizard’ at the company and appearing as an expert onpodcastsandnewsoutletsthat lauded him as a captain of the emerging AI industry.Yet it all came undone afterrevelationsthe company – which appointed new CEO Manpreet Ratia in February – willdeclare bankruptcyafter major backer Viola Credit demanded immediate repayment of the $77 million ($US50 million) loan it extended to Builder.ai in 2023, when it was valued at $2.3 billion ($US1.5 billion).“Despite the tireless efforts of our current team and exploring every possible option,” the company said, “the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position.”Pulling back the curtainThe bankruptcy came after a Bloomberg investigationfoundthat the company had been working with Indian social media startup VerSe Innovation to undertake questionable financial practices – including using ‘roundtripping’ tooverstate revenuesfor 2023 and 2024 by a factor of four.Natasha offered to build the app of your desire. Image: SuppliedAs well as its financial shenanigans, the company’s questionable business has been outed after confirmation that Natasha was not, in fact, an AI at all – but a team of 700 very human Indian developers who were not only writing customers’ software, but tasked with behaving like bots.Rumours to this effect had circulated since a 2019Wall Street Journalreportquestioned Engineer.ai’s bona fides, but the truth was finallyexposedthis month with confirmation that the entire company was a lie – with former employees describing the company as “all engineer, no AI.”Although the developers used a range of software tools in their work, coding wasperformed manually, meaning that while Builder.ai did eventually deliver apps to its customers, it was simplyanother playerin an Indianoffshoringindustryattracting$27 billion ($US17.7 billion) annually.That puts the company in a completely different market segment than the one that propelled AI-hungry investors throughfour funding roundsbefore and after thedebutof OpenAI’s ChatGPT turned the global tech industry on its head.The typo in the screen grab was probably a red flag. Image: SuppliedA reckoning for the AI industryThe combination of financial malfeasance and outright deception has reportedlyattracted the attentionof US federal prosecutors, with suggestions that a formal criminal investigation has kicked off as Builder.ai careens into the annals of AI’s worst ever disasters.Reportssuggestthat around 90 per cent of AI startups fail within a year, whether due to a lack of market demand, financial instability, operational challenges, or AI’s technological complexity – and the demise of the likes of Artifact, Shyp, Tally, Eaze, and Ghost Autonomy are prima facie evidence.Even major firms have struggled to get AI right, with McDonalds, Air Canada, Sports Illustrated, iTutor Group, and Zillow among those that have backtracked afterwrongfooted AI implementations.Gaps between AI hype and AI reality are regularly proving disastrous – as when the surprise debut of Chinese generative AI venture DeepSeek sent share marketstumblingin January, or when Microsoft and AWSannouncedin May that they would pause their expansion of AI data centres.As of press time, Builder.AI’swebsitestill claims that “AI means we can build more cost effectively and at speed”, describing an AI-basedworkflowin which Natasha is an “AI project manager” thathelps customers“order an app, like you would a pizza.”David BraueDavid Braue is an award-winning technology journalist who has covered Australia’s technology industry since 1995. A lifelong technophile, he has written and edited content for a broad range of audiences across myriad consumer and business topics, with a particular focus on managing the intersection of technological innovation and business transformation. He has twice won Best IT Journalist at the Australian IT Journalism awards, and was named Best Technology Journalist at the 2024 Australian Technologies Competition.Tags:aibuilder.aihumansmicrosoftdisaster